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PRENUPTIAL AGREEMENTS

By Henry S. Gornbein

Many people contemplating remarriage, or in some instances, a first marriage, are looking into many of the financial aspects as well as the romantic. If you plan to formalize a relationship through marriage and have children to protect from a prior marriage as well as property, a prenuptial agreement, technically known as an antenuptial agreement, can be very helpful. In the past, many states did not recognize prenuptial and antenuptial agreements, arguing that they were anti-marriage. In some instances they were recognized in the event of death but not divorce. The current trend is that antenuptial agreements are being recognized in all circumstances. I offer some words of caution, however. In my practice, I have seen a number of outcomes when couples have come to me to form a premarital agreement. Some have decided to go forward without one. Others, disagreeing on whether or not to use one, decided to cancel the engagement altogether.

In order for an antenuptial agreement to be valid, the following requirements must be met (I am using Michigan as an example, but requirements are similar in other states):
The agreement must be in writing;
It must be voluntarily entered into without any fraud, mistake or duress; thus, the situation of the multimillionaire handing his fiancee an agreement and saying "Darling, don't worry, just sign this" as they are about to walk down the aisle could very well be thrown out, due to duress or fraud.
The parties must be represented by independent and effective legal counsel;
The obligations, rights and alternatives must be explained to each party;
There must be a full and fair accounting and complete disclosure of each party's assets, liabilities, and income. I normally attach an exhibit listing all assets and liabilities of both the prospective husband and prospective wife so that everything is clearly set out.
The agreement is to be fair and not unconscionable when signed.
In counseling people about an ante or prenuptial agreement, I raise several other issues. These include how to deal with existing assets. Normally, they are kept out of the marriage with the understanding that any assets brought into the marriage by the husband will go to his children from a prior marriage, and any assets brought in by the wife will go to her children from a prior marriage. In some instances, one party might have a great deal of property and the other very little, and it is recommended that, over a period of years, some of the premarital property will be shared in the event that the marriage lasts for at least several years. Other issues include how the parties are to share obligations and living expenses, whether or not all property acquired during the marriage will be owned or shared, or who will contribute to the acquisition costs and costs of maintaining property should it be purchased. What portion, if any, of the wealthier person's property will go to the person who does not have very much in the event of divorce or death should be discussed. In addition, the question can arise whether a specific amount of property going to the other spouse should be increased during the marriage to cover inflation and cost of living as the marriage becomes longer. Also, an inheritance during the marriage should be addressed. Often, the inheritance should be kept separate from the marital estate and should only go to each party's heirs from a prior marriage.

These are all important considerations and should be thought about very carefully and spelled out in the agreement to ensure fairness to both individuals. They are not romantic, but it should be remembered that romance is only one part of the equation in a successful remarriage. I will never forget the situation I had when a man came to me several years ago saying that he was very much in love and planning to get married. He wanted an antenuptial agreement. I asked him if he had discussed it with his fiancee, and he said "no." He then asked me to draw up the agreement. I did so, and he discussed it with his fiancee who told him "no" and the marriage was off.

Copyright 1995 by Henry S Gornbein

Posted on Saturday, April 7, 2007 at 12:20PM by Registered CommenterSite Administrator in | Comments Off

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