DC PREMARITAL AGREEMENTS
Premarital agreement, also called prenuptial agreement, is a contract between a future couple which delineates financial obligations of each party in the event of marital dissolution, separation, annulment or termination of a domestic partnership.
Given the complexities of the divorce and separation proceedings and when the child support/custody aspects are included, it is not just advisable to have a separation financial road map it is an indispensable legal tool for those with financial obligations and assets.
Traditionally such agreements were considered a sensitive subject and frowned upon. However, given the independent financial capabilities of power couples and their maze of financial assets, liabilities and footprint, a well drafted cohesive agreement does no longