With wedding season in full swing, I am overdue for a post about prenuptial agreements. Let’s jump right in.
First: what exactly is a prenuptial agreement? The bare bones definition of a prenuptial agreement is a contract between two people who intend to marry in the future. A prenuptial agreement sets out an agreed-upon plan for the division of assets and debts upon divorce.
Who needs a prenuptial? To be honest, no one needs a prenuptial agreement. Not having one will not, per se, prevent you from marrying your sweetheart. But—if you wish to establish clear financial expectations in the event of divorce, then please do get a prenup! Otherwise, the general rule in Minnesota is that a divorcing couple’s assets and debts will be divided “fairly and equitably” (think of this as being roughly 50/50, for sake of simplicity here). Would that feel fair to you if you got divorced? If not, set out what is fair to you and your partner in a prenup.
Having this agreement in place does not mean you and your partner will divorce—it simply means that you’ve had a full conversation on your finances and have arrived at a joint “just in case” plan. Having a prenup is like having a will. It’s an insurance plan in case things do not turn out as we wished or expected. The good news is that divorce rates have been decreasing in recent years. Of first-time marriages, the divorce rate in the United States is somewhere around 41%. It’s only when we throw in second, third, etc. marriages, that divorce rates climb well above 50%. (Census Bureau data) The bad news is that the rate is not 0%. So let’s not pretend like it is.
Here are some particular situations where you will want to give a prenup extra consideration:
- You and/or your partner is entering the marriage with significant assets or debts (e.g., a family trust fund)
- One or both of you owns a business
- One or both of you has children from another partner
- Your partner has trouble making responsible financial decisions
Under Minnesota law, certain things are required to make a prenuptial agreement effective. Those requirements include but are not limited to the following:
The agreement must be
- Made between individuals who are of legal age
- Made in writing
- Signed in the presence of two witnesses
- Notarized
- Signed before the wedding!
And, importantly, both parties to the prenuptial agreement must
- Make a full and fair disclosure of their earnings to one another
- Have had the opportunity to consult with counsel of their own choosing
Can you make a “DIY” prenuptial agreement? Sure, but most attorneys (including me) would not advise it. Any time two parties are entering into an important contract, there is always the opportunity for language to be unclear or conflicting. Mistakes can easily be introduced. Requirements can be missed. Working with an attorney who has the proper expertise and education will go a very long way toward avoiding these mishaps. Further, an attorney will advise you on the potential adverse consequences you may face in signing off on a problematic prenuptial agreement. Please do it right and hire an attorney.
If you wish to discuss or create a prenuptial agreement, please contact Streit Law today for a free consultation or to retain Angela. Please visit www.streitlaw.net or call 651-294-6157 or 651-237-3646.