Category: Prenuptial

Love In The Time Of Corona: Extended Engagements Give Couples The Time To Consider Prenuptial Agreements

By now, everyone knows someone who has had to cancel a major event due to the coronavirus (COVID-19). Unfortunately, this is the case for many weddings that were planned months and years in advance, and will now have to be rescheduled due to travel bans and restrictions on groups. Engagements are now prolonged, perhaps indefinitely, due to this global pandemic.

The silver lining, if there is one, might be that these couples now have the time to focus on a prenuptial agreement.

What Is A Prenuptial Agreement?

A prenuptial agreement (also referred to as a “prenup” or a “premarital agreement”) is a legal contract that is signed prior to getting married, which sets forth what will happen to the couples’ finances in the event of a divorce. A prenuptial agreement may include provisions regarding the division of assets, payment of expenses and liabilities, the calculation (or exclusion) of alimony, responsibility for attorney’s fees, and provisions in the event of a spouse’s death.

Who Should Have A Prenuptial Agreement?

While anyone who is getting married can have a prenuptial agreement, it is most commonly used when one or both parties have assets or income that they would like to protect. In Connecticut, all assets, regardless of how they were obtained or titled, are considered a “marital asset” and subject to equitable division in the event of a divorce. In other words, all assets part of the marital pot, unless they are specifically excluded or addressed in a prenuptial (or post-nuptial) agreement. Accordingly, many couples who may have already been married, have accumulated wealth, and/or would like to pass assets on to their children, utilize prenuptial agreements.

Prenuptial agreements can also protect assets that haven’t been received yet. If you are engaged, and you are the beneficiary of a trust, own a piece of a family business, or expect an inheritance, a prenup can assist you in determining what happens to these future assets in the event of a divorce.

How Do I Discuss The Idea Of A Prenuptial Agreement With my Fiancé?

Every relationship has a different dynamic. Sometimes couples arrive at our office having already negotiated terms of an agreement between themselves. Other times, we receive calls from a worried fiancé, asking how to best approach a future spouse with the concept of a prenuptial agreement. We are even approached by well-meaning parents of the bride or groom, who have a direct interest in keeping their child’s future assets protected! It is not uncommon for grown children to be in the dark regarding the estate plans of his or her parents.

Whether you are engaged and want to discuss the idea of a prenuptial agreement with your fiancé, or you are a parent who wants to encourage your child to sign into a prenup prior to marriage, the best policy is honesty. Now is the time to have an open and honest discussion about what the potential concerns are, what the assets (or debt!) consist of, and what you hope to accomplish by agreeing to settlement terms now. In Connecticut, in order for a prenuptial agreement to be enforced, there is a requirement for full and fair disclosure—meaning, each spouse must fully disclose any and all assets, holdings, liabilities, and income at the time of signing. It is not a good idea to wait until the last minute before the wedding to approach these issues. Now is the time to put it all out on the table and to have a frank and level-headed discussion.

At Broder & Orland LLC, we frequently consult with clients who have questions about whether a prenuptial agreement would be right for them and we have significant experience representing clients who want to best protect themselves in the drafting and negotiation of a prenuptial agreement.

Three Critical Issues to Address in a Prenuptial Agreement

A prenuptial agreement is a written contract entered into by two people before they are married. Its purpose is to resolve, in advance, various financial matters that will necessarily arise from the marriage in the event of divorce or death of a spouse.  Notably, prenuptial agreements offer parties on opportunity to resolve financial issues in whatever manner they choose, rather than leaving such issues to be determined by the divorce laws of a particular state.  While the contents of prenuptial agreements can vary widely, there are certain issues that are commonly addressed in such agreements, three of which are discussed herein.

Property Distribution and Asset Classification:

Prenuptial agreements typically define which types of assets will be subject to division in the event of divorce (i.e., which assets will constitute “Marital Property”), and which types of assets will necessarily be retained by one party to the exclusion of the other (i.e., which assets will constitute “Separate Property.”)  While there are many ways to classify assets, it is common for agreements to state that any assets brought into the marriage by a particular party shall constitute that person’s Separate Property, while any assets acquired during the marriage shall constitute Marital Property.  It also common for prenuptial agreements to provide that inheritances received by a party during the marriage shall constitute that person’s Separate Property.  In addition to classifying assets as Marital or Separate Property, many prenuptial agreements expressly set forth the manner in which Marital Property will be divided between the parties in the event of divorce.  For example, Marital Property might be divided equally, “equitably” (as determined at a later time under the laws of a particular state), or in some percentage allocation other than 50/50.

Many prenuptial agreements also address the disposition of assets that are acquired during the marriage with a combination of each party’s Separate Property and/or Marital Property, often referred to as “Mixed Property.”  Often prenuptial agreements will be drafted to ensure that both parties will recoup any Separate Property contributions he or she made to the acquisition of Mixed Property.

Alimony

Generally speaking, there are three options when it comes to addressing alimony in a prenuptial agreement.  One option is for the parties to agree to mutual “alimony waivers,” meaning that each party agrees that he or she will have no right to seek alimony from the other in the event of a divorce.  A second option is for each party to retain the right to seek alimony from the other, while leaving the issue open for determination at the time of divorce.  A third option is for parties to expressly agree upon specific alimony obligations that one party shall have to the other in the event of divorce, which may could include specific provisions regarding the duration and/or the amount of such alimony.

Estate Rights

In most jurisdictions, absent a written agreement to the contrary, each party to a marriage will be guaranteed by law to receive a certain minimum share of his or her spouse’s estate (the “elective share”) upon their spouse’s death.  For example, the “elective share” in Connecticut is comprised of the lifetime use of one-third of the value of all real and personal property owned by a party at the time of his or her death, after the payment of all debts and charges against that party’s estate.  However, a spouse’s right to an “elective share” can be waived in a prenuptial agreement, and it is not uncommon to see estate rights waivers in prenuptial agreements particularly where one or both parties have children from a prior relationship.

At Broder & Orland LLC we have extensive experience throughout Fairfield County and Connecticut negotiating and drafting prenuptial agreements that align with our clients’ circumstances.