“To keep your marriage brimming, with love in the wedding cup, whenever you're wrong admit it; whenever you're right, shut up.” Or so says American poet Ogden Nash. It's true, love is a funny thing. Finding that special someone to share the rest of your life with is one of the best gifts, but life is long, and sometimes things just don't work out. So, what can you do to protect yourself? What can you do to protect your family? One commonly used approach involves a premarital agreement, commonly called a “prenup.” Of course, just the word “prenup” is enough to inject fear and loathing into an otherwise joyous occasion. A prenup often means having an uncomfortable and awkward conversation with your prospective spouse. Who wants to talk money when there's cake to be eaten? But having that discussion before things fall apart can truly make it easier on everyone.
A prenup is, in its simplest terms, an agreement between two prospective spouses made in contemplation of marriage. It is not effective, however, until the actual marriage occurs. Arizona has a set of default rules that define how property and debt are divided between two spouses. A prenup allows prospective spouses to choose their own rules and guidelines in the event the marriage ends and not get forced into using the default rules. In Arizona, a prenup must be in writing and must be signed by both parties. But be careful, it's never that easy. If you want to truly protect yourself and your family in the event of divorce or even death of one spouse, then the terms of a prenup should be carefully considered by both prospective spouses. Here are a few Do's and Don'ts when it comes to making a prenup.
- Define property rights. Arizona is a community property state, which means that in the event of a divorce, couples must equally divide their property and their debt. A properly drafted prenuptial agreement allows couples to override Arizona law and specify their assets, liabilities, and income as either separate or community (aka marital) property.
- Define spousal maintenance. Spousal maintenance is more commonly referred to as “alimony.” Couples can and should use a prenup to clearly define the amount of spousal maintenance one spouse will receive and the spouse will pay. Importantly, Arizona allows spouses to waive their rights to spousal support under the law. Yet, the prenup must adhere to certain legal requirements or risk being challenged in court. Most challenges to prenuptial agreements concern spousal support.
- Define inheritance rights in the event of death of a spouse. Arizona law allows spouses to waive or designate inheritance rights in the event of one spouse's death. It is strongly recommended that this be done in conjunction with making of an overall estate plan. While the laws varies depending on the family dynamics, a surviving spouse has guaranteed rights to certain assets from the deceased spouse's estate unless both parties agree otherwise in writing, such as with a prenup. This can be vitally important in the event one or both spouses have children from a previous relationship.
- Hide or misrepresent assets. Sometimes a spouse enters a marriage and attempts to hide, minimize, or otherwise misrepresent assets. Arizona law requires full disclosure of each spouses' finances, including assets and liabilities. This way everyone can make a well-informed decision about whether to sign the prenup as written, to ask for revisions, or refuse to sign it altogether. Without this full disclosure, prenups are unenforceable by the court.
- Have only one lawyer involved. It's true – lawyers do not come cheaper by the pair. However, it can be vitally important that each prospective spouse have their own independent counsel. So, like it or not, two lawyers should be involved. If the court is asked to evaluate whether a prenup is enforceable, one condition the court will consider is whether the prospective spouses fully understood what they were getting, and more importantly, what they were giving up in signing the prenup. If the court determines this condition was not met, it may invalidate the agreement altogether.
- Try to limit child support and/or child custody. Parents have a legal obligation to support their minor children financially. Period. Under no circumstances can a prenup attempt to limit or adversely impact child support in the event of a legal separation or divorce. Similarly, a judge will not look favorably on a prenup that attempts to limit child custody rights.
Marriage, like love, is a funny thing. Regardless, learning to laugh can certainly help when things get rough. But, a properly drafted and executed prenup can help ensure you are protected no matter what.