Free Premarital Agreement

The Premarital Agreement can make provisions regarding the distribution of property upon the death of a spouse.

Disinheritance of Spouse
Most states have enacted laws that prohibit the total disinheritance of a spouse. These laws create an interest by one spouse in the other spouse's property known as "dower" or "curtesy", allowing a spouse to elect to take a share of the deceased spouse's estate as specified by state law, commonly one-third or one-half of the estate, regardless of what the deceased spouse's Will provides. Also, homestead (residence) laws may prevent the removal of a surviving spouse from the family home. However, spouses may voluntarily waive these marital rights in many jurisdictions, if done prior to the marriage ceremony. The court with jurisdiction over the distribution of the deceased spouse's estate will make the final decision. To ensure compliance with local law, a lawyer should review such provisions in the Premarital Agreement. The provisions of the Premarital Agreement may also need to be reviewed if the parties change their state of residence.

Distribution Other Than Spouse
The parties may not want their respective estates to pass to the surviving spouse. For example, each party may want to provide for his or her children or grandchildren from a prior marriage.

Even if the parties agree that the bulk of their property should be distributed to someone other the surviving spouse, they may want certain items to pass to the surviving spouse, for example, the home and its contents.

Another option is to allow the parties to make distributions to each other by the Last Will and Testament of each.

The parties to a Premarital Agreement have an obligation to fully disclose to each other their respective financial circumstances. By signing the Agreement, each party gives up certain rights that he or she would otherwise be entitled to in the property of the other spouse. Therefore, unless that party is fully aware of what he or she is giving up, the Agreement may not be binding because it was entered into under false pretenses.

Take great care to ACCURATELY describe the value of ALL assets, liabilities and income, as requested by the program. This information will appear on exhibits to the Agreement which should be signed as "accurate" by the information provider and signed as "received" by the other party.

Disinheriting means to deprive another person of property that would have been distributed to that person under the state laws of distribution. In some instances, an agreement between a person and his or her spouse, signed prior to their marriage (a premarital agreement), may permit the exclusion of the spouse from receiving any of the deceased person's property.

You should consult with a lawyer regarding your state's laws governing the rights of a spouse to receive property from the deceased person's estate, despite the provisions of a will or premarital agreement.

Discussing a property settlement and alimony in the Premarital Agreement clearly does not suggest that a separation or divorce will occur. However, the parties may realize that such events are not uncommon. Therefore, the parties may want to express their intentions regarding how their property will be divided if they separate or divorce.

Traditionally, the judicial system has opposed settlement agreements made prior to marriage. However, it is becoming more common for divorce courts to honor the property settlement provisions of the Premarital Agreement. Common settlement provisions are presented for inclusion in the Agreement. The parties may also compose their own provisions. Whether a court will ultimately follow these provisions will depend upon the jurisdiction in which the parties reside at the time of the separation or dissolution. To ensure compliance with local law, the parties should consult a lawyer. A lawyer should also review the provisions of the Premarital Agreement if the parties change their state of residence.

Governing law usually provides that income earned by either spouse during the marriage is jointly owned property. This presumption can be reversed by including in the Agreement a provision stating that the earnings of each party will remain that party's separate property. Care should be taken not to commingle such separate property with other assets of the couple.

The parties may desire to use their earnings for the payment of joint household expenses, but the Agreement will clarify that such usage should not be interpreted as implying joint ownership of the earnings.

The distribution of assets upon the death of a party may be specified in documents other than a premarital agreement. For example, each party may have prepared and signed a Last Will and Testament or a Living Trust prior to the premarital agreement, which provides for distribution of his or her property. While preparing the Premarital Agreement, keep in mind how such other documents are structured to distribute that party's assets, including beneficiary designations for life insurance and retirement plans.

An Exhibit is a document that can be used to provide information which, because of its length or format, is best handled as one or more separate pages attached to the main document, for example, a legal description of property, a pre-printed job description, or a table consisting of rows and columns of information.

The parties can prescribe in the Agreement how all property acquired after the marriage will be owned. Alternatively, the Agreement can be silent on that topic, allowing them to make that decision on a case-by-case basis as property is acquired.

Joint Tenancy. Property held by the husband and wife in "joint tenancy with rights of survivorship" will pass to the survivor upon the death of the first spouse. The property passes irrespective of any provision to the contrary in a will.

Tenants In Common. In contrast, each party can hold an undivided one-half interest in any property as "tenants in common", in which case each person's one-half interest will pass to that person's beneficiaries at death. If the person has a will, the one-half interest in the property will pass according to the terms of the person's will. If the spouse dies intestate (without a valid will), ownership of property other than real estate will be determined by the laws of the state where the person was a resident at death. If the property is real estate, ownership will be determined by the laws of the state in which the real estate is located.

Normally a husband and wife are responsible for the debts of each other if such debts were incurred for the "necessities of life", such as food, shelter and medical care. However, the parties may want to prescribe separate treatment for certain expenses. This program also permits the couple to allocate responsibility for debts incurred using credit cards.

A couple may want to specify how living expenses will be handled. One option is to pay for joint living expenses using a joint checking account which is funded with contributions from both parties. Typical living expenses are listed and can be classified as either joint or separate expenses. Additional space is also provided for the parties to compose their own custom arrangement.

The Debts provision states that debts incurred prior to the marriage will remain the responsibility of the party who incurred that debt. Also, an optional provision allows the parties to maintain separate liability for debts incurred during the marriage.

