Georgia Prenuptial and Postnuptial Agreements Blog

5 Myths About Premarital Agreements

California attorney and mediator Diana Mercer has published an excellent article (reprinted below) on a number of myths about prenuptial agreements.

Diana Mercer, Attorney-Mediator, is the founder of Peace Talks Mediation Services in Los Angeles, which mediates premarital agreements. Visit http://www.premaritalmediation.com for a free premarital agreement checklist and more information about prenups, mediation, and premarital mediation. For more information about divorce and divorce mediation, visit http://www.peace-talks.com

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Between news coverage, soap operas and family drama, we all have some preconceived notions about premarital agreements (also know as prenuptial agreements). Here are a few of the most common myths, debunked:

Myth 1: Prenuptial agreements are only for wealthy people, my fiance and I are not rich and so we don't need an agreement.

You may not be rich, but you definitely want to have a successful marriage. Having those honest discussions regarding how the two of you will approach finances will ensure that there won't be any surprises once you are married. You never want to actually need to enforce the premarital agreement, right? Talking about financial issues in advance will help insure that you handle your finances with minimal conflict during your marriage as well as in case of divorce.

Example: You may become rich in the future. Your education or ideas and talents may one day become more valuable than they are today. You need to think about how you'd want to handle the sale of a book, screenplay or song; you may also need to think about how you'd handle the division of a business in the event of a divorce.

Example: Second and third marriages can often bring conflict between children from prior relationships and new spouses. Clear discussions about finances in a divorce or premature death situation help everyone avoid conflict later.

Myth 2: Prenuptial agreements are designed to simply protect the wealthier spouse and strip the other spouse of all of his or her rights.

Fact: Prenuptial and premarital agreements should be designed to protect both spouses. Premarital agreements which are unfair and completely one-sided are probably not enforceable in court. By definition, the agreement must be fair. The basic requirements for premarital agreements to be enforceable are: signing the agreement must be voluntary, it can't be unfair when it's signed; each party needs to make a full disclosure of your assets and debts.

Premarital agreements can be designed so that everyone's needs are met.

Example: With a premarital agreement, you will know in advance how your assets and debts would be handled in the event you do not stay married. You're negotiating the property settlement while you're both in love with each other. You would not be at the mercy of your spouse's generosity or lack of generosity at the time of a divorce.

Example: If you end up needing your agreement to be enforced by the court, you'll be glad that you made it reasonable from the beginning (and therefore enforceable). For example, by providing a reasonable support structure for your spouse in the premarital agreement, in the event of a divorce, this agreement defines the support's limits, terms, amount and duration. If you left it up to a court, you would have no control over any of the terms.

Myth 3: Premarital Agreements Aren't Romantic.

Fact: Jessica Simpson didn't think they were romantic, either. And, there's nothing romantic about fighting about money once you're married because you never discussed how you'd handle your finances, either. Clearly, premarital agreements are touchy subjects, but consider this quote from the Nolo Press book Prenuptial Agreements: How to Write a Fair and Lasting Contract (Nolo Press 2004):

"While a prenuptial agreement may not seem like a very romantic project, working together to consider and choose the terms of a prenup can actually strengthen your relationship. After all, marriage is a partnership in every sense of the word. Learning how to deal respectfully and constructively with each other about finances is a benefit in itself. So even if you conclude that you don't need a prenup, using this book can help you converse with each other about the important---and sometimes challenging---financial matters that are sure to arise in the course of your marriage."

"When you marry, you make what you expect and hope will be a lifetime commitment to be there for each other in every way. Your prenup should support and reflect the spirit of partnership with which you approach your wedding vows."

Myth 4: Premarital Agreements must deal with every issue that might come up in a divorce.

Fact: You can include as many issues or as few issues as you wish. Because premarital agreements are private contracts, you can make them as detailed as you want.

Example: If the only thing you want for your premarital agreement to accomplish is to protect your pre-marital property, you can limit your premarital agreement to that issue alone.

If the only thing you want for your premarital agreement to accomplish is to outline what would happen in the event of your death, in addition to a Will or a Trust, you can limit your premarital agreement to that issue alone.

If you want your premarital agreement to cover almost every issue that might come up in a divorce except one or two issues (like spousal support, or contributions to a pension during the marriage, for example), then you can have the agreement cover everything except the issues you want to exclude.

If you want your premarital agreement to cover every issue, you can do that, too.

Myth 5: If we don't get married, my live-in mate won't have any claims to my income or property.

Fact: You could risk your income or assets by living together without marrying.

