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Pre-Marital or Post-Marital Agreements

By Allison Quattrocchi, Mediator (retired) and

Joy Borum, Mediator 
  

A pre-marital agreement means you are choosing not to come under the community property system by walking down the aisle. A post marital agreement means you did walk down the aisle, came under the community property system by doing so, and now want to opt out.

If you ask your fiancé about a pre-marital agreement or a spouse about signing a post-marital agreement, she or he might feel deeply hurt, disappointed, threatened, and perhaps angry. Or well meaning friends or family might suggest that something's "wrong" with having such an agreement. Unfortunately, to a large degree, our society still struggles with the false belief that, "You can't think and feel at the same time." Or struggles with an unspoken message that thinking clearly about the practicalities of life means there is lesser love and commitment. For the person receiving a request for a pre-marital or post marital agreement, such a request can be perceived as a lack of faith in the relationship and in the hopes and dreams for the future. For the person doing the asking, such an agreement is a practical tool for designing and clarifying the financial relationship instead of letting the state law (community property) do it for you. 

Done with full disclosure on both sides, attorney review for each person, and information and support during the mediation process, pre-marital or post-marital agreements can protect both spouses. One common scenario is a second marriage for at least one of the parties who has pre-marital assets to protect. If that person brings sole and separate property to a marriage and does not mix it with community property, there will never be a claim on it, but identifying it in a pre-marital agreement may help clarify what is sole and separate in the event of a divorce. Such agreements may be also used to memorialize a mutual understanding regarding financial responsibilities for children from a previous marriage and for who will inherit what.

Pre-marital or post-marital agreements can be vulnerable to challenge because of the close relationship of the parties involved and the emotional dynamics that may be a part of a negotiation at the time agreements are being written. To avoid claims of undue influence, incompetency, unfairness, among other issues, it is critically important that all assets and obligations are disclosed and that each party be represented by counsel. Additionally, it is good practice to have each attorney sign an acknowledgement of representation on the actual agreement.

Besides sorting out the sole and separate property and debt, there are other common issues often addressed in pre-martial and post-marital agreements:

  1. How are you going to manage your income? Will there be a joint account for the certain expenses such as the mortgage payment and utilities? Food, entertainment, travel? If so, how will that be funded and will each of you contribute to that joint account? If so, in what percentages? Will there be an allowance paid to one spouse? Are both spouses going to work outside the home or earning income from home? Will each spouse’s income be considered sole and separate rather than community income?
  2. How are you going to manage debt? Is someone bringing debt into the marriage? Will that person pay it off? If it is paid off by both of you or by the other party, will that be acknowledged in the event of a divorce?
  3. How are you going to manage the marital home? Is the home owned by one of the spouses? Is it going to be joint titled? Is one spouse putting a down payment on a new home from his or her sole and separate assets? Is the new home going to be joint-titled? If so, how are you going to sort that out in the event of a divorce? How about the household furnishings? What is sole and separate and what is going to be divided between you?
  4. What are the expectations in the relationship? If one spouse has more income than the other, is there a plan for support in the event of a divorce? Does the amount of support increase depending on the length of the marriage? Is there no support? What are the expectations of the relationship -- children, stay at home parent, continued pursuit of mutual careers, ageing parents? Are there children from another relationship and commitments for child support and spousal support to an ex-spouse?
  5. How about life insurance, wills, trusts? What is the plan in the event of the death or disability of one of the spouses? Whose money will pay for care of the other spouse? Will that person be reimbursed? These and other possible situations can be addressed in a pre- or post marital agreement.

Mediation can be used very effectively with parties who want a pre-marital or post-marital agreement. The mediator/attorney can draft the agreement and send both parties out for independent legal advice, or the mediator can prepare a Memorandum of Understanding detailing the decisions and one of the party's attorney can draft the agreement.