Top Ten Reasons to Get a Pre-nuptial Agreement

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1.Estate Planning: Spouses entering second marriages, usually with children from a prior relationship, may want to consider the special advantage of a pre-nuptial agreement. The spouse may want to ensure their children (or perhaps other family members or friends) share in their inheritance, rather than having their entire estate go to the new spouse. In order to comply with Colorado law, it may be necessary to execute a pre-nuptial agreement to ensure that a portion of your estate goes to someone other than your new spouse.

2.Protection Against Your Spouse’s Debts: Even if both parties have minimal assets, a pre-nuptial agreement is a good way to protect you from your spouse’s current and/or future debt. For example, a pre-nuptial can set forth specific provisions as to whether joint credit cards will be acquired, and how they will be used, and who will be responsible for which debts. Student loans may also be a consideration. In addition, your future spouse may not have any existing debts at the time you marry, but there might be circumstances giving rise to a future debt (for example, IRS audits may take several years before they catch up to someone). Pre-nuptial agreements can be tailored to the parties’ individual circumstances to address these debts.

3.Divorce Planning? Yes, you read that correctly, and no, pre-nuptial agreements should not be viewed as “planning your divorce” before you are even married. Let’s face it – if your marriage fails, it’s not going to be on the existence of a pre-nuptial agreement or not. However, a pre-nuptial agreement is closer to, “If we do get divorced, we don’t want Colorado’s laws and legislature to apply to us. These are the rules we do want to apply, if we get divorced.” It’s sort of like spelling out all the rules of a game before you play it.

4.Spousal Support: One spouse may have a concern over the other spouse seeking alimony or spousal support from the other in the event of divorce. The parties could agree to completely waive any kind of spousal support, or any alimony to be paid could be specified if a divorce does occur. Additionally, the parties could agree to pay a certain amount of spousal support dependent on the length of the marriage, whether one of them stayed home to raise kids, etc.

5.Test for Marriage: The prenuptial process itself can be an educational opportunity for you to observe their ability to compromise when it comes to financial matters and planning for the future. Working through the potential issues forces the parties to take an honest assessment of their relationship.

6.Proactive Education: Frequently you will hear a married spouse say, “I never knew he/she had millions in a bank account” or “I would have never married him/her if I knew about all their debt.” Going into the marriage, you may think you have an open and trusting relationship, but frequently there are things that just don’t come up for one reason or another. In order for a prenuptial agreement to be valid, each party must make a fair and reasonable disclosure of their financial condition. Going through this process allows the parties to know what the financial condition of the other is like, and may prevent surprises down the road.

7.Protect Business Interests/Inheritances/Other Assets: Pre-nuptial agreements can be used to ensure that after the marriage, significant assets remain separate property. Often times at the beginning of the marriage, the parties may even verbally agree that certain assets will be treated as separate, but during the divorce, one of the parties may go back on his/her word. In particular, couples who jointly own a small business may want to consider getting a pre-nuptial agreement to ensure continued operation of the business during divorce, as well as compensation issues.

8.Certainty in the Event of Divorce: Frequently, when couples go through a divorce, they may each have a fear of the unknown, uncertain of what is going to happen. A well-drafted and properly executed pre-nuptial agreement may ease this anxiety, and allows the spouse contemplating divorce to know what “lies on the other side” if they do pursue a divorce. 9.Get it Out in the Open: Pre-nuptials are essentially “business planning” documents. At the beginning of the marriage is the best time to address financial expectations of the other person. Pre-nuptials can even specify how day-to-day expenses will be handled, and who will be responsible for what percentage. Having this planning up front may prevent bickering about assumptions when it comes to the household finances.

10.Intention to Bring in Separate Property to Use in the Marriage: Often, one of the parties may have a house titled in his/her name only at the beginning of the marriage. After the marriage, the parties may live in the residence together. Situations like this can prevent difficult circumstances in divorce. If parties intend to bring separate property into the marriage, and in essence, “commingle” it with other joint property, they should consider entering into a pre-nuptial agreement which addresses these separate vs. marital property issues. In the absence of a pre-nuptial agreement, a court could find that a “gift was made to the marriage,” and divide property which was initially intended to be separate property.

About Author
Heidi Culbertson is the Director of Client Development at Harris Family Law. Harris Family Law specializes in Denver divorce, Colorado family law and Colorado child custody laws.

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