Introduction to Prenuptial Agreements
A prenuptial or antenuptial agreement is a written contract between prospective spouses that will generally be enforced by Virginia courts so long as the agreement was validly made, is not in violation of law, and the terms of the agreement are not unconscionable (i.e. grossly unfair). In general , a prenuptial agreement can cover any and all issues of concern to the prospective spouses, including the division of assets in the case of divorce, the payment of debts, maintenance and spousal support, the disposition of property in the event of the death of one of the parties, and the rights of each in the event that either spouse has children from a previous relationship.
Essential Elements of a Prenuptial Questionnaire
While each prenuptial agreement questionnaire will likely vary to some degree from firm to firm, there are certain commonalities that can be found within the best prenuptial agreements questionnaires. The following are some of the critical aspects that shouldn’t be overlooked when drafting a prenuptial agreement questionnaire:
Financial Disclosure: This will likely be the core component of the questionnaire, as it is typically the only way to get an accurate read on the financials of you and your soon-to-be spouse. Make it clear that failure to disclose any assets can have a negative impact on the validity of the final agreement.
Property Holdings: This is broken down into two parts, realty or land and personal property. Both types of property should include descriptions of each property, such as location, date of acquisition and value. Personal property can be especially tricky, so take the time to be especially deep in your descriptions, it will pay off.
Income: How much do you and your future spouse make? Having a clear idea of both of your incomes is crucial to gauge how each party should contribute to your family while you are married, and how any assets should be distributed in the event of a divorce.
Debts: Just like positive income and assets, each party should be prepared to disclose any debts they currently have.
Wealth and Debt: Money Discussions
Assets and liabilities are an important part of the prenuptial agreement questionnaire. They can both be a foundation of a lawfully-obtained wealth to protect, or can be things that need to be shared with a spouse for fairness and support during life and the end of it. As I had most recently noted on my blog here, there are some spouses who seem from the outset to want to protect everything they have directly from the other while others want things more in common.
In the initial prenuptial questionnaire that usually has some room for comments, are some questions broken down into financial areas.
Assets Owned by You Prior to Marriage:
o Do you own real estate?
o Do you have a car, motorcycle or boat registered in your name?
o Do you own stocks, bonds, mutual funds, or options?
o Do you have a savings account, CDs, or retirement account?
o Do you own a business or partnership interest?
o Do you have jewelry or art collection?
o Do you have other items of value such as collectables, antiques, etc.?
Additional Assets:
o Do you currently have money owed to you from a lawsuit or judgment?
o Are there specific items in your parents’ estate you expect to receive?
Debt Owed by You:
o Do you currently have a mortgage, line of credit on real estate, business loan, judgment, lawsuit, or loan against life insurance policy that has not been paid off?
o Do you currently owe any personal loans to friends or family members?
o Have you declared bankruptcy (or filed for protection via bankruptcy) in the past?
Business Interests:
o Do you have an ownership interest in any business, whether or not you get paid for it?
o Do you currently have an ownership interest in any partnership? What is the percentage ownership?
o Are you involved in the management of any business?
o Is there another person involved in the management of this business? If yes, is that person a partner, officer, or employee?
Using a questionnaire to address the financial considerations can best protect the weaker economic spouse by identifying income and assets going into the marriage. It can make the parties aware of the value in each area and can serve as a good device at a later time if the marriage does not work out to potentially identify whether something was pre-marital or post-marital.
Property and Assets: Who Owns What?
When it comes to discussing personal assets and property ownership, the comprehensive prenuptial agreement questionnaire becomes an essential tool. One of the primary roles of a prenup is to address the division of assets and property in the event of a divorce. To that end, your attorney will need to understand the extent of your holdings, which may include real estate, investment accounts, business interests, retirement plans, vehicles, collectibles, and other valuables. Each prenuptial questionnaire is a little different. However, you should expect it to ask questions about all of the assets you have currently and any for which you may have a claim by virtue of inheritance or otherwise. How you approach the process of identifying and discussing assets and property will depend largely on whether they are held individually or jointly with your partner. Some couples find it helpful to go through by category. Both natural and digital categories are important in today’s world, where people can own both real property and virtual assets such as websites and domain names. If you don’t hold any joint assets with your fiancé, you may find it beneficial to simply list them by category and include a brief description of what each item represents. Remember that doing so does not lock you into an agreement—your intentions may evolve in the months and years to come. Finally, remember that your attorney will be able to assist with ensuring that each category is represented in the world in which it was designated.
