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Do I Need A Prenuptial Agreement?

Prenuptial (or premarital) agreements are recognized as binding contracts and are enforceable agreements in Colorado. Colorado statutes and case law control what must be or what may be included in a prenuptial agreement. Whether an individual “needs” a prenuptial agreement depends on the particular facts and circumstances of the person getting married. This article will discuss what a person contemplating marriage should consider when deciding whether or not to request and then negotiate a prenuptial agreement.

First, as a practical matter, requesting and negotiating a prenuptial agreement is probably the most unromantic thing you will ever do. Many couples understandably shy away from discussing a prenuptial agreement because it may be seen as a sign of a lack of trust or a sign that one member of the couple is not entirely sure about the long term chances for the marriage. So, be aware that presenting the idea of a prenuptial agreement to your fiancé may meet with some resistance for reasons that have little to do with property or finances.

Second, also as a practical matter, negotiating a prenuptial agreement requires the couple to address some uncomfortable issues that many people would rather ignore until after the marriage or even until the problem have grown too big to ignore. The problem is that ignoring the issues can lead to serious disagreement and discord in a marriage that can ultimately lead to a divorce. So, on a positive note the negotiation of a prenuptial agreement allows the couple to address those issues head on before they commit to a life together and allows them to identify and hopefully resolve those issues well in advance of a disagreement. Some of the major issues are:

• How will we share our incomes
• How will we pay our bills
• If we have property that we bring in to the marriage, how will that be handled
• If we have children from prior relationships how will we handle those expenses and parenting responsibilities
• If we have children of our own how will they be taken care of
• What will happen if one of us dies and we are still married. How will the property of the deceased be treated. Will children or the spouse inherit.
• What if one of us becomes disabled. Will the other spouse be the person to handle the finances and property.
• What if we separate and eventually divorce. How will the property division and support of a spouse or children be handled.

Even a couple without a lot of assets or substantial income will benefit from looking at some of these potential problem areas before they get married so that their expectations of each other are clear and the chances of misunderstandings and disharmony are reduced.

In Colorado, the law has certain rules and provisions for how property will be handled in the event of the death of a spouse or in the event of a divorce. Those laws often may not be consistent with the wishes and plans of the couple who are about to be married. A prenuptial agreement allows the couple to contractually agree on many things related to their assets and debts that otherwise would be dictated by the law. For example, a prenuptial agreement allows the parties to determine fully and unequivocally what will happen to their property when the first spouse dies.

Some Good Reasons to Have A Prenuptial Agreement

The following are some good reasons to consider asking for and negotiating a prenuptial agreement:

1. You or your fiancé have children from a prior marriage or relationship who are not the biological children of both of you. You may wish to provide for them upon your death in such a way that would not occur if you do not have a prenuptial agreement.

2. You or your fiancé own or have an interest in a business that owns assets and produces income but also may have debts and liabilities. A prenuptial agreement allows the couple to decide how such a business will be operated and how the income and debts will be handled after the marriage. It also can provide for how the value of the business will be passed on in the event of a death or shared in the event of a divorce.

3. You or your fiancé own a home and you plan to live in that home. You both might own homes and you might plan to rent the second home. A prenuptial agreement allows the couple to decide how these homes will be owned, how the bills will be paid and what will become of the value of the home in the event of a death or divorce.

4. You or your fiancé own significant assets such as investments, retirement plans, pensions, real estate, etc. The owner may wish to retain sole ownership of such assets or perhaps to share ownership at some point in the future. The prenuptial agreement allows the couple to decide how these assets will be treated after the marriage and how the income they generate might be treated. The value of the assets may increase or decrease substantially during the marriage and the prenuptial agreement can address how such increases or decreases in value will be handled.

5. You or your fiancé may have significant debts or liabilities and the other person may not want to become entangled with those debts or liabilities. A prenuptial agreement allows the couple to decide how such debts and liabilities will be treated during the marriage.

6. You or your fiancé may be the beneficiary of family inheritances or trusts and the family may wish to specify what the new spouse’s interests in such family money may or may not be.

7. You and your fiancé may wish to specify certain expectations for how to raise any children you might have, i.e., religious training, educational opportunities, etc. Such agreements may not be binding on a court at a later date but they can help clarify the expectations of the parties.

8. You or your fiancé have been married before and may have certain obligations related to his or her property or to pay maintenance or child support. A prenuptial agreement allows the parties to become informed about such matters and to plan around them in their own relationship.

These are just some of the reasons why a person may want to consider entering into a prenuptial agreement. Having a frank and open discussion with your fiancé well before you get married about your mutual expectations of each other may uncover other reasons.

Requirements for a Valid and Enforceable Prenuptial Agreement

In Colorado, certain requirements must be met in order for a prenuptial agreement to be enforceable either upon the death of a spouse or upon a divorce.

1. The agreement must be entered into voluntarily and not under any duress. Pressuring a fiancé to sign without giving the person a chance to consider the terms of the agreement is never wise. Signing a prenuptial agreement at the last minute is never wise. A good rule of thumb is to sign the agreement at least 30 days before the planned wedding.

2. While it is not a requirement that both sides have an attorney to review the agreement and advise them, it is wise for both persons to be able to consult with an independent lawyer before signing a prenuptial agreement. A prenuptial agreement is a contract and often addresses complex issues of property or support. Drafting one’s own agreement or using an online form is not advisable.

In Colorado, not having access to a lawyer for purposes of consulting about the terms of a prenuptial agreement can be grounds to set aside a prenuptial agreement. If one party has a lawyer and the ability to provide funds for the other party to retain a lawyer it would be wise for the party with the ability to pay to provide those funds to his or her fiancé. A good rule of thumb is that each party has the opportunity to consult with a lawyer of his or her choosing about the agreement and to have both lawyers sign a statement that is part of the agreement stating they have had that opportunity.

3. Both sides must make reasonable financial disclosures to each other as part of the agreement. It is wise to attach schedules of assets and debts to the agreement so that it is clear what disclosures have been made and how complete and accurate they are. Exchanging information about income is also wise, i.e., the most recent tax return of each party. The more vague or incomplete a disclosure is, the greater the possibility the agreement will not be enforceable.

4. In Colorado the agreement must also state in conspicuous language that the parties understand the following:

• You may be giving up the right to support from your spouse
• You may be giving up the right to own or control money or property
• You may be agreeing to pay the debts of the person you are marrying
• You may be giving up the right to inherit from your spouse if your spouse dies
• You may be giving up the right to money or to own property if your marriage ends in divorce.

5. A prenuptial agreement may not include agreements that are against public policy; which adversely affect a child’s right to support; which penalizes a party for filing for a divorce or legal separation; or which limit the rights of a victim of domestic violence.

Conclusion 

While a prenuptial agreement may not be a very romantic exercise, it can be a very practical and useful one. A well drafted prenuptial agreement can avoid significant cost and disharmony in a marriage. Consulting with a lawyer experienced in drafting prenuptial agreements to determine if one might be helpful to you is a wise choice.