Prenuptial agreements are usually heard in relation to celebrity weddings, where crazy-large estates and royalties are on the line. But these agreements can be beneficial for couples preparing to be married and not planning to sell their wedding photos to People Magazine. A prenuptial agreement, or “premarital agreement,” is an agreement made between two individuals prior to a marriage. The agreement “affirms, modifies, or waives a marital right or obligation during the marriage or at legal separation, marital dissolution, death of one of the spouses, or the occurrence or nonoccurrence of any other event.” C.R.S. 14-2-302(5).
There are several things you can do within a prenuptial agreement. Possible provisions may regard: spousal maintenance, division of property, and debt allocation. While such an agreement may cover many areas, a prenuptial agreement has some limitations. For example, a prenuptial agreement cannot affect a child’s right for child support, set out parental rights or responsibilities, penalize the initiating spouse of a divorce, or violate public policy.
Drafting up a prenuptial agreement may sound anything but romantic, but who should consider creating such an agreement?
- When one person has more assets than the other
In Colorado, all income and assets acquired during a marriage are considered marital property; in other words, each spouse is entitled to half of all assets or income regardless of which spouse produced the asset or income. In the event of a divorce, the Courts will look at all the martial property at the time of the divorce and generally allocate half to each party. This may mean that if you make a significant amount more in income, your spouse may be entitled to half of your income if a divorce occurs. Having a prenuptial agreement executed can protect your income by including language that specifies it will remain your separate property upon divorce.
- Excessive debts
Just as assets and income acquired during a marriage are determined to be equally owned by each party, so too are debts. If your spouse either has an excessive debt load coming into the marriage or you know they have spending fever, you may not want to be held responsible for part of these debts if a divorce occurs. A prenuptial agreement can help protect you from being found obligated to pay for some or all of their debts in the event of a divorce.
- When one person owns or is part of a business
If one party either owns or partly owns a business and no prenuptial agreement is in place, the Courts may commence a business valuation to determine the value of the business. This would occur in order to see if your spouse is entitled to a share of the business. And having an ex-spouse as a partner in your business may not be something you or a partner may want. Therefore, creating a prenuptial agreement may be a smart business decision you may want to consider.
- When this is not your first marriage
It is very common to see prenuptial agreements among those who are remarrying. In a second or third marriage, financial and legal concerns may be very different than in earlier marriages. You or your soon-to-be spouse may have children from a previous marriage, you may own property, or you may have an estate plan. Having a prenuptial agreement can protect these and other needs that you may want specific outcomes for in case of a divorce or death.
- Safeguard against high legal fees if a divorce occurs
A divorce does not need to be drawn out and expensive. Unfortunately, with hurt feelings and the high emotional nature of divorce proceedings, legal fees can rack up quickly when a couple cannot negotiate and compromise. It is also much easier to come to an agreement on how you would like the marital estate to be divided upon a divorce when you are happy with one another. Without a prenuptial agreement, you and your spouse will be bound to the laws of your state regarding a dissolution. You or your spouse may wish for a different outcome than what would be provided for by law. Having a drafted prenuptial agreement would guide many portions of a divorce proceeding and allow you and your spouse to control many outcomes that you would otherwise not be able to.
Preparing for marriage is an exciting time, but that does not mean you should not protect yourself. Therefore, it is important to discuss your circumstances with a competent domestic relations attorney. If you are preparing to be married and feel a prenuptial agreement would be beneficial for you and your spouse, please contact our Domestic Relations team today. We are here to help you feel confident in your newest life journey.
Please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.
Morgan Paterson is a domestic relations associate attorney in Denver, Colorado at Cantafio & Song PLLC. She is passionate about helping her clients receive positive outcomes in their domestic relation matters and feels that early preparation makes for better outcomes.