Georgia Prenuptial and Postnuptial Agreements
Many people have misconceptions about a prenuptial agreement (sometimes called prenup or antenuptial). Most often, prenuptial contracts protect the interests of existing children or partners in family businesses. Other times, it protects the higher income earning spouse.
Postnuptial agreements (those entered into after the parties marry) are mainly used to protect the financially responsible spouse from the overspending spouse or as a way to memorialize the agreement of a reconciliation between the parties after one party's transgression broke the party's vows.
You do not need to be a Hollywood celebrity or millionaire banker to benefit from a prenup. Many people entering a second marriage, having children from previous relationships or having family properties find them helpful. It makes sense, even if it isn't romantic. If money conversations are too uncomfortable or challenging to encounter before the marriage, wait until the couple discovers what those conversations are like during the marriage. Conversations between engaged couples that ensure both parties understand their rights and obligations clearly from the very beginning will benefit the marriage like nothing else can.
Understanding Prenuptial & Postnuptial Agreements
An appropriately crafted prenuptial agreement can designate certain assets as separate, so they would not be subject to division in divorce, and ownership would be clear for inheritance purposes.
Both parties may be similarly situated, and there is a likelihood of acquiring significant family-owned assets such as vacation property, closely-held stock, or professional practice. They may have intentions to keep them separate. Nevertheless, it can be essential to agree upon that characterization in writing. Doing so can not only prevent later misunderstandings; it can keep the title to these assets clear, which can be important when they are sold or insured.
We recommend creating any prenuptial agreement well before your wedding date to give you and your intended time to plan and ensure that the romance remains on the big day. Each party should retain an attorney to protect their interests.
Postnuptial agreements are gaining in popularity as financial tools for couples who are already married. These agreements (sometimes called marital agreements) memorialize financial decisions such as setting budgets or keeping a spouse's business assets and liabilities separate from the couple's finances.
Just as with prenups, both parties should retain a Georgia attorney experienced in drafting marital agreements to protect their interests.
At Stearns-Montgomery & Proctor, we act as advocates for families throughout the Atlanta metropolitan area for both prenuptial and postnuptial agreements.
Contact our qualified divorce and family law attorneys today.
Why Get a Prenup or Postnup?
As an attorney practicing divorce law in Georgia, the reasons you should get a prenup are overwhelming. Let's face it; there is a fifty percent chance a married couple will get a divorce. The percentages increase for second marriages. As a practical matter, the courts in Georgia essentially begin with the presumption that it is fair to divide income and assets acquired during the marriage equally. To put it in perspective, it's like treating the couple as if they were still living in the 50s when most American families looked like the Cleavers in the popular TV show 'Leave it to Beaver." Today, most families have two breadwinners. It is not uncommon for the wife to be the breadwinner. The marriage could be a second or third for one party. After building their careers or businesses, the parties may have married later in life. There may not be any children from the marriage.
Given that diversity, a presumption that all income and property are from equal efforts of both parties makes no sense to most clients hearing that from their divorce attorney for the first time. The battle that subsequently ensues in pursuing justice is emotionally and financially draining.
Benefits of Prenups
Prenups Encourage Honesty
It is a sad truth that approximately 50% of all marriages end in divorce. Some parties choose to ignore that divorce is a potential outcome. However, asking your future spouse to consider a prenup is a matter of honesty. It brings the reality of the possibility of divorce into the open and forces the parties to concede that their relationship could end. It also causes a couple to acknowledge that it will create a series of challenges if divorce does occur. By discussing a prenup, a couple can have an honest dialog about their state of financial affairs, their assets, and how they would like to deal with such economic issues if a divorce ultimately happened.
Prenups Encourage Open Financial Conversations
One of the leading causes of divorce is arguing over money. We see it all the time. Ideally, having a prenup would enable a couple to avoid some of these arguments. In drafting a prenup, the parties can have an open, candid talk about their financial situations. Thie conversations can help them budget their finances, decide how to blend them, and give them a prenup's typical benefits. The disclosures involved in drafting a prenup allow a couple to be proactive about their financial future together.
