Defining a Prenuptial Agreement
A prenuptial agreement (or "premarital" agreement as it is also known) is a set of conditions that spouses-to-be enter into prior to their marriage. The agreement is essentially a contract that establishes the sharing of assets and debts if the marriage ever ends in separation or divorce. It can protect an inheritance, the value of any pre-marital property, or the interest in a privately held business . For second or more marriages it is especially important for the protection of children and family assets.
The type of issues to be discussed in a prenuptial agreement depend on each individual couple and their particular circumstances, but generally speaking, prenuptial agreements typically address the following issues:
In New Jersey, a prenuptial agreement has to be "fair" – it has to be fair at the time that you sign it and it has to be fair at the time an action is filed for divorce.
Reasons to Hire a Lawyer to Draft a Prenuptial Agreement
The drafting of the prenuptial agreement is an important legal process and for this reason, each party will need to retain your own independent lawyer. The negotiating of the agreement will highlight areas of financial concern, as will the compulsory exchange of full and frank disclosure of assets, debts and income.
The couple’s lawyer is there to ensure the contract is fair to his or her client. A party’s lawyer will also ensure that the following factors are addressed:
- The agreement is not unfair (there is a presumption that agreements are fair, but a Court can make a finding that the agreement is unfair eg because of the difference of the parties’ bargaining power);
- The agreement protects any rights the parties intend to create with respect to property (for example, pre-existing superannuation rights);
- Protects the parties’ rights to their superannuation fund;
- Protects assets held by family trust;
- Provides the party with information about the financial circumstances of the party so that they make a fully informed decision; and
- The agreement provides for appropriate spousal maintenance provisions so that if the need arises, a person can receive some financial assistance (eg because of illness or injury).
It is neither unusual nor inappropriate for one party to have more bargaining power in relation to the agreement. The Court does not seek to overturn an agreement simply because of that imbalance. Each party might have their own accountant or valuator to make a financial assessment. The lawyer will share their expertise, and not other experts who do not have that expertise.
The drafting of a prenuptial agreement is an investment in the future. It provides peace of mind that the parties’ interests are protected, and it helps to ensure that marriage is entered into with both parties fully informed of their legal and financial position.
Essential Qualities When Choosing a Lawyer to Draft a Prenuptial Agreement
When choosing a lawyer, it is important that you look for someone who specializes in the laws of prenuptial agreements. Many people do not realize that there is a very specific set of rules governing the enforceability of these contracts. Your California family law attorney should be well-versed in case law, such as In re Marriage of Bonds and In re Marriage of Dawley. He or she should also fully comprehend the Uniform Premarital Agreement Act (Family Code sections 1610 et seq.), which sets clear standards for an enforceable premarital agreement in California. Your attorney should also be comfortable working with financial advisors, actuaries and business attorneys. Much of the time, the valuations of pensions, businesses, stock options and the like will be necessary in order to draft and negotiate a prenuptial agreement that satisfies the parties’ needs. In addition to looking for the right areas of expertise, you should also be savvy about working with lawyers. Your instincts should tell you whether the feel of your attorney is right for you. You should feel that he or she is a strong advocate for you and believes in your goals. Too often, lawyers insist that their clients acquiesce to terms that they feel are unreasonable simply because those terms are "standard" or "the way things are." A good attorney will work hard to craft a prenuptial agreement that gives as much protection as possible to you and your future spouse.
Finding the Right Lawyer for Your Prenuptial Agreement
The most crucial thing you need to do as you try to find the right prenuptial agreement attorney is to get information. You need to research and interview attorneys before you decide which one to hire. Take the time to interview enough lawyers to find one you feel comfortable with.
Find an attorney specializing in prenuptial agreements in your city. The best way to find good legal representation in your area is to ask people you know for direct referrals. Ask trusted friends (especially other people who have hired lawyers in the past) if they know of any prenuptial agreement lawyers in your area that they would recommend. Ask your family lawyer or a divorce lawyer you know of who has a positive reputation if he or she handles prenuptial agreements, and if not, who they recommend.
If you can’t get a referral from someone you trust, then you can go to your state bar association’s website to get a list of all lawyers who practice in family law. You can also try to find a lawyer on the FindLaw lawyer directory by entering your ZIP code. This tool allows you to search a network of reviewed and rated lawyers across the country.
The legal community is divided into many sections, organizations and groups. From time-to-time the "PTO" (Platinum Tier Organization) commissions an independent research company to evaluate the top lawyers in each city. Attorneys pay for these evaluations, are certified for up to five categories, and receive a cersficate. Once a lawyer is evaluated, they can post the cersficate on their website or office.
FindLaw also has an attorney directory that lists lawyers by location and type of practice. Look for a prenup lawyer in your geographical area by entering your city and, if you wish, your state.
The Avvo website contains ratings of more than 95 percent of practicing lawyers in the United States. The lawyers are rated according to their credentials, track record in prior cases, disciplinary history, recognitions and awards received, and client reviews. Lawyers who join the directory pay a fee to do so. However, this site claims that lawyers cannot pay to be highly ranked or featured. Each attorney gets a numerical score from 1 to 10. A rating of 9 or 10 indicates that the attorney is super. A rating of 8 means the attorney is excellent. A rating below 7 indicates that the attorney is average.
Once you have made a list of potential attorneys to interview, be sure to ask them all the same questions. This will help ensure that you are making an even comparison between all of the attorneys you are considering hiring. Ask the attorney how long he or she has been a practicing lawyer. After taking a day or two to think about your conversation, you will be able to compare all the attorneys you interviewed to help you make your decision.
Prenuptial Agreements and Their Lawyer Fees
As with anything having to do with lawyers, the ultimate cost of having an attorney prepare a prenuptial agreement for you is going to depend on a number of factors. Are you both clear as to each of your assets and debts? Do you have complex and varied assets and debts that will take more time and expertise to deal with? Have you already negotiated an agreement but need to have your attorneys reduce those points to writing? Are you , or is your spouse, a business person who has a business that will need to be addressed? Do you have children from a prior relationship that need to be incorporated into the agreement? These and many other questions will determine the necessary legal services that will allow your attorney to effectively represent you in the negotiation of a prenuptial agreement. This will ultimately result in a cost that is different from client to client.
Common Prenuptial Agreement Mistakes to Avoid
Some of the most common mistakes litigants make in prenuptial agreements include failing to:
1. Disclose all material information concerning assets and debts to each other.
A competent lawyer will conduct a thorough interview with the client when preparing the prenuptial agreement. The lawyer asks the client about assets, debts and potential income sources. If there is a discrepancy in the client’s answers, the lawyer will do their best to verify the information.
2. Get independent counsel or, at least, review the contract with other counsel.
Each party to the prenuptial agreement should have independent counsel representing them on an individual basis. If that is not possible, then the client should have more than 24 hours to review the contract before it is signed. It is also a good idea to have the contract notarized for future reference.
3. Have a general and vague agreement.
The premarital agreement should be as specific as possible so both parties know exactly what they are signing. Generalizations often lead to difficulty in determining the intent of the parties.
4. Apply the wrong law or law that has not been upheld before.
All divorces will eventually reach the courts, which means a court will rule on the prenuptial agreement. A court may be likely to uphold the prenuptial agreement if it essentially reflects the law in that state; otherwise, the judge may contemplate an inherent marital contract with public policy in mind. If party CDs her or she does not meet the common understandings of a marital contract, the judge may choose not to enforce provisions of a premarital agreement.
It is possible to modify an existing contract, but the waiver or modification must be voluntary.
A competent lawyer can provide the invaluable service of drafting an enforceable prenuptial agreement.
The Legal Steps to Drafting a Prenuptial Agreement
When either prospective spouse approaches an attorney about the possibility of a prenuptial agreement, the dialog usually begins with a broad discussion about assets, liabilities, exemptions, how they should be disposed of, and how they may be impacted by any contemplated marriage. Once that is done, the lawyer then typically will refer the person to either the State Bar of Arizona or the Maricopa County Bar Association to locate an attorney for the other prospective spouse. The idea is to bring that person in, give them the same high level overview of the issues that the first party saw, and then collectively understand the issues and negotiate a mutually acceptable agreement. In terms of the process, most family law practitioners will request, at a minimum, the following documentation to support the proposed terms: Once the information is gathered, the attorney will allocate time to talk to their client about all the information obtained. Once that is done, they will begin drafting the provisions of the prenuptial agreement. Once the terms are agreed upon by both parties, the document is executed in front of a notary. The document will have to satisfy Section 25-201.01 , Arizona Revised Statutes or else it will be found unenforceable by the Court. The next step typically involves the attorneys exchanging the documents so that both parties can have it signed (if not done already), notify the other about when the other will be getting the documents, and have the other spouse send a substituted notice under Rule 5.2 of the Arizona Rules of Family Law Procedure. Once the attorney receives the Rule 5.2 Affidavit from their client, the attached prenuptial agreement is filed with the Court only to establish the date of filing. This can be put into the case even if the parties have not yet married. Either way, once the parties do marry, the prenuptial agreement is enforceable by the court in the event that the terms of the case need to be enforced. While prenuptial agreements can often be simple, when dealing with multiple complex financial matters, it is important to have a competent attorney involved in the process to ensure that, in the event they need to be used, that the correct procedural steps have been taken to have an enforceable document later on down the road.