Business and Divorce - A prenuptial agreement can help ensure there's a systematic process that will take place if a
marriage was to come to an end. That process can turn to chaos, however, if certain conditions are not met. There are a few that are essential to comply with, if you want your agreement to fulfill its intended purpose. Of course, meeting the conditions are outlined below doesn't guarantee an agreement won't be challenged by an upset spouse or struck down in court. But it can go a long way toward making sure there's marital bliss in the short term.
Make a full disclosure. Each party should prepare a financial statement that includes all assets and all liabilities, gross income, interests in family trusts, and potential inheritances. Full disclosure ensures that each person understands what he or she is getting and giving up; failure to do so can result in a prenuptial agreement being set aside.
Be fair. The agreement should be fair. Courts tend to strike down agreements that favor one spouse over the other. Plus, courts will set aside agreements signed under pressure, such as within 48 hours of the wedding.
In writing. Though each state has different laws regarding prenuptial agreements, they basically follow the same basic form: A prenuptial agreement is a written contract signed by the two prospective spouses and witnessed by a notary. These agreements need not be filed with a court and can be drawn up by the two prospective spouses without assistance.
Add clauses. Generally, the agreement should contain a clause stating that if any provision of the agreement is invalidated, the rest of the agreement remains valid. Couples should also add a clause that makes sure the laws of the state in which the couple are going to be married take precedence should they get divorced in another state. In the absence of such a clause, couples that get divorced may have their assets divided according to the laws of the state in which they reside when they divorce. Thus, community property states--Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, will generally divide in half the couple's assets acquired during the marriage, while other states--the equitable distribution states--may decide how to split the assets fairly, based on years of marriage, status of children, lifestyle considerations and any number of other factors. The agreement should contain a clause stating that all arrangements between the prospective spouses regarding their assets and liabilities are included in the prenuptial agreement.
Include specific and circumstantial information. Couples might also wish to quantify "maintenance," the amount of alimony a divorced spouse may receive from his or her wealthier counterpart. In addition, an agreement could speak to the preservation of a business, family assets or a family fortune held prior to the marriage so that those assets stay with the original owner should the marriage end in divorce. For more complex situations, couples about to exchange marriage vows might also consider protecting separate property through other more sophisticated legal tools.
Hire a lawyer to review the agreement. Last, but by no means least, it's important that each person hire separate counsel to review the contract, make sure his or her interests are protected and ensure that the agreement follows the letter of the law of the state in which they'll marry. Some agreements get struck down because each party didn't hire his or her own lawyer to review the agreement.