Despite the growing use of premarital agreements, there remain some uncertainties regarding the enforceability of various provisions contained in such agreements. Therefore, the Premarital Agreement includes provisions to bolster the enforceability of the Agreement, including the following: (i) the agreement will be binding on both the parties and their representatives, (ii) the agreement is the complete agreement of the parties, (iii) any provisions which may be found to be unenforceable will be limited or deleted so that the remainder of the agreement remains enforceable; and (iv) the parties acknowledge that they have been advised to separately consult their attorney before signing.

The Agreement should include the names of any children from prior relationships as further evidence of the reasons for entering the Agreement, which supports the enforceability of the Agreement.

The support provision provides for the parties' agreement that a step-parent may support step-children without establishing the legal responsibility to do so either during the marriage or upon separation. The Agreement does not contain provisions regarding the support of natural children of the couple in the event of divorce, because such agreements are viewed as contrary to public policy. The concern is that the couple might enter into an agreement that would be unfair to those children. The determination of such child support is within the sole authority of the divorce court.

In the event of divorce, the court with jurisdiction over the parties will determine whether or not the provisions of the Agreement will in fact be upheld by the court. This Agreement permits you to compose your own provisions, however, to ensure compliance with local law, you should consult a lawyer regarding the enforceability of these provisions.

A Premarital Agreement is an agreement between prospective spouses, made in contemplation of marriage. The Agreement becomes effective upon marriage. The Premarital Agreement should be discussed by the parties well in advance of the marriage. Sufficient time should be permitted to allow both parties to consult their separate legal counsel and to sufficiently consider the Agreement. Otherwise, one party may later claim that the Agreement is unenforceable because it was misleading or signed under pressure. The Agreement is generally unenforceable if it was signed after the marriage ceremony.

From a legal perspective, marriage can be viewed similar to a business arrangement. Business transactions should not be entered into without documenting the terms of the arrangement in writing. Likewise, the parties in a marriage should carefully consider how issues will be handled during and/or after a marriage. Without an agreement, the probate court (upon death) or the divorce court will impose an agreement on the parties in those circumstances.

Property Rights
A number of issues can be clarified in a Premarital Agreement pertaining to property rights. For example, the agreement can specify how property -- previously owned or acquired during the marriage -- will be distributed upon divorce or death. Other items which may be addressed include:

1. The handling of debts and expenses;

2. Rights to inherit from each other;

3. Rights to be named as the beneficiary of life insurance or retirement plans; and

4. Any other matter regarding the parties' rights and obligations, as long as the agreement does not violate public policy concepts or criminal laws.

Recitals describe background information regarding the parties and the reasons for entering the agreement. This explanatory information often assists in the interpretation of the agreement.

A revocation provision should be included in the Premarital Agreement specifying that the Agreement can only be revoked by both parties signing and recording a revocation. By requiring that the revocation be recorded in the county records, other parties who deal with the couple can determine whether or not the Agreement is still in force.

The Premarital Agreement can include provisions specifying the rights of the parties to certain property owned prior to the marriage and property acquired after the marriage. It is common to agree that any property owned by a party prior to the marriage will remain the separate property of that party. (Take care not to commingle such separate property with other assets of the couple.) An option also permits the couple to specify that property acquired during the course of the marriage will also remain the separate property of the acquiring spouse.

If a couple resides in a "community property state" at any time during the marriage, then by default, all real and personal property, wherever located, acquired after the marriage ceremony (except property acquired by gift or inheritance) will automatically be "community property" of the couple. This means that such property is owned one-half by each party, regardless of who may have separately purchased the property. However, this community property scheme can be altered by the Premarital Agreement so that each party can purchase and own his or her separate property.

When property is being sold by one spouse, it is common for the buyer to expect both spouses to sign the transfer document even if the property is titled only in the name of one spouse. This is because it is so frequently the case that both spouses have marital rights in the property, and so the signature of the non-owner spouse is required in order to remove that possibility. The Premarital Agreement can include a provision obligating the non-owner spouse to sign such documents upon request.

1. Each party should seek the advice of a separate lawyer before signing this Agreement. While the Agreement is not necessarily invalid if only one, or no lawyers, are consulted before signing, the Agreement may be overturned later if one party can show that he or she did not knowingly and voluntarily decline to consult with his or her own separate attorney.

2. The Premarital Agreement should be signed prior to the wedding ceremony because the consideration (value) for entering into the agreement is the act of marriage itself. The document should be signed in the presence of a notary public so that the agreement can be recorded in the public records, if necessary.

3. The exhibit describing the financial position of each person should be signed by the person whose assets are described. The person who receives the exhibit should also sign the exhibit in order to acknowledge receipt.

4. One signed copy of the Agreement should be retained in a secure place within the residence of the parties. Each spouse should also place a copy in a secure place outside of the home. For example, a copy could be given to each spouse's personal lawyer or placed in that spouse's personal safe deposit box.

The trend is against awarding alimony upon divorce. If each spouse is self-supporting, the parties may agree not to seek alimony in the event of separation or divorce. However, merely reciting that the parties are self-supporting will not be persuasive if the facts at the time are otherwise. The divorce court considering the support issue will make an independent determination of the need for alimony.

The Premarital Agreement includes a provision allowing the couple to take advantage of certain income, gift, and estate tax provisions that benefit married couples. These benefits might not otherwise be available, depending on the interpretation of the Premarital Agreement. For example, the benefit that might be obtained by filing joint federal or state income tax returns can be preserved.

In addition, a married couple may make joint annual gifts. In 1999, the maximum non-taxable gift is $10,000 per donor to any other person (donee); or $20,000 per couple to any donee, even though only one member of the couple actually makes the gift. Most transfers from one spouse to the other are also tax-free, and there is an unlimited marital deduction under the federal estate tax law for the transfer of property to the surviving spouse upon the death of the first spouse. For further information, consult your accountant or lawyer.