Should I Create a Prenuptial Agreement?
No one longs to hear the words “prenuptial agreement” as they plan their wedding. However, prenups can be helpful to provide clear answers regarding what will happen in the event that you separate from your spouse, or if one spouse dies.
Provide security to each party
While prenuptial agreements are generally seen as a way to protect the wealthier spouse from losing too much in the event of a divorce, a prenuptial agreement can provide security to both spouses. A prenuptial agreement can guarantee how much a spouse will receive in spousal support in the event of a divorce. The agreement can provide that, should a spouse elect to leave the work force to stay home with children, that spouse will be appropriately cared for in the event of a split. A prenuptial agreement can outline which property should be separate and which marital, and how marital assets will be split in the event of divorce.
Know that your intended heirs will receive their inheritance
Contrary to popular belief, prenups are not only useful in case of divorce. Prenuptial agreements can be particularly helpful to ensure that your estate is distributed according to your wishes upon your death. Under the laws of Virginia, a widowed spouse can choose to take either the portion of the estate explicitly left to them in the will, or to take a spousal “elective share.” This may end up being greater than the amount you wished to leave to your spouse, and interfere with the inheritance you intended for your children. Specifying in a prenuptial agreement that each spouse waives the right to an elective share of the other spouse’s estate will allow you to avoid this issue. This can be especially helpful in cases of a second marriage, where one or both spouses has children from a previous relationship.
Ensure your agreement is reliable
The first step you can take in preparing to create a prenuptial agreement is to create a list of your financial assets and liabilities. Under Virginia law, each future spouse is entitled to receive a “reasonable disclosure” of the property owned, and debts owed, by the other spouse. If that disclosure isn’t made, or was inaccurate, the agreement could later be voided by one of the parties. Make sure that you create a prenuptial agreement sufficiently in advance of your wedding, so that each party has time to consider the agreement carefully and determine whether it’s in their best interests to sign it. If an agreement is forced on one of the future spouses too soon before the wedding, possibly along with threats that the wedding can’t go forward unless the agreement is signed, then a court might later find that there was undue pressure to sign, thus invalidating the agreement. Most importantly, find a family law attorney whom you can trust to create a reliable agreement that takes into account both spouses’ interests.
What CAN be Included in a Prenuptial Agreement?
Premarital agreements are used to settle various financial issues between the couple. These may include:
Determining which Assets are Marital Property and Which Assets are Separate
During a Virginia divorce, marital assets are divided based on the Commonwealth’s equitable distribution laws. A prenuptial agreement can specify which assets will be considered marital and how those assets will be distributed.
Protections against Debts Belonging to One of the Spouses
If one spouse is bringing a significant amount of debt into a marriage, the other spouse could also end up on the hook for this debt. A premarital agreement can be used to limit the non-owing spouse’s debt liability.
Preservation of Family Businesses and other Family Property
Maybe one of the spouses is a part owner of a family business with siblings and/or parents. Or maybe they own a valuable piece of real estate together, such as a family vacation home. A premarital agreement can be used to ensure that this property stays in the family.
Preservation of Inheritance for Existing Children
As we touched on earlier, a prenuptial agreement can be used to protect the inheritance of children from a previous relationship in the event that their parent dies.
In addition to a child’s inheritance, a premarital agreement can address the distribution of the rest of the decedent’s property if one of the spouses dies, and it can be used in conjunction with a will, trust, living will, and other estate planning tools.
Waiver of Alimony
A spouse can waive his/her right to alimony in a prenuptial agreement. Many states do not allow this, but Virginia does as long as the agreement is voluntary and impartial.
What CANNOT be Included in a Prenuptial Agreement?
Although most financial matters can be addressed in a premarital agreement, there are some that cannot. Here are some areas that are beyond the scope of a prenuptial agreement:
Provisions Regarding Child Support and Child Custody that Violate the Law or Public Policy
A prenup can only include any provisions dealing with child support, child custody, and visitation that are not illegal or go against public policy. This essentially means that provisions in this area must be in-keeping with the child’s best interests.
For example, you are free to include provisions that go above and beyond the state child support guidelines, such as agreeing to pay tuition for private school and college. And although provisions regarding children are subject to review and possible rejection by the court, one of the goals is to avoid having to go to court, particularly when the terms are fair and generous.
Incentives for Divorce
If there are any provisions within the agreement that tend to incentivize or encourage a divorce, it is likely that a court will strike them.
Provisions about Personal Matters
A premarital agreement cannot be used to address personal issues that are not related to your finances. For example, you cannot use the agreement to spell out who is responsible for what household chores or where the couple will spend their summer vacation.
Provisions That are Illegal
This is pretty self-explanatory, any provision that violates the law will be struck from the premarital agreement, and the inclusion of such provisions could put the validity of the entire agreement in jeopardy.
If you’d like to speak to an experienced Virginia family law attorney about whether a prenuptial agreement is right for you and your future spouse, contact the Charlottesville law firm of Buck, Toscano, & Tereskerz for a consultation, at 434-977-7977.