Prenups Can Protect You During a Divorce
As it relates to marriage, the worst-case scenario is divorce. Making the heartbreak even worse is a long, expensive divorce. Many divorces cost tens of thousands of dollars in legal fees even when the property in dispute is barely worth that much. A prenup can help streamline the divorce process and help prevent a drawn-out, costly divorce. While it is often challenging to address with the person you are about to marry, talking about a prenup is a moment of emotional honesty. That conversation can help prevent an emotionally and financially devastating divorce trial.
Prenups Allow You to Make Your Own Rules
When a person files for divorce without a prenup, the outcome of that action is uncertain. While a person can make a settlement offer to their spouse to resolve the matter, they are under no obligation to accept such an offer. If a couple cannot settle after a long, costly, invasive, and stressful discovery period, they will proceed to trial. The power lies with the presiding judge or a jury at trial. With a prenuptial agreement, the parties can make their own rules on dividing their property and debts and determining alimony. You can set the rules up with a prenup and choose what happens. In the absence of a prenup, you may have to live by the judge's decisions regardless of how right or wrong you find those decisions to be.
Reasons to Consider a Prenup
There are several important reasons why a prenuptial and postnuptial contract or agreement should be considered:
- Communication: According to Psychology Today, stress over financial issues is one of the leading causes of marital problems and divorce. Establishing a pattern of honest communication about financial matters can positively benefit your relationship.
- Clarification: Issues can arise when spouses fail to understand each other's financial expectations or feel their partner is less than honest with them about money. Clarifying your individual and inherited assets and your attitudes towards financial management can help avoid potential problems later in your marriage.
- Assurance: Having a pre-or postnuptial agreement provides the security that your rights, interests, and individual property is protected, both now and in the years to come.
- Prior marriages: It is common for those entering second and subsequent marriages to have children from previous relationships. You can use a prenup to allocate certain assets specifically towards your children, protecting their inheritance.
- You own a business: If you have your own business or a partnership with another, it is essential to realize that your future spouse's contributions during your marriage to that business could result in ownership interest.
- Existing debts: One of the parties may have outstanding debts. Your prenup can specify these debts as belonging to an individual party while also detailing payment arrangements.
- Protection of inheritance: If you anticipate inheriting money, property, or other assets from a loved one, your prenup can help ensure it remains in your sole possession.
Effects of Premarital or Marital Agreements on Divorce
While no couple wants to think their marriage will end in divorce, having a pre or postnuptial agreement helps to ensure you are protected as it will dictate how the divorce will be handled. Depending on the terms in this post or prenup contract, it can protect you personally and financially while limiting the potential for no long, drawn-out legal battles.
Common areas addressed in a prenup include:
Division of Marital Property
Georgia is an equitable property division state. What does equitable mean? Depending on the circumstances, the judge may award your spouse a more significant share of the property, income, and assets. In other words, whatever the judge or jury thinks is fair. With a marital agreement in place, you and your spouse will get the portion you previously agreed on.
If a spouse earns significantly less than the other, sacrifices their own career goals to support those of their partners, or leaves their position to raise a family, they may be entitled to alimony. If this was an issue addressed in your pre-or postnuptial agreement, the judge is required to abide by your decision.
While the terms of a prenuptial or postnuptial agreement do not include child custody or child support; it may be wise to have a provision in the prenup to require the collaborative process in making these arrangements.
Common Clauses in a Prenup or Postnup
When considering what to include in a prenuptial agreement, you must be sure and cover all bases. The following are key areas to consider:
- Property division: You may include a stipulation on how to treat earnings or property acquired during your marriage.
- Alimony: If one spouse earns less than the other or sacrifices their career to care for children, include alimony conditions or limits.
- Business interests: If you own or intend to start your own business, your spouse's contributions to it during your marriage could result in a future ownership interest in that business for your spouse, and you would include conditions or limits.
- Retirement accounts: Once you are married, contribution to a pension and/or 401k accounts will be considered marital property. It is essential to discuss how a divorce would affect your spouse's interest in those accounts.
- Attorney's fees: In contested divorces, attorney's fees can drive up costs. You may stipulate that each will be responsible for their legal fees.
