What Is a Prenuptial Agreement?
Prenuptial agreements are legal contracts that just about anyone can enter into with their soon-to-be spouse as long as both of them agree. The contract usually entails items such as how assets will be divided in case of a divorce and how debts will be handled. One of the most important things that the agreement does is make certain that the assets of one or both spouses are protected. For example, if a spouse owns a company and the other has nothing going into the marriage, the premarital agreement can protect that company. Without the agreement, the non-owning spouse could end up being granted half of the company when the couple gets a divorce.
Some people think that they shouldn’t sign a prenup because that means that they are already planning to get a divorce . This isn’t necessarily the case. Most people realize that divorces happen and having a prenup can make it much easier for both parties if they do get a divorce. Instead of the couple having to hash out the details regarding asset division, they will simply refer back to the contract.
Without a prenup, you might have to end up selling the house you and your spouse bought together to divide the profits. With a prenup, you will know ahead of time that you will divide the house based on how long you lived in the home.
If you are considering having a prenup drafted for your marriage, it is important that you do so as soon as possible. Waiting until you are a few months from the wedding is less than ideal.
The Legalities of a Prenuptial Agreement in Arizona
Like much of contract law, Arizona requires that prenuptial agreements be in writing and signed by both parties. Further, the written terms of the agreement must include a full disclosure of assets and debts of both parties, in order for the agreement to be seen as fair. In fact, if an agreement is not written, or is not fair then the resulting contract will not be enforced in Arizona.
The disclosure mentioned above and required by the law focuses on both assets and debts. This means that both sides of the partnership must be fully honest and transparent about what belongs to them, but also on any debts they may owe to third parties or to each other. There will be full honesty about these matters before the agreement is finalized, as well as sworn testimony that each party is competent to contract.
If this sounds like a lot of pressure, keep in mind that most people generally do not end up in court over disputes to terms of a contract like this. However, if issues arise, courts may look to these regulations to decide how property distribution issues should be handled.
Elements of a Prenuptial Agreement Template
Any prenuptial agreement template worth its salt will include a variety of different sections, covering the range of issues that may arise during the marriage or in the event of a divorce. These topics include the division of common property, decisions upon the happening of a marital dissolution, provisions for spousal maintenance or support, and a plan to settle any future disputes in ways that are consistent with the drafters’ overall intentions as expressed in the contract. Many important concerns not covered in general divorce statutes can be handled through a prenuptial agreement template.
Some of the more important issues typically addressed in a prenuptial agreement template include:
Property Division at the End of the Marriage
A properly drafted prenuptial agreement template will include a section that specifically addresses property division during the marriage, such as how much of joint income will be placed in the marital account, how the parties will handle debts, and how marital property will be divided in case of a divorce. This is especially vital in Arizona, where many individuals lack an understanding of community property law. It is also important that the template avoid overly complex or restrictive language that might not be enforced in court.
Debt and Liability
One of the great examples of a poorly-written prenuptial agreement template is the one that attempts to limit each spouse’s liability for debts that arise during the marriage. Although a template can outline how debts may be divided, it cannot restrict liability for a debt in the unlikely event that the lender seeks collection.
Spousal Support
Arizona law allows for spousal maintenance or support in some cases, so your prenuptial agreement template should allow for this possibility and give a general idea of how the parties would like to handle spousal maintenance in the event of a divorce.
Disputes
Although many individuals have issues with signing a pre-marital agreement, the most common concern has to do with the issue of dispute resolutions. Contract law usually favors the validity of any contract that includes an arbitration or mediation provision as opposed to the traditional litigation route. As a result, spouses may be bound, in some cases, to arbitrate a dispute instead of taking it into the court system.
Reasons to Customize Your Prenuptial Agreement Template
While using a prenuptial agreement template provides the starting point for the contract, your agreement must be customized to meet your unique needs and circumstances in a way that is specific to you. Oftentimes, the template fails to provide adequate/full disclosure of assets and debts, which is one reason it is imperative that an attorney helps you craft an agreement tailored to you. Remember that when entering a marriage, you should be open and forthcoming about your assets, debts, and anything else of financial matter that can impact the agreement. If an agreement is made on limited knowledge of what either party has, how can it be relied on? It is important to provide full and fair disclosure so that each party knows what they are giving up and getting. This goes well beyond just providing a list of assets-it requires answers to many, many other questions.
