There are many details to think about when you are planning your wedding; however, a prenuptial agreement (also known as a prenuptial agreement) should not be left to the last minute. Here is a list of things to think about before you talk to your fiancé and her attorney about a prenuptial agreement. If it often helps to know your own feelings about these issues before you decide to talk to your fiancé about them:
Premarital assets and debts:
You’ll want to make a comprehensive list of your assets and debts that are currently in your name. It is required for your prenuptial agreement, and it is also a good practice to be open and direct about financial issues with your new marriage partner. Here are some questions to think about when thinking about assets and premarital debt:
o Once you’ve made your list, how will you handle assets and premarital debt in the event of a divorce?
o Will the assets and debts remain separate property, meaning they will revert to the person who amassed them before the marriage?
o Or will your separate property be mixed with your marital property?
o What if one person’s premarital property is used to pay off the other person’s premarital debts (ie, school loans)?
o Will the paying party need to be reimbursed or is it a gift?
o What if you use prenuptial property to buy a house that you will own together?
o Will the paying party need to be reimbursed or is it a gift?
Marital Property:
Marital property describes the assets and debts that you will accumulate together once you are married. Here are some questions to think about regarding marital property:
o How will you manage the income and assets you accumulate together?
o Will they be joint and 50/50?
o Will you use another arrangement?
Asset and Income Management:
People tend to be spenders or savers. Since opposites tend to attract, it is typical for a couple to have very different money styles. That can work very well, as long as you each know each other’s priorities and goals, and as long as you can find a way to meet each other’s needs. For example, a partner might be concerned about retirement savings and future security. The other partner may feel that the money should be enjoyed and spent on things like vacations and luxury vehicles as part of a life well lived. Can these styles be reconciled? The answer is yes, of course, as long as you have a plan for what will be set aside for retirement and what will be available to enjoy. Some questions to ask yourself regarding asset and income management are:
o Who will make the financial decisions and manage the checkbook?
o Will they do it together or will one person be the main financial manager?
o What about the big expenses?
o Does your spouse need to ask you before buying that plasma TV or that designer dress?
o How will household bills be paid and whose responsibility is it to pay them?
o Will you have joint bank accounts, separate bank accounts, or both?
o Do you have similar money styles?
o Regarding the debt?
o Regarding savings?
o Did you discuss your long-term financial goals and how each of you will contribute?
o What about retirement savings?
o Will the authority to make decisions be different for assets or premarital debts that belonged to one of you before the marriage?
o If one of you owes spousal support or child support from a previous marriage, how will those payments be made?
o From common property or income, or from separate property?
o In the event of separation or divorce, would the other spouse want or expect a refund for these payments made during the marriage?
o What if the obligation is informal, like voluntarily paying for an adult child’s college?
Credit and Debt:
Have you seen each other’s credit reports? Now might be a good time to have a serious conversation about credit scores and priorities regarding paying off old debts or accumulating new debt.
o Is either of you likely to take on too much debt? Or refuse to borrow no matter how much sense it makes to the other person?
o Consider joint credit issues, as well as things like pledging your home as collateral for a business, or using a home equity line of credit to finance a business or bail you out in an economic downturn.
o Do any of you have bad credit? Will you and your spouse co-sign new credit obligations?
o Are back taxes owed? If so, how will they be paid? Jointly, individually and from which checkbook?
Labor:
What are your views on non-monetary contributions, such as child rearing or household management? Most states recognize these types of contributions during marriage, but it’s important that you share your attitude and know your fiancé’s attitude about these types of roles in marriage. Here are some questions to ponder about the job:
o What is your expectation about the types of jobs and income each will have?
o Do any of you anticipate a career change at some point?
o Some jobs are riskier than others, such as firefighters, military personnel, and stuntmen. Changing your job can affect the other spouse, especially if he or she becomes disabled due to a work injury.
o Other jobs pay less but are very personally rewarding. Teachers and nonprofit positions generally don’t pay very well. How would you feel if your spouse changed careers?
o When do you plan to retire? As soon as possible, or do you plan to work as long as you can?
o Do you anticipate that both of you will continue to work after having children? Or would any of you stay home? For how long?
o How will you handle moving decisions?
o What if one of you was transferred by your job and had to move to another state?
o What if one of you wanted to get closer to extended family after having children?