Palimony is a spousal support substitute for alimony or spousal support for people who are not married. Palimony claims are difficult to prove, but that doesn't stop some people from trying. Also, if you have an oral or written discussion about how you will own property, share income, assets, debts and so forth, it's sometimes possible to make a claim that contract law applies (as opposed to family law), and that property should be divided even if it's only in one person's name, or only one person paid the bills. There are also real estate partition laws that can dictate how property is divided, and in some cases you can even force an involuntary sale at auction.

If you are going to live together without getting married, you'll want a cohabitation agreement. It's better to decide who contributes to and owns property before you buy things rather than afterwards.

Example: Remember actor Lee Marvin (The Dirty Dozen and more than 60 other movies)? In the 1970's, his live-in girlfriend of 6 years, Michelle Triola, brought an action against him alleging that she and Lee Marvin entered into an oral agreement that during the time they lived together that they would combine their efforts and earnings and share equally the property accumulated through their individual or combined efforts, and that Michelle would be his companion, housemaker, housekeeper and cook, give up her career as an entertainer and singer, and that Lee Marvin agreed he would provide for all her financial support for the rest of her life.

After a couple of appeals, the court agreed with Michelle Triola. Lee Marvin had to pay her $104,000, which was quite a bit of money back in the 1970's. Worse still, you can imagine what he probably paid in attorneys fees to defend these claims. But that's only half the story: Michelle Triola Marvin also had an attorney who needed to be paid, too. Taken in this perspective, a premarital agreement or cohabitation agreement is a cost-effective way to handle this type of situation.

Conclusion: The truth is that a carefully crafted premarital or prenuptial agreement can cement your relationship, prompt you to have the hard discussions that engaged couples need to have, and insure that your finances are handled the way you each intend in the event you were to divorce or pass away prematurely.

Protect your assets with a prenuptial agreement

Traditional marriage vows are increasingly being revised to delete the words "till death do us part." Since almost half of all marriages end in divorce, many people who have children from a prior marriage or desire to protect assets such as ownership interests in a business choose to enter into a prenuptial agreement. Approximately 40 percent of marriages include a spouse who has been married before.

All 50 states recognize prenuptial agreements. They are simply contracts between prospective spouses entered into before the marriage that identify each spouse's separate property and define each spouse's rights in the other's property, including future earnings, during and upon termination of the marriage by divorce or death. The prenuptial agreement can waive a spouse's rights to alimony and provide for the rights of children from a prior marriage. A prenuptial agreement cannot waive rights to child support but can provide for additional support.

A business owner should include provisions in the prenuptial agreement that provide for the sale of the business from one spouse to the other. If this is not practical, then provisions should be included that cover who controls the business post-divorce. For example, a spouse can retain the right to share in the profits but give up voting rights regarding the business.

A common misconception about prenuptial agreements is that they are only for the wealthy. There are reasons other than preservation of assets and income for people to use prenuptials. A spouse may desire to provide for the care and support of children or grandchildren from a prior marriage or for needy parents. A good prenuptial agreement will allow the parties to a marriage to determine division of property, such as business ownership, in the event of a divorce, instead of a judge or jury. A common provision in prenuptial agreements is the agreement to make a will or create a trust in order to provide for the support of a spouse in lieu of alimony or division of property under the divorce laws. Another common provision in prenuptials is the agreement to make a separate buy-sell agreement regarding the sale of a business in the event of a divorce. A prenuptial agreement can also provide for the obtaining of insurance for the benefit of a spouse.

There are certain technical provisions required in Georgia. For example, the agreement should be witnessed by two persons and should be recorded with the clerk of the superior court in the county where the parties reside.

In the past, Georgia courts refused to enforce prenuptial agreements. However, in 1982 the Georgia Supreme Court recognized the increased rate of divorce and ruled that prenuptial agreements were enforceable. Since then, Georgia courts have upheld prenuptial agreements if the answer to each of the following questions is "no":

1. Was the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts? Each spouse should fully disclose his or her financial situation including assets and income. Financial statements for your business should also be disclosed. Each spouse should have a separate attorney who should sign a certificate stating that there has been full disclosure and each spouse understands the consequences of signing the agreement. It is advisable to enter into the agreement as far in advance of the marriage as possible. A prenuptial agreement entered into on the eve of the marriage could be subject to attack as being forced upon one spouse.

2. Is the agreement unconscionable? This means that if one side gets too greedy, a judge could throw the agreement out. Common sense should be the guide here. A spouse should not be left destitute. Also, make sure that only important items are covered in the agreement. For example, it is proper to discuss issues such as the religious training of children. It isn't a good idea to put more trivial items in, such as requirements that a spouse maintain a certain weight.

3. Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable? For example, a significant decline in the health of a spouse could cause a judge to void the agreement. Georgia courts are reluctant to enforce a premarital agreement that would force a spouse to apply for welfare. It's a good idea to review a prenuptial agreement every few years.

A prenuptial agreement may not be a very romantic subject to discuss prior to marriage. However, it is a valuable tool for the legal strategist who hopes for the best and prepares for the worst.

SOURCE: Atlanta Business Chronicle by Dan Kolber

What to cover in your prenup

Jeff Lalloway of the California Divorce and Family Law Blog posted a series of articles last year on what to include in a prenuptial agreement. Thanks to PrenuptialAgreements.org for its recent post alerting me to this series:

If you have smartly decided to get a prenuptial agreement before you marry, there are many areas you may want to cover. You can cover as few or as many of the items as you want. Some of the items may not be relevant to your situation. Be sure that if you follow the list, you will cover most of the key issues.

1. Decide how all of your debts will be handled. This includes those debts incurred before you are married and those incurred after you are married.

2. Make sure you disclose all of your assets, liabilities, sources of income, and any other potential future assets, such as gifts or inheritances.

3. Should you divorce or die, decide who will get your primary residence or any vacation  homes.

4. Determine what will happen to any assets or property you bring to your marriage. Normally, this will be separate property. But you need to agree with your soon-to-be, what will happen to any post-marriage appreciation, earnings, or proceeds of that property.

5. Figure out what will happen, if you divorce or die, to any assets or property you acquire after you get married.

If you have smartly decided to get a prenuptial agreement before you marry, there are many areas you may want to cover. You can cover as few or as many of the items as you want. Some of the items may not be relevant to your situation. Be sure that if you follow the list, you will cover most of the key issues.

1. Decide how all of your debts will be handled. This includes those debts incurred before you are married and those incurred after you are married.

2. Make sure you disclose all of your assets, liabilities, sources of income, and any other potential future assets, such as gifts or inheritances.

3. Should you divorce or die, decide who will get your primary residence or any vacation  homes.

4. Determine what will happen to any assets or property you bring to your marriage. Normally, this will be separate property. But you need to agree with your soon-to-be, what will happen to any post-marriage appreciation, earnings, or proceeds of that property.

5. Figure out what will happen, if you divorce or die, to any assets or property you acquire after you get married.

Georgia Prenuptial Agreement FAQ

What is a prenuptial agreement?
A prenuptial agreement is a contract entered into by two people who are to be married. The purpose of a Prenuptial Agreement is to set forth certain rights for each party in the event of a divorce. Sometimes provisions for property distribution upon death are included, but such provisions are better placed in a Last Will and Testament.

Why do people get prenuptial agreements?
The most common reason for a Prenuptial Agreement is to protect property that one or both parties owned before the marriage from becoming divided upon divorce.

What is an "antenuptial agreement" or a "premarital agreement"?
These are all synonyms for a Prenuptial Agreement. They all refer to the same concept, the same type of document.

Can I sign a prenuptial or post-nuptial agreement after I get married?
Yes. It would be called a "Post-Nuptial Agreement" and Georgia law does currently recognize such documents.

Does everyone getting married need a Prenuptial Agreement?
Prenuptial agreements are not for everyone. Prenuptial Agreements are generally utilized by parties who have considerable assets prior to the marriage and want to keep those assets separate or those who have been through a divorce and want to minimize the cost and time if they unfortunately go through another divorce. Without a prenuptial agreement, it is possible in certain circumstances for separate or premarital property to lose its separate quality and it can then become marital property or can be used to pay alimony.

Can a Prenuptial Agreement cover alimony?
Sometimes, Prenuptial Agreements are used to limit, establish or eliminate alimony in the event of a divorce.

Can a Prenuptial Agreement affect child custody or child support?
Generally speaking, Prenuptial Agreements do not deal with child custody or child support. Judges make the final decision on custody, and parties cannot pre-determine child support because the law regards child support as being a right for a child, and parties cannot override that right. Custody also must be determined AT THE TIME OF THE DISPUTE since no one can predict all the circumstances which will exist at the time of a custody dispute.

I already have a house and property and I want to protect it. Will a Prenuptial Agreement help?
Yes. If you own property before the marriage and you want to protect that property in the event of divorce, a well drafted and enforceable Prenuptial Agreement can make it easier for you to keep that property in the event of a divorce.

Do I need my own lawyer if my fiancé's attorney prepared a Prenuptial Agreement?
Yes. It is important to have your own counsel explain fully the proposed Agreement and the potential pitfalls that could affect you in the event of a divorce. Your attorney can suggest changes to the proposed Agreement that can dramatically affect to your benefit what happens in the event of a divorce.

Does my fiancé need their own lawyer if my attorney prepares a Prenuptial Agreement?
Yes. Not only does it make it more fair (each side has independent advice), it also makes it more enforceable since neither can later argue that they did not understand what they were signing.

Even if my spouse and I have a Prenuptial Agreement, can we change the terms later?
Yes. You can "re-up the Prenup" by having your attorney prepare an addendum to the original Agreement. After that has been properly signed and witnessed, it becomes a part of the original Agreement and will reflect the new terms you have changed.

What if my spouse and I decide, after years of marriage, that we no longer want to have the Prenuptial Agreement in effect?
Most well-written Prenuptial Agreements will contain a provision that dictates exactly how to cancel the Prenuptial Agreement so that it is no longer in effect. Further, your attorney can build in Asunset@ provisions to the original Prenuptial Agreement that provide for its automatic cancellation after an agreed-upon amount of years.

Will a Prenuptial Agreement determine how my spouse's property is distributed after his/her death?
Not unless you insist on such a provision. It is strongly recommended that you each have a Last Will and Testament to cover what happens to property upon the death of a spouse. Generally, a good Prenuptial Agreement will contain language that says that either of you are free to give or will away any property you want to the other party.

Are Prenuptial Agreements expensive?
As is in most cases, the cost is based on how long it takes your attorney to prepare the Agreement. Prenuptial Agreements take a lot of time to prepare since they are an attempt to resolve disputes which have not yet occurred and which are based upon factors which do not yet exist (changes in income, assets, the birth of children, etc.) In some limited cases, Prenuptial Agreements can be prepared on a flat fee basis. See your attorney for more complete fee and cost information.

SOURCE: DivorceNet

SOURCE FOR POST: Georgia Family Law Blog

What is a prenuptial agreement?
A prenuptial agreement is a contract entered into by two people who are to be married. The purpose of a Prenuptial Agreement is to set forth certain rights for each party in the event of a divorce. Sometimes provisions for property distribution upon death are included, but such provisions are better placed in a Last Will and Testament.

Why do people get prenuptial agreements?
The most common reason for a Prenuptial Agreement is to protect property that one or both parties owned before the marriage from becoming divided upon divorce.

What is an "antenuptial agreement" or a "premarital agreement"?
These are all synonyms for a Prenuptial Agreement. They all refer to the same concept, the same type of document.

Can I sign a prenuptial or post-nuptial agreement after I get married?
Yes. It would be called a "Post-Nuptial Agreement" and Georgia law does currently recognize such documents.

Does everyone getting married need a Prenuptial Agreement?
Prenuptial agreements are not for everyone. Prenuptial Agreements are generally utilized by parties who have considerable assets prior to the marriage and want to keep those assets separate or those who have been through a divorce and want to minimize the cost and time if they unfortunately go through another divorce. Without a prenuptial agreement, it is possible in certain circumstances for separate or premarital property to lose its separate quality and it can then become marital property or can be used to pay alimony.

Can a Prenuptial Agreement cover alimony?
Sometimes, Prenuptial Agreements are used to limit, establish or eliminate alimony in the event of a divorce.

Can a Prenuptial Agreement affect child custody or child support?
Generally speaking, Prenuptial Agreements do not deal with child custody or child support. Judges make the final decision on custody, and parties cannot pre-determine child support because the law regards child support as being a right for a child, and parties cannot override that right. Custody also must be determined AT THE TIME OF THE DISPUTE since no one can predict all the circumstances which will exist at the time of a custody dispute.

I already have a house and property and I want to protect it. Will a Prenuptial Agreement help?
Yes. If you own property before the marriage and you want to protect that property in the event of divorce, a well drafted and enforceable Prenuptial Agreement can make it easier for you to keep that property in the event of a divorce.

Do I need my own lawyer if my fiancé's attorney prepared a Prenuptial Agreement?
Yes. It is important to have your own counsel explain fully the proposed Agreement and the potential pitfalls that could affect you in the event of a divorce. Your attorney can suggest changes to the proposed Agreement that can dramatically affect to your benefit what happens in the event of a divorce.