- Confidentiality agreements: You may stipulate that your marriage or divorce details and any settlements are confidential.
Other areas of concern:
- Income taxes, deductions, and claims for tax refunds
- Management of household bills and expenses
- Management of joint bank accounts
- Arrangement regarding investing in certain purchases, such as the marital residence or rental houses
- Management of finances, such as credit card spending and payments and savings contributions
- Property distribution to the survivor, including life insurance, in the event of death
- Education financial support, such as arranging to put one or the other through school
- Settlement options, such as using mediation or arbitration.
Ensuring the Enforceability of Prenuptial Agreements
When an antenuptial or prenup is drafted and entered into willingly by both parties, it is legally enforceable.
Prenuptial Agreement Checklist
The guidelines for establishing and enforcing a prenuptial agreement are outlined under the Georgia Domestic Relations Code. To be valid in a future action for divorce, your prenup must not interfere with the rights of third parties, prior purchasers, or creditors and meet these qualifications:
- Was the prenuptial agreement entered into willingly by both parties, without any coercion?
- Is it in writing and signed by at least two witnesses?
- Does it fully disclose all assets that each party holds?
- Did both parties have the option to obtain legal representation? If not, it could be an issue in enforcement.
Issues With Enforcing A Prenuptial Agreement
Provided the following standards are complied with, your prenuptial agreement is enforceable:
Was it obtained through fraud, duress, or misrepresentation?
It is unconscionable, or unjust to the rights and interests of both spouses?
Have circumstances changed considerably since the prenup was first entered into?
Amending Prenuptial Agreements
If you and your future spouse have already drafted and signed a prenuptial agreement and later decide you want to change the terms of the prenup contract, you generally have the right to do so. Providing specific conditions are met, and it is not in violation of any current contract, your prenuptial agreement lawyer may be able to draft an addendum to the original.
Some prenups have clauses and provisions for canceling the agreement. Still, any significant changes to it would need to be made by an addendum, which modifies or updates the original terms. The validity of an addendum to your prenup requires a change in circumstances that necessitate altering the original. These changes may include the following:
Undisclosed Assets or Property
Discovering your spouse has property or accounts they failed to disclose justify an addendum to the original
Newly Acquired Marital Property
You may need to update your prenup to include a financial windfall or a new business venture
Changes in Health or Economic Status
Fluctuations in earnings and health concerns occur naturally over the course of your marriage, but any significant changes, such as quitting a job to support your spouse or being diagnosed with a debilitating disease, may justify changes in your agreement
Georgia Reconciliation Agreements
A reconciliation agreement is a postnuptial agreement, a prenup after marriage for a couple who has previously contemplated divorce. Reconciliation agreements may address property, asset, and debt distribution issues.
The Georgia Supreme Court case of Spurlin v. Spurlin, 289 Ga. 818 (2011) highlights situations in which a reconciliation agreement may be desirable. In this case, the wife in the matter filed for divorce from her husband. After she confessed to an extramarital affair, the couple later reconciled and resumed living together before the final divorce.
The couple entered into a reconciliation agreement, preemptively settling future issues regarding the division of marital property, alimony, and child custody. (It is important to note that the court reserves the final right of decision concerning custody matters, and any arrangement agreed upon must also be in the child's best interests.)
A reconciliation agreement is an important option to consider to protect yourself in the following situations:
For couples who agree to reunite while undergoing marital counseling
For those who opt to forgive conduct in their spouse which would have been grounds for divorce, negatively impacting awards of alimony and property division
As a way of updating existing premarital agreements to reflect changes in circumstances and to include certain penalties or provisions
Find a Qualified Attorney to Manage Your Prenuptial or Postnuptial Agreement
To enter into a prenup or even discuss one with your future spouse requires a person to take off the rose-tinted glasses of love and consider that nearly half of the marriages end in divorce.
The dissolution of your marriage is not something you hope will happen, but that situation may very well occur, despite the best intentions of both parties. Drafting and signing a prenup eases the pain should that worst-case scenario unfold, and it lets you game the system by crafting an acceptable end to a bad situation. Resolving most of the issues in advance limits the power that strangers, such as attorneys and judges, will have on your relationship.