What are Prenuptial Agreements and Postnuptial Agreements?
The difference of a Prenuptial and Postnuptial Agreement is in the timing of the document. The issues that are addressed are identical. A Prenuptial Agreement is a contract entered before marriage, but is conditioned on the marriage. Issues covered by a Prenuptial Agreement include divorce, separation, death, taxes, and living expenses. If in a Postnuptial Agreement you are still a happily married couple, then you’re talking about what happens in the event of a divorce, separation, or death. If it is a Postnuptial Agreement, because the divorce is going on right now, then the primary topic you cover are divorce-related issues.
How are debts handled in a Prenuptial Agreement?
Debts are handled the exact same way as assets. It may be that one party enters the marriage with a lot of credit card debt while the other party is very fiscally responsible. Sometimes when a marriage begins, the fiscally conservative one in the relationship will cover all of the debts but will sign a pre-nup that states that if they separate and get a divorce in the future, then the other spouse must agree to pay that money back. If they do not separate, then it is not something that they need to worry about.
How much does a Prenuptial Agreement cost to prepare and who pays for it?
One of our biggest concerns in drafting Premarital Agreements is the fact that too many lawyers do not put enough time into preparation, because a Prenuptial Agreement is only as good as it is when you need it, which depends on how careful you are when you sign it. When you sign the contract, everybody believes that the contract is done and put away. Someday if you pull it out, you want to make sure that is a valid document at that time. If you do not adequately prepare that document ahead of time before it is signed, then you have created arguments that could lead to the invalidity or ambiguity of the contract. The primary reason why Prenuptial Agreements are deemed to be invalid is because there was inadequate disclosure of assets, debts, and income at the time the contract was signed. Another reason is something called "coercion or duress", which means that someone felt compelled to sign the contract because the other person gave them an ultimatum. You might as well not have bothered preparing the document if you do not do it carefully. There must be a comprehensive disclosure and exchange of information and documentation before the Prenuptial Agreement is negotiated and both sides should be represented. There must also be enough time that passes so that everybody has the ability to be very thoughtful about the document that they are about to sign. All of this requires time investment and the more time investment, the higher the expense. If you do it the right way and spend a little bit more at the beginning, it is well worth your trouble at the end when you really need it. You can either do a cheap contract at the beginning and pay a large sum many years down the road to defend it or you can pay a little more at the beginning to be more careful. Most Prenuptial Agreements will require an attorney to invest between 10 to 25 hours of time.
Who pays? Sometimes each party pays for their own, and sometimes one party pays for both sides. In a lot of situations, where one party is the more wealthy party, there is nothing wrong with that party saying "I'm going to pay for your lawyer and my lawyer, but I want you to be separately represented because I want you to feel as though you are being fairly treated." After all, you are about to be married.
