Hosted By: Dan Couvrette, Publisher, Family Lawyer Magazine and DivorceMag.com
Guest Speaker: Amy Kennedy, a Utah family law attorney, Dart, Adamson & Donovan (DA&D) Attorneys at Law
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Read the Transcript of this Podcast Below.
What is a Relationship Agreement? Is a Cohabitation Agreement the same as a Relationship Agreement? What kinds of items are typically included in these agreements?
A relationship agreement and a cohabitation agreement are essentially the same things. They are for couples who are living with one another or who desire to live with one another but who choose not to be married. These agreements can cover a variety of topics and the most common topics are to:
- clearly establish that there is not a marriage relationship – this is important to prevent future claims of common law marriage
- outline financial responsibilities for living and shared expenses and
- create and manage joint property.
Although I like to view my relationship agreements as helping a couple plan their future together, we are remiss if we do not address what may happen if the couple splits up.
What is a Marital Agreement? What is a prenuptial & post-nuptial agreement? Are they essentially the same, except for when they’re created? What kinds of items are typically included in these agreements?
A marital agreement is a blanket term that can describe both a premarital or prenuptial agreement or a postnuptial agreement. These agreements are essentially the same but there is an important consideration for a prenuptial agreement because these agreements are specifically recognized by Utah Law. Creating a premarital agreement is an important opportunity for future spouses to discuss their current and future financial situation and make plans for how to create joint property and be clear on how they will maintain and keep separate their individual property. I really dislike it when people categorize a premarital agreement as pre-planning a divorce. I think having an open and honest conversation before marriage helps future spouses navigate difficulties they may encounter in their marriage. Entering a serious relationship such as marriage with eyes wide open and having difficult conversations is a helpful skill. In my marital agreements, I include a discussion about what is separate and what will be marital property, financial obligations between the spouses, and of course, discussing what happens when the marriage ends either by divorce or by the death of one of the spouses. The parties may also agree to eliminate alimony or limit the amount or duration of it.
A postnuptial agreement can accomplish many of the same things as premarital agreement does. Often times my clients wound up signing a postnuptial agreement because they ran out of time before their wedding. This is why I stay on top of my clients to make sure it’s this is taken care of before the wedding!
A postnuptial agreement can establish financial rights and responsibilities after the marriage in the same way that a premarital agreement does. It can also help a couple define these property rights during their marriage and can lay the groundwork for a potential separation agreement or divorce settlement if necessary.
What can you tell me about the value of getting a prenuptial or post-nuptial agreement in Utah?
Utah is an equitable distribution state. What that means in layperson’s terms is that our courts are directed to equitably divide marital property. While in most cases equitable means equal our judges have the discretion to fashion a property settlement that considers the equities of the case. In extremely rare circumstances this could mean that a judge could award a portion of separate or pre-marital property to the other spouse in a divorce settlement. To me, the biggest value of a prenuptial agreement in Utah is avoiding this potential outcome. By focusing on what is and is not marital property, the conversation regarding a divorce settlement becomes clearer. Also, knowing whether spousal support or alimony is in play helps the parties focus on their settlement outcome.
Can a prenup be used to protect the rights of the children from the first marriage in the event the second marriage produces children? For instance, could it be used to protect child support and inheritance?
It can. This is one of the most common reasons spouses consider marital agreements. By being very clear about what is separate property, and carefully considering the needs of children from the first marriage, whether what a parent would like to do to ensure the future of their children or to consider financial obligations created in a previous divorce settlement. This type of situation is where I can put my family law and estate planning practices together as often times marital agreements are created in conjunction with or to incorporate an existing estate plan that makes provisions for children from a previous relationship.
This can also be helpful to be clear on how new obligations or properties are being acquired by the couple are to be handled. By being clear about expectations for children from previous relationships, the spouses can also be intentional about how they intend to create property together and care for each other in the future or potentially divide property between them if their relationship pence in divorce.
Can a prenuptial agreement be used to address how to handle parenting issues that may arise, such as changes in custody or visitation agreements?
No, it cannot. Anytime a premarital agreement addresses children’s issues, I advise my clients not to sign it. First, the law governing premarital agreements in Utah forbids us from including child support in such an agreement. This recognizes Utah’s longstanding public policy that child support belongs to and benefits the children, not the parent. Further our courts are required to consider the best interest of the children in any divorce or separation proceeding. Even if the parties reach a settlement agreement regarding custody, it is always subject to court approval for this reason. This is why in my view prearranging custody or parent-time provisions would likely not be upheld by the court. It’s best to address the needs of the children in a divorce or separation at that time.
If a person is getting married later in life, possibly a second marriage, and they want to protect their assets for their children from their first marriage, do they really need a prenuptial agreement, or will a Will suffice?
I say both. My practice incorporates both traditional family law and estate planning, so I have a keen understanding of how marital agreements and estate planning documents work together. My marital agreements are clear that neither party is to expect to inherit from their spouse or be the beneficiary of their estate in any way. What this does is prevent is help prevent arguments regarding a will or trust after a spouse has passed away. That said, this doesn’t mean that a spouse can’t be more generous in their estate plan if they choose. To me, this is part of sound financial planning heading into a new relationship to make arrangements for providing for children from other relationships. It’s quite common for people to remarry in their 40s, 50’s or 60s and blended families are becoming the norm.
If one party has very few assets and the other party has a lot of assets, how does the party with less money protect themselves in a prenuptial agreement? How can the less-monied spouse make sure he or she isn’t being taken advantage of?
The best way for a party with fewer assets than their future spouse to protect their interest is to work with a competent attorney. Getting advice from a family lawyer will help the less moneyed spouse understand the proposed agreement and make sure that it is fair. This also gives this person the opportunity to understand provisions that could be altered or added to the agreement. Oftentimes people don’t understand that marital agreements can be negotiated and they’re not a take it or leave it situation.
Do these agreements always stand up in court, or can they be set aside for some reason?
A marital agreement is looked at by our courts as a contract and in most cases, contracts are enforced. That said, our courts do have the discretion to examine the circumstances of a marital agreement and apply our laws to determine whether the agreement is enforceable. In my experience, it is very rare for marital agreements to be set aside by the court. This is why it is so important for both parties to have competent legal counsel before entering these agreements.
If the parties didn’t sign a prenuptial agreement before the wedding, is it too late?
It’s not too late but it’s not ideal. By signing a marital agreement before the marriage, the parties have the protection of our statute in Utah that recognizes and governs premarital agreements. A post-marital agreement does not have had that statutory recognition that provides an extra layer of certainty. This is why I advise my clients who are considering a marital agreement to do so several months in advance of the wedding. Time goes by quickly and getting the marital agreement done provides a sense of relief to the future spouses to have this task taken care and allows them to focus on the more joyous aspects of their wedding.
Can you change a prenuptial agreement after it’s been signed?
You can. A premarital agreement can be amended after it is signed. The parties can alter provisions, remove certain provisions, or in some cases agree to that that the agreement is no longer binding. This requires that both parties agree to these changes in writing period. Of course, I recommend that both parties seek independent legal counsel when doing any type of amendment to their marital agreement.
What happens if you have a prenuptial agreement, but the parties decide to put a piece of property in joint names after they are married?
Ideally, the parties consulted their premarital agreement before they put the property in joint names. The agreements that I create for my clients will address the steps the parties need to take when they want to when they acquire property and want it to be considered a joint asset. It’s all about being intentional.