Inheritance and Gifts: Coming into Money
Most prenups include a section that addresses expectations as to future inheritances and gifts. For example, it is quite common for spouses to agree that gifts or inheritances received from a third party after the marriage is void and may not be claimed as community property. There are those, however, who feel this is unnecessary, especially when they have an Established Family Trust that they believe will adequately address the division of any additional future inheritances. In some people’s view, the trust is the primary vehicle to address these circumstances, so a prenup on these issues is a waste of time. My own experience working with couples is hybrid; there are days I agree with the perspective of both. In our current climate of blended families, divided couples, second and third marriages, children from multiple prior relationships, divorce and death , a prenup that distinguishes between a gift, an inheritance, and the like on the one hand; and the Estate Planning document, on the other, is helpful. Having both is helpful, and necessary. When attempting to discuss whether to create a prenup with your soon to be spouse, I suggest that you broach the topic of future inheritances and gifts with caution. You should confirm to yourself (and your betrothed) that this is a topic of importance to you. You need to be able to articulate why, and what you hope to accomplish in discussing pre-marital agreements to address the issue. Are you trying to avoid future litigation? Are you trying to protect the expectations of your adult children? Are you trying to protect the assets that you have that have been built up over time? Are you trying to protect an inheritance that you are expecting from a parent, etc.?
Exclusive Support and Alimony Clauses
As with other parts of a prenuptial agreement, the questionnaire should address potential spousal support or alimony. It is well settled law in almost every jurisdiction that a spouse may waive his or her right to receive a spousal support award, though this should not abrogate some states’ laws that address offense factors, such as adultery or domestic abuse. As such, one party to the marriage may be limited to a certain degree and duration of a possible support payment despite a spouse’s otherwise dire need, should the waiver agreement have been entered into knowingly and voluntarily.
The support provisions should also address the factors that will be considered by a court in deciding whether modification to the provisions is appropriate, such as employment loss or reduction, financial hardship due to illness, or significant changes in the worth of property. Obviously, the court will not likely look upon an attempt to substantially modify a provision in less than a year, as it is rarely the case that life altering events happen within specific and short time frames.
The discussion should also cover the elements that will not be considered by the court when determining a modification of the spousal support provision, such as: 1. Whether the spouse having spousal support obligation will be required to leave living accommodations; 2. Whether the obligor currently has available a source of income; and 3. Whether the spouse receiving spousal support is entitled to collect 50% of proceeds of a personal injury claim against a third party.
Like any good checklist, the questions in this part of the questionnaire should ensure that nothing is overlooked or omitted. It will almost invariably initiate communication between the parties and their attorneys (the exchange of letters and conversations) prior to the marriage, and may go some way in identifying points of potential conflict that, if not resolved, could lead to a bitter and contentious divorce.
Legalities of Prenups: When They’re Valid
Deciding on the following three factors will help you determine the legal validity of your prenuptial agreement:
1. Do you have to go to court to deal with either of these factors?
If so, you cannot require a waiver of spousal support without receiving something substantial in return. Otherwise, if one of you went to court, a judge could set aside portions of the prenuptial agreement. For example, California Family Code Section 1612 states that an agreement may not adversely affect the right to spousal support unless the right is expressly waived, and the waiver is made "with a full and frank disclosure of the obligations or potential obligations of the party with sufficient knowledge of the relevant facts."
2. Was there a full and fair disclosure of assets, or did one party conceal assets?
The parties do not have to exchange financial data at the time of signing, but each must acknowledge in writing the general nature of the other’s assets, according to California Family Code Section 1615.
3. Did you sign your prenuptial agreement with both parties represented by separate counsel, or did one of you represent the other?
If a spouse is unrepresented, the prenuptial agreement will not be enforceable unless he or she received independent legal representation, according to California Family Code Section 1615, (c), (4).
If you did not, the party who was represented could argue that the agreement will not be enforceable in court.
Common Queries
How soon might you send the questionnaire to your betrothed?
It is beneficial that the prenup questionnaire be sent to the other party soon after engagement. It is not necessary that the parties move together until they and their counsel have been able to review the responses of both parties.
Is it possible to start on a prenup without the questionnaire?
Though it is technically possible to start upon a prenup without a questionnaire, it is strongly recommended that you have one completed before starting the process in order to gain a more thorough understanding of answers to questions regarding assets and debts.
How are the answers to the questionnaire used?
Information gleaned from the questionnaire can help you prioritize your concerns , and determine which points are most important to you to incorporate into the prenup.
Is the questionnaire all-encompassing?
It is not likely that a prenup could cover every issue that will arise in a marriage. For this reason, most prenups contain a clause that states that the parties will agree to negotiate a resolution between themselves, and if no agreement can be reached, to proceed with mediation. The prenup can contain a list of issues that will be presented to the mediator.
What happens if the other party refuses to complete the questionnaire?
Even though the communication about the prenup may be quite difficult, which can lead to a breakdown in communication, it is vital that you stay professional and positive. Your betrothed should be made aware that this is not personal. Though there may not be an interest in completing a prenup, it is not personal in nature.
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