A prenuptial agreement (“prenup”) provides a snapshot in time of the assets of the parties’ at the time the parties get married. And, like all contracts, codifying the arrangement can have both beneficial and harmful consequences.
A prenup may establish division of assets, and support obligations (e.g. alimony) often without any consideration of what may transpire in the future. Conversely, a prenup may also set ground rules as to division of property acquired during the marriage (and the increase in value of assets owned prior to marriage) in the event of divorce. By knowing the assets at issue at the time of marriage and how all assets are to be divided in the event of divorce, the divorce process is streamlined, and as a result (most likely) less contentious, less litigious, and less expensive, at least as to those issues.
Without a prenup, at the time of a divorce, parties have to go back in time (on many occasions decades or years) to gather documentation in support of non-marital claims. For example, if one party makes the down payment on the purchase of a house from his/her pre-marital account then that party will need to obtain the documentation to trace the pre-marital down payment. If that party did not maintain good records, the likelihood of being able to obtain the documentation to prove his/her non-marital share is significantly diminished. A prenup may address this as the time of the marriage so that there is less stress and uncertainty in the event of a divorce.
But, is a prenup always the right answer?
A prenup may limit a party’s rights as compared to state law. For example, if each party retains his/her retirement accounts, to include contributions made during the marriage, this may be less advantageous to one or even both of the parties. Under Maryland law, the court would make an equitable division of the marital contributions and earnings on them, and most likely, that equitable division would be an equal division.
You cannot predict the future, and with a prenup you are contracting away a right that may later prove to be something you want or need, such as alimony. This may be particularly problematic if the couple is young. For example, what if you waive alimony in a prenup and then end up abandoning your career to be a stay-at-home parent? You may find yourself 25 years later without any income and no means to support yourself.
If you are considering a prenuptial agreement there are a few things you should consider:
- What are your goals?
- What are you trying to protect or achieve?
- How do you discuss the concept of a prenup with your future spouse? This can be complicated both emotionally and in terms of achieving your desired legal result.
- Get informed. How do you get the information you need to make an informed decision?
A good lawyer will assist you in accomplishing your goals, while taking into account the long range implications of your agreement and making sure you are fully informed about your rights, what you are waiving, and your obligations under the prenup.