A prenuptial agreement serves as an important tool for a soon-to-be-married couple to plan for potential legal and financial issues that may arise from differing viewpoints and expectations in a marriage.
As their wedding date approaches, many couples seek premarital counseling to head off potential relationship problems. Unfortunately, these same couples often do not take time to consider or plan for potential legal and financial issues they may eventually face. A prenuptial agreement serves as an important tool to flesh out these potential problems, which often arise based on differing viewpoints and expectations in the marriage.
LSR Family Law Group has developed the following checklist of questions and considerations to begin the prenup conversation. Completing this checklist will help both partners develop an effective prenuptial agreement based on realistic expectations. The goal is for both partners to feel reassured that financial and legal concerns are addressed before the marriage begins. Bring this checklist to your consultation with your LSR Family Law attorney.
Prenuptial Agreement Checklist of Considerations
1. Premarital assets, debts, and obligations and other non-marital property
What are the premarital assets and debts? Full disclosure is required.
How will premarital assets and debts be handled during the marriage and in the event of the divorce?
What if one spouse’s premarital property is used to pay off premarital debts or marital debts?
Obligations: What if one spouse has an obligation to pay child support from a previous marriage? Will it be paid from marital property/income or premarital assets/income?
Income-generating property: How will you handle income-generating premarital property during the marriage?
Inheritances, interest in trust, gifts from families, gifts in contemplation of marriage
Premarital cohabitation: If there was a period of premarital cohabitation, how do you want to treat property acquired during this period? Is it joint property or premarital property of each spouse?
Nonmarital business interests: How will those business interests be operated during the marriage? How will income from nonmarital business interests be treated during the marriage?
2. Marital property and ownership of such property
Property acquired during the marriage: Does a spouse wish to define marital property differently from what the law presumes?
Ownership issues: How will you want to title the property, in one spouse’s name or jointly?
Gifts from families: will such gifts be considered marital property or the property of the spouse whose family gave the money?
3. Management of assets and income
In whose accounts will bank accounts and financial accounts be held? Other marital property?
Any concerns regarding the other spouse’s spending/saving habits?
Discussion of long-term financial goals and priorities and expectations of contribution of each spouse
Normal living expenses: Do you wish to specify who is going to be responsible for normal living expenses? If so, will the arrangement change if there are changes in employment?
Taxes: How will taxes be filed — any special considerations?
Higher education: Any special agreements as to higher education for a spouse during the marriage?
Business ownership issues: Indemnification of business debts/taxes; type of business ownership; ability of spouse to determine own income; provisions for forensic accounting in the event of separation or dissolution of marriage; other business issues
Investments: Approaches; pre- and post-marriage classification
4. Marital debts
Consider joint credit issues: Positions on pledging marital property as collateral, taking out home equity line of credit (HELOC) on the marital home (especially in the event there are premarital contributions)
Form of obligations: Which spouse shall take on the obligation? Will both?
Joint credit obligations: How will these be handled? Any agreements as to paying off marital debts?
5. Contributions to the marriage (financial and other)
Views on nonmonetary contributions
Career expectations, income expectations, career changes
Retirement plans: When does each spouse plan on retiring? What are each spouse’s expectations for the other spouse?
6. Spousal support in the event of divorce
Amount, terms, duration of support in the event of divorce, and limitations thereto: Will there be temporary spousal support pending resolution of a dissolution action, post-dissolution support? Lump sum, monthly? Or will there be permanent support? Alternatives to spousal support (i.e., buyouts)
7. Rights on death of the spouse, disability of the other spouse
Timing: Rights if separated but haven’t formally filed for divorce
Beneficiary designations on retirement plans, IRAs, pension plans, annuities
Disability insurance, long-term care insurance
Estate planning: Comprehensive estate plan after wedding, considerations for children of prior relationships, and/or present relationship
8. Duration of prenup
How long do you want the prenup to be in effect: For the life of the marriage? Or do you want the agreement to expire after a certain period?
9. Attorney’s fees
In the event the agreement is challenged by either party, do you want to include a provision making the challenging party entirely responsible for the other’s attorney’s fees if their challenge is unsuccessful? If not, what would you like to include, if anything, regarding attorney’s fees?
10. Full disclosure of financial assets (exhibits listing all current assets and liabilities)
Lists from both parties detailing separate property and debts
Approximate values of each party’s separate property, and any property already co-owned by the parties, should any exist
Approximate value of each party’s separate secured and unsecured debt, and any joint debt, should it already exist
Examples of property disclosures:
- Financial Affidavit
- Last three years of tax returns, with all schedules and attachments
- A current monthly statement for every bank account, money market account, certificate of deposit, stock, bond, or investment account
- Identification of all real estate owned, the fashion in which title is held (i.e., joint tenancy, trust, etc.), along with the current mortgage balance(s), home equity loans or lines of credit, appraised value, and appraisals, if any
- Car titles, loan balances, and estimates of values, title document demonstrating the manner in which title to the vehicle is held
- Most recent statements from any retirement account, whether qualified (ERISA) or not, along with loan balances; existing projected benefit upon retirement; any waiver of interest forms for spouses post-marriage
- Jewelry and personal property appraisals (look to homeowner’s insurance policies). These include art, antiques, and collections.
- Identification of family heirlooms, particularly any gifted to the fiancée for which return is going to be provided.
- Business tax returns, profit and loss statements, balance sheets for three years. Copy of the owner’s stock certificate, or some similar designation of ownership percentage/interest, or business valuations, if any.
- Life insurance policies, including loan information.
- Monthly statement from credit card, installment, or other debts and obligations.
If there was a prior marriage, the judgment for dissolution of marriage, marital settlement agreement, and parenting agreement from any prior marriage that details each spouses’ financial obligations.