Premarital Agreements in Arizona
The old adage is that money can’t buy you love; but in today’s society, money and finances are inextricably linked together. Once you say “I do”, a number of things change with regard to your finances. Basically, one spouse’s financial habits will affect the other’s credit history, as married couples incur shared responsibility on home equity loans, joint credit cards, and other financial obligations. With America’s high divorce rate, prenuptial agreements are no longer limited to celebrities and multi-millionaires. While only three percent of first marriages use a premarital agreement, 20 percent of second marriages adopt one. This article will explain the basics of a premarital agreement and highlight some tips on creating a workable agreement while maintaining a sensible relationship.
At its core, a premarital agreement is defined under Arizona law as “an agreement between prospective spouses that is made in anticipation of marriage and that is effective upon marriage.” People consider such agreements to establish how assets will be divided at the end of a marriage. They seek to protect inheritances and business interests, and set specific guidelines for handling debt obligations. Without a prenuptial agreement, the marital estate will be divided according to state law. As such, these contracts give marrying couples a way to handle separation without the typical legal wrangling that plagues most divorces.
If you are considering a premarital agreement, here are some guidelines to help craft your agreement.
Plan your agreement far in advance. Premarital agreements should be discussed long before you exchange wedding vows. Some family law attorneys suggest that it should be drafted at least six months before the wedding date to ensure that both parties have time to contemplate each aspect of the contract. In this sense, long deliberations can be helpful, as last-minute prenups can be tricky to enforce. Impromptu agreements imply that some type of duress was involved, which can invalidate a contract. Also, springing a prenuptial agreement on your future spouse raises red flags about your relationship and shows bad taste.
The agreement must be reasonable and enforceable. Arizona law provides wide latitude for marrying couples to craft their own agreements, but a prenup may not have provisions that are unconscionable as a matter of law. For example, a provision stating, “if you leave, you will have no right to child support” would not be enforceable, as a child’s right to support may not be infringed upon. Also, agreements where a party is not provided a full disclosure of the assets (or financial obligations) can become unenforceable. Each party must be fully aware of the details of the agreement in order to be held responsible.
While couples may have elaborate fault clauses (i.e. if I catch you cheating, I get the house), those may be curtailed as well, because courts generally will not leave one party destitute as a result of a prenup. Also, frivolous provisions such as those requiring a spouse to maintain a certain weight, or to perform specific duties are not practical. Ultimately, couples should work to establish agreements that give each spouse with a sense of exactly what they are entitled to if the marriage ends.
Keep your emotions in check. Think of it as business, which follows the saying “is never personal”. The emotional high of finding that special someone and planning for your “happily ever after” can sometimes distort your sense of reality. Therapist Pease Gadoua likens the experience to “emotional flooding” and suggests that people lose 100 IQ points when falling in love. Having objective feedback on your prenup can help distinguish reality from fantasy. To that end, both parties should have their own attorney review the agreement.
Be judicious about talking finances. Timing is important when talking about money. Tax time is typically a good opportunity, because people are usually anticipating a healthy refund or dreading the possibility of a huge tax bill. Arizona law allows couples to establish agreements for dividing marital property and setting (or modifying) spousal support. How couples handle conversations about money can set the barometer for financial provisions in the prenup. Many couples who consider premarital agreements have retirement accounts and 401ks that have accrued prior to the marriage, and they have an interest in protecting them before saying “I do.”Talking about how money can be set aside (or divided) in case of a breakup may be awkward now, but it can save a great deal of time and emotional energy down the road.
For more information about what may be included in a premarital agreement, contact an experienced family law attorney.