Prenuptial agreements are more common than ever. Keeping a prenup legally binding, however, may be a bit trickier than you think. Steven Spielberg and Amy Irving wrote their prenup on the back of a cocktail napkin. It didn’t hold water in court.
You can lose your prenup’s intended protections if you don’t follow the terms – including how you manage your finances. I’ve seen several recent cases where protections have become nullified by poor stewardship.
The purpose of a prenuptial agreement is to protect premarital assets, and sometimes even assets accumulated during the marriage, from division in the event of divorce or death.
Top 4 Reasons For Creating A Prenup:
- Greater possibility of divorce due to soaring divorce rates
- Parenting and decision-making for children who exist prior to the marriage
- Significant pre-marital assets to protect separately
- Different beliefs about the accumulation and use of assets by spouses
Your primary prenup goal might be to avoid division of protected assets with your ex-spouse. A prenup can preserve assets for the spouse’s children from a previous relationship, or return inherited family assets back to the family, if a spouse dies.
If you’ve completed your education, or own a business, you may feel that the fruits of your labor should be retained in the event of divorce — or go to your heirs if you die.
A prenup is a living document that shouldn’t be shelved or forgotten about until a time of divorce or death.
“Always consider your prenup
whenever you make financial transactions during your marriage.”
The terms of your prenuptial agreement must be legally implemented if you are creating an estate plan, investing, making purchases or selling assets during your marriage. Basically, whenever there is a significant transaction, make sure that the prenup is followed and updated accordingly.
Who Owns The Garage?
In a recent case, a husband built a garage on his wife’s property, but failed to put documents in place to protect his interests in the property. He lost the value of the garage in the divorce. The unquestionable intent of the couple’s prenup was to protect the husband’s separate investment in the wife’s property.
The court, however, was unable to enforce that protection because he failed to properly protect his interests in the garage. He perfected his interest in her property, but failed to address it in the subsequent deed to the wife’s children.
To fulfill the goals of your prenuptial agreement, pay careful attention to the terms when you make transactions throughout your marriage. Here are eight of the most important to follow:
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Have estate planning documents set-up to implement the prenup terms
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Sign proper beneficiary designation forms in advance
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Hold title to non-marital assets in one spouse’s name alone, not jointly
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Don’t flow non-marital assets through a joint accounts
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Document real estate transactions carefully
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Retain proof of payments and transactions made, as required by the prenup
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Keep the signed original prenup in a safe place
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Legally document any transactions where a spouse agrees to waive rights related to assets that he/she previously wanted to protect through the prenup
If you have a prenup, periodically review it, along with any transactions, with your attorney to ensure that the terms of the prenup haven’t been violated. Your attorney can tell you if all of your prenup goals are preserved and protected. You may even want to contact your attorney for guidance before conducting financial or real estate transactions.
Strauss Troy’s Family Law attorneys frequently work with clients to help them prepare prenuptial agreements. We also handle transactions for parties who already have prenups. Our Domestic Relations | Family Law practice includes collaborative law; mediation; negotiation; complex divorce litigation; dissolution, child custody and support matters (both pre and post decree). Several of our domestic relations attorneys are trained mediators of domestic and family issues.