Spousal Support and/or Alimony:
How do you feel about spousal support? In most states, the rights to claim child support belong to both the husband and the wife. You don’t have to address this in your agreement if you don’t want to, but it makes sense to talk about it. Some topics you may want to talk about are:
o Will there be any limitations on the amount, terms, and duration of support?
o Do you want to establish spousal support or alimony terms that are different from what your state law allows?
o Do you both expect to work and contribute to the household?
o What are those expectations?
o Even if you think you agree, it’s worth making sure you’re both going into marriage with the same income and job expectations.
o Would there be any circumstance that causes one of the members of the couple not to work, such as a health problem or the birth of a child? What about going back to school?
o Does that change your mind about how you feel about spousal support or alimony?
Families gifts:
Sometimes a group of parents or relatives give a couple a large monetary gift, a loan, or a down payment on the house. It is important to make it clear what kind of gift this is. Here are some questions to address in this situation:
o Would the family gift be marital or community property, or property of the spouse whose family gave the money?
o If it is a loan, who would be responsible for repaying it, how and when?
o How formal will you be with the documentation if it is a loan?
Being clear with each other and with your own family will help you avoid conflict in the future.
Tax:
Once you’re married, your finances will be intertwined for tax purposes, unless you agree otherwise as part of your prenuptial agreement. It is important to be clear about your attitudes and opinions regarding paying taxes. Some questions you might want to ask yourself:
o Will you file separate taxes or joint taxes?
o Do any of the partners have questionable tax deductions or a cheerful attitude towards filing taxes? Does that concern the other partner?
o Is there old tax debt?
o Who will be responsible for that debt, knowing that a refund while married could be garnished to pay off an old premarital debt?
Higher Education:
Sometimes one spouse will want or need to go back to school. This situation may leave one spouse to support the other while he or she obtains a title. In this situation, it is important to clearly communicate with each other the expectations of each party. Some helpful questions to ask:
o Will either of you attend college, graduate school, or professional school during the marriage?
o Will one of you have to support the other while he or she is at school?
o How will you deal with this sacrifice made by one person if the marriage doesn’t work out?
o How will student loans be repaid?
o Would income and earnings expectations change if a person wants to go back to school after being married for several years?
Duration of the Premarital Agreement:
It is up to you and your spouse to decide how long a prenuptial agreement can remain in force. Couples may wonder if the agreement will last forever or if it will expire at some point:
o Does having children change your mind about how your arrangement should work?
o What about being married 10 years, 20, 30 or 50 years? Would the agreement expire or would it ever be renegotiated?
o If they separate, does it matter who chooses to end the marriage? Does it matter why?
o Would you like the agreement to be renegotiated at a specific time, such as 5 years after the marriage, or after the birth of the first child?
Company Ownership:
If you or your spouse own a separate business, there are special issues to consider.
o Would your prenuptial agreement include compensation for business debts and taxes–business, personal, back taxes, payroll taxes?
o Are there issues with the type of business entity, such as a subchapter S or d/b/a corporation, and how the corporate spouse determines their own income?
o Many small corporations have a lot of discretion regarding how much of the corporation’s income is taken as salary or income for the officers or employees of the corporation.
o Do you want to provide accounting books or forensic audit in case of separation or divorce?
o Do you want to agree on how much income will be contributed to the household and how much can be kept separate?
o What happens if a prenuptial business starts a new business or subsidiary after marriage?
o What if one or the other of you works for the other person in a prenuptial business? There can be many “outside the labor market” issues, so negotiating terms of employment with your spouse before joining the company can be an important step.
Fault:
Fault can be defined as who is at fault for the divorce. Guilt can be evidenced by an affair, drug or alcohol abuse, among other things. However, most state laws will consider no or little fault when dividing property or awarding spousal support in a divorce situation:
o How do you and your fiancé feel about guilt?
o Would it make any difference to you in the arrangement of your property or spousal support if you felt that one person contributed more to the breakdown of the marriage than the other?