Oftentimes couples will come to us looking for a prenuptial agreement, which is a written contract between a couple who are going to be married, spelling out what will happen in certain circumstances. A typical prenuptial agreement includes:
- How the parties will share expenses. Will they pool all their income, and agree on how it is spent? Will they divide the expenses and each pay half, with each of them free to spend the rest however he or she likes? Will one of them pay all of the living expenses and the rest be invested?
- What happens in the event of divorce. Will premarital or inherited assets be treated as the separate property of that party? Will alimony be paid? Will each of the parties be entitled to keep his or her own retirement accounts?
- What happens on the death of a spouse. Will the surviving spouse be entitled to inherit everything? Will certain assets be preserved for the deceased spouse's other family members? Will the parties agree to have certain provisions in their wills?
The Alaska Supreme Court has said that premarital agreements of this sort will be considered valid, if they meet certain requirements. If you are considering a prenuptial agreement, there are certain things you need to do in order to make sure it will hold up in court:
- The agreement must be objectively fair. If it looks like one of the parties is being taken advantage of, chances are a judge will refuse to enforce it.
- There must be full disclosure of the financial circumstances of each of the parties.
- The agreement should avoid putting either party into a situation in which he or she may end up on public assistance, as the Alaska Supreme Court has specifically mentioned this as a possible reason for throwing out a prenuptial agreement.
- Each of the parties should have a separate attorney. One of the attorneys will draft the agreement, and the other will review it to make sure it is fair to the other party. Often there are multiple drafts sent back and forth as the attorneys negotiate the fine points.
- Don't wait until the last minute! It is quite common for people to come to attorneys in the last few weeks before the wedding, and want a prenuptial agreement drafted. A prenup is a detailed, complicated document and can take time to do right. If the parties are still negotiating in the last days before the wedding, one of them may feel pressured to accept an agreement which he or she does not really want, which increases the possibility that a judge will throw the agreement out.
- Follow-up is critical. The best prenuptial agreement in the world is useless if the parties don't follow it after the wedding. Unfortunately some of these agreements are so long and filled with legalese that the parties can't possibly follow the terms, because they do not understand them. If you have a prenuptial agreement, you should read it carefully and make sure you understand all of the terms, and then make sure you act accordingly.
Prenuptial agreements are useful, especially for people who have separate assets, or anticipate a large inheritance, or have children from prior relationships. However they have to be done right, otherwise they are not only worthless, but may actually make things worse than they would have been without one. If you are interested in a prenuptial agreement, please contact us for an appointment.