Does my fiancé need their own lawyer if my attorney prepares a Prenuptial Agreement?
Yes. Not only does it make it more fair (each side has independent advice), it also makes it more enforceable since neither can later argue that they did not understand what they were signing.

Even if my spouse and I have a Prenuptial Agreement, can we change the terms later?
Yes. You can "re-up the Prenup" by having your attorney prepare an addendum to the original Agreement. After that has been properly signed and witnessed, it becomes a part of the original Agreement and will reflect the new terms you have changed.

What if my spouse and I decide, after years of marriage, that we no longer want to have the Prenuptial Agreement in effect?
Most well-written Prenuptial Agreements will contain a provision that dictates exactly how to cancel the Prenuptial Agreement so that it is no longer in effect. Further, your attorney can build in Asunset@ provisions to the original Prenuptial Agreement that provide for its automatic cancellation after an agreed-upon amount of years.

Will a Prenuptial Agreement determine how my spouse's property is distributed after his/her death?
Not unless you insist on such a provision. It is strongly recommended that you each have a Last Will and Testament to cover what happens to property upon the death of a spouse. Generally, a good Prenuptial Agreement will contain language that says that either of you are free to give or will away any property you want to the other party.

Are Prenuptial Agreements expensive?
As is in most cases, the cost is based on how long it takes your attorney to prepare the Agreement. Prenuptial Agreements take a lot of time to prepare since they are an attempt to resolve disputes which have not yet occurred and which are based upon factors which do not yet exist (changes in income, assets, the birth of children, etc.) In some limited cases, Prenuptial Agreements can be prepared on a flat fee basis. See your attorney for more complete fee and cost information.

SOURCE: DivorceNet

SOURCE FOR POST: Georgia Family Law Blog

Is a Prenuptial Agreement Right for You?

These steps will help you decide whether a prenuptial agreement makes sense for you.

Whether to have a prenup is as personal and unique a decision as whether to marry in the first place. Here are a couple of things you can do to figure out whether a prenup is what you need.

Consider the Pros and Cons

Before getting to the specifics of your own situation, it can be helpful to look at the general pros and cons of making a prenup. We'll look at the good news first, then a few downsides.

Prenup Benefits

Making a prenup can:

• protect your separate property
• support your estate plan
• define what property is considered marital property or community property
• reduce conflicts and save money if you divorce
• clarify special agreements between you, and
• establish procedures and ground rules for deciding future matters.

These points are discussed in more detail in What You Can (and Can't) Do With a Prenup.

In addition, creating a prenup may actually strengthen your relationship. While people often imagine that negotiating a prenup is potentially divisive, communicating about money matters can actually improve the quality of your relationship and support good communication in your marriage. Even if you don't end up signing a written agreement, just sitting down and hashing out the basics about money and property can eliminate misunderstandings that might otherwise create conflict. Remember that sooner or later you and your intended will be talking about money. If you think you can handle it, most psychologists and legal experts would tell you there's no time like the present.

Disadvantages of a Prenup

While there is a lot to be said for a carefully considered, clearly written prenup, there are some downsides to consider.

It's not romantic. Let's face it, a prenup is not romantic. Being engaged conjures up images of candlelit dinners and walks in the moonlight. Although marriage is a financial partnership as well as a romantic one, if you feel that discussing something as mundane as property and finances, as well as the possibility of divorce, will mar an otherwise beautiful time of your lives, you may not be candidates for a prenup.

The time may not be right. The need for a prenup is partly a question of timing. The issues covered in a prenup will probably arise sooner or later in your marriage: money management, property rights, responsibility for debts, estate planning. And if your marriage doesn't work out, you'll certainly need to deal with divorce decisions.

But making a prenup forces you to confront many of these issues now, at a time when your relationship may still be new and untested. Discussing what goes into a prenup could be unpleasant and stressful, leaving one of your with bad feelings about the relationship. (If now is not the time to make a written agreement, you may be able to make a contract after you marry (a "postnup"); but be advised that postnups have their own disadvantages, including stricter legal rules.)

State law may protect you without a prenup. The laws of your state may do a fine job of accomplishing what you want. For example, you may live in a community property state where assets owned before marriage are separate property and those accumulated during marriage are community property that is owned fifty-fifty. If this is essentially what you would want in your prenup, or maybe even better than what you expected, why go through the work of negotiating a prenup? Still, you'll want to be sure that you're not facing any special circumstances where your state law is unclear. Proceed to the next step and take a careful look at your situation.