On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Thursday October 1, 2020.
When two people marry, often times financial responsibilities become shared; spouses take on each other’s pre-existing and future debts (credit card debts, collection accounts, student loans, etc.), open joint financial accounts, and file together during tax season. However, when couples divorce, shared assets are divided among both parties, as well as assets gained individually before or during marriage.
No one wants to lose financial property in the event of a divorce. Marital agreements are contracts between spouses that protect an individual’s assets and address how alimony and property are distributed during a divorce.
Two Types of Marital Agreements
There are two types of marital agreements. A Prenuptial Agreement (also called “premarital agreements”) is signed by the potential spouses before the marriage. A Postnuptial Agreement is put in place after marriage. These contracts don’t have to be renewed and they don’t expire. It is smart financial planning to have a marital agreement in place because it allows spouses control of their individual property during marriage and keeps non-marital accounts, non-marital funds, and separate (not joined, non-marital) property separated. Marital agreements:
- Cover each spouse’s financial rights during marriage and in the event of divorce
- Can protect individual annuities (life insurance policies, retirement plans, pensions, etc.) from being divided between spouses in event of divorce
- Determines a waiver of alimony during separation or divorce, or alimony costs and duration
- May ensure individual’s income earned during marriage is not distributed to spouse in the event of divorce
- Protects an individual from incurring the debts of their spouse during marriage and protects against legal obligation of debt repayment on those debts after divorce
For some, it might seem unromantic to discuss with your partner the subject of a marital agreement, but it is a very practical option to consider in the event of a divorce for a variety of reasons, plus it protects personal finances and family fortunes. Marital agreements are ideal for:
- People who owned assets prior to the marriage that they want to protect,
- People with children from a previous relationship who want to protect their child’s inheritance from being subject to division in the event of divorce,
- Or people who have businesses they want to keep separate from their marriage in the event of divorce.
To file a marital agreement, it must meet certain requirements. Full disclosure of both spouses’ financial information to include statements and assets must be provided and reviewed by attorneys from different firms representing both spouses and found to meet all legal guidelines.
At our firm we can help you explore options of asset protection and choose the right marital agreement for your needs. Contact our office to schedule a consultation.