Consult an Attorney: Basics of When You Should and Why
Although it’s not legally required, speaking with an attorney can offer many benefits. In many cases, this is the best way to ensure that there are no gaps in your agreement. A skilled Phoenix divorce attorney can pinpoint exactly what needs to be added in your agreement. They can also help you avoid the potential pitfalls inherent in creating your own prenuptial agreement from a template.
In a few specific situations, it’s almost essential that you consult a legal professional before moving forward with the negotiation process: Your terms are very specific. These are the types of terms that need to be spelt out in advance. Because the details related to assets are so specific, a professional can help you focus on exactly what needs to be included. You own a business. In this case , it’s important to address exactly what will become the property of the other spouse and what will remain separate. This can also apply to family businesses, where one spouse is completely uninvolved with its maintenance. There are complex financial and legal issues involved. The more money you and your partner have between you, the more complicated your portfolio, and the more likely it is that you have hidden assets, the greater the need for a professional guiding you through the process.
It is also important to understand that there are two different roles a lawyer can play in the prenuptial agreement process: Either way, your lawyer can strive to ensure that your agreement meets the needs of both of you.
How Do You Create a Prenuptial Agreement?
The process of creating a prenuptial agreement in Arizona is similar to most contracts. For couples who wish to enter into a marriage with the understanding that they will retain their individual assets if the marriage ends, it is important that the process is handled thoroughly and with an attorney’s oversight to ensure that the resulting prenup is legally binding in the event that it must be enforced.
The first step in the process of a prenuptial agreement is a discussion between the two parties about the concept. People who may need a prenup understand its basic purpose, but they may not know whether they will need one. The discussion should focus on the reasons that a prenup may benefit both parties, and whether or not that understanding is mutual. If the couple is in agreement, the following steps can be taken.
While marriage may seem like such a natural step in the couple’s relationship, the next step in creating a prenup can often be the most difficult. When many people think about the concept of a prenuptial agreement, they often consider their own finances first, and do not want to ask their fiancé about his/her financial situation. While there may be some awkwardness involved, this step is essential if an accurate picture of the household finances is to be laid out.
After this information has been collected, it is time for the drafting of the document. From this point on, no other details can be changed or added, so getting everything correct before signing is very important. Following is an example of what would be typically included in a prenup:
Once a draft is prepared, it should be sent to the other party’s attorney for review. Once a thoroughly vetted version of the contract has been settled upon by both parties, it is time to sign.
Modifying or Revoking a Prenuptial Agreement
While a prenuptial agreement is intended to stand the test of time, there are circumstances that may necessitate an update or the complete revocation of the document. These circumstances may include a significant change in income (whether an increase or decrease), a change in financial status (such as a new career or inheritance), the birth of a child, or changes in the law. When one or both parties experience a significant life change, such as death, disability, or a diagnosis of a serious medical condition, a review of the prenuptial agreement is also advisable. In order to update a prenuptial agreement, the parties must come to a mutual agreement on the changes to be made and then go through the same procedures they followed when executing their original document. Specifically, the revised document must be notarized and executed in the presence of both parties. If the parties cannot agree or are otherwise unable to complete the process on amicable terms, a dispute may result. In such instances , the parties would need the intervention of an experienced family law lawyer to ensure that their interests are protected. If the parties simply want to revoke the terms of the prenuptial agreement, they can do so by signing a written agreement. Again, the drafted agreement should be specifically tailored to address the specific needs and financial circumstances of the couple and comply with all Arizona laws concerning the revision or revocation of prenup agreements. While the process does require some degree of legal intervention, it can be executed without too much difficulty, resulting in a clear, amendable document that reflects the current state of the parties’ financial interests and marital status. After signing a prenuptial agreement, it is important to have it reviewed periodically to ensure its relevancy. New laws and personal occurrences can often affect a prenuptial agreement. By staying current with changes in your life, you can prevent potential disputes from arising in the future.