Prenuptial agreements are a very powerful tool that can resolve a lot of potential issues for couples. People are generally aware of prenuptial agreements, however few people are informed as to the power of these agreements and what they can actually achieve. While prenuptial agreements are not for every couple, there are many situations where an agreement may be very helpful. It is crucial to understand exactly what a prenuptial agreement may protect, in order to analyze if one is important for your relationship.
In 2007, Florida adopted the Uniform Premarital Agreement Act, which clearly lays out what is protectable and what is not protectable in prenuptial agreements. The adoption of the act has increased clarity for drafters and has led to an increase in enforceable agreements.
Prenuptial agreements are drafted mainly to protect financial interests in a relationship. These agreements are entered into in consideration of three basic reasons: in contemplation of death, dissolution of marriage (divorce), or to govern the relationship of the partners during the marriage.
Without an agreement, statutory guidelines direct how financial interests are divided or distributed at death or divorce. Under Florida law, assets and liabilities are divided equitably at the time of divorce. What defines equitably is left for a judge to decide according to the guidelines. Just as a will does for an individual upon death, a prenuptial agreement mandates a judge to blatantly ignore the state guidelines and to implement the agreement's guidelines for division and distribution of property.
What a Prenuptial Agreement May Protect
In drafting a prenuptial agreement, a couple may contract with respect to the establishment, modification, waiver, or elimination of alimony or spousal support. This remains true even if the waiver may be considered unfair or a bad deal for one of the spouse's.
*A waiver of alimony may be limited if the agreement's elimination of alimony leaves a spouse in a destitute situation qualifying for a program of public assistance.
2. Equitable Distribution of all Assets and Liabilities
A prenuptial agreement can protect financial interests including, assets, liabilities, income, retirement accounts, investment accounts, and even potential future assets and liabilities.
Some notable interests that often are protected by prenuptial agreements include:
- Premarital/marital property (and appreciation in value of that property)
- Appreciation in value of retirement accounts
- Appreciation in value of stocks and bonds
- The responsibility of student loans
- Business interests and possible future business ventures
A drafting lawyer is crucial to properly protect financial interests in a prenuptial agreement. The language required in the document, along with the advice on management and title of these assets and liabilities is key to the enforcement of the prenuptial agreement.
3. Estate Planning Considerations
A prenuptial agreement can allow a married partner's property to be treated as that of an unmarried person upon death. Under Florida law, a widowed spouse is entitled to 30% of their deceased spouse's estate, regardless of what the will calls for. (Called an elective share) A prenuptial agreement allows an individual to waive this right and other rights normally accorded to a spouse under Florida law.
Additionally, a properly drafted prenuptial agreement can waive the requirements for homestead laid out in the Florida constitution. Florida Homestead law provides rights to the spouse in homestead protected property. A prenuptial agreement can override those rights if an individual desires to only leave the homestead to children or others from a prior marriage without leaving any rights to the spouse.
4. Attorney's Fees
A spouse can waive his or her right to post-dissolution attorney's fees. Further, provisions are permitted that award attorney's fees to the prevailing party in any action to enforce the agreement. Thus, if a prenuptial agreement is valid and enforceable, the challenging party will be held responsible for the costs of challenging the agreement.
What a Prenuptial Agreement May Not Protect
1. Child Support & Custody
There are statutes in place that prohibit certain clauses in a prenuptial agreement. The agreement cannot govern anything that may negatively affect the best interests of a child. This includes the drafting of child support related clauses, as well as time-sharing clauses which may have a negative effect on the child. (A prenuptial agreement may not conclusively determine which parent will ultimately receive the most time-sharing)
Don't Leave Your Fate to a Judge
A prenuptial agreement may serve a crucial purpose in many situations. The ability to adjust the statutory guidelines is a very powerful tool that couples can use to create a specific plan for themselves. It is beneficial for couples to work together and discover amicable solutions in the event of an unfortunate ending to a relationship. Even if situations change during the marriage, a prenuptial agreement may be amended at any time with consent of both of the spouses. Instead of potentially putting your fate in the hands of a judge, it is wise to consider a prenuptial agreement.
If you are considering a prenuptial agreement and have any additional questions please contact our office at 305-967-6307 to set up a free consultation.