Considering the Impact of a Pre-Marital Agreement

Doing family law, many times I see the benefits of a couple entering into a pre-martial (also known as a pre-nuptial) agreement. This article discusses the major issues which arise upon entering into such an Agreement. As a preliminary matter, you must understand that upon entering into such an Agreement, your intended spouse and you are waiving certain rights (and their accompanying benefits or obligations) which otherwise would have been available to you under applicable law. In particular, the Agreement will impact your rights in the event of dissolution of marriage or death. Because of this, you should only enter into the Agreement if you have a clear understanding of your rights and of the impact the Agreement will have on those rights. If you have any doubts or questions, you should discuss them with an attorney before signing.

Set forth below are a few of the major areas impacted by a Pre-Marital Agreement.

1.  Equitable Distribution. In the event of dissolution of marriage, the court will determine marital and nonmarital assets and liabilities. The court has the authority to divide those assets and liabilities equitably (in other words, as the court determines is “fair”). As a general statement, assets and liabilities accumulated during the marriage and enhancements of assets brought into the marriage, are considered marital and subject to division by the court. Upon entering into a Pre-Marital Agreement, you are agreeing with your spouse how assets and liabilities will be determined to be marital or nonmarital. The Agreement defines marital and nonmarital assets and liabilities differently than would be the case under applicable law. Therefore, the Agreement could significantly lessen the assets to which you are entitled and could increase the liabilities for which you are held accountable.

2.   Alimony/Spousal Support. In the event of a dissolution of marriage, you might be entitled to receive support from your spouse in the form of alimony (either rehabilitative, lump sum or permanent alimony). Upon entering into a Pre-Marital Agreement, you may be waiving or limiting your entitlement to receive such alimony or support. Once waived, you can never go back and receive alimony in a divorce action.

3.  Spousal Elective Share. In the event of your spouse’s death, you would normally be entitled to receive either what your spouse leaves you in their Will, Trust or by beneficiary designation, or to elect to receive 30% of your spouse’s estate. By entering into the Agreement, you are waiving your spousal elective share and would only be entitled to receive what your spouse leaves you by gift or bequest.

4.  Homestead Property. Under Florida law, spouses have certain rights in and to the primary marital residence in the event of divorce or death. Upon entering into a Pre-Marital Agreement, you are waiving your homestead rights under Florida law and thereby consenting to the homestead being disposed of as set forth in the Agreement.

5. Attorney’s Fees and Costs. In the event of a dissolution of marriage, a significant issue to be resolved can be who will pay for the attorney’s fees and costs incurred. If the divorce is contested, these can be in the tens of thousands of dollars. Under applicable law, the divorce court can order one spouse to pay the other spouse’s attorney’s fees and costs. In particular, the spouse who has the lower income can be impacted since it is usually that spouse who is awarded the fees and costs form the higher income spouse. Often in a Pre-Marital Agreement, the issue of attorney’s fees and costs are addressed, thereby limiting or altering a party’s rights to recover these expenses.

 

For more information, please visit our sister sites: www.linslawgroup.com and www.mytampabaydivorce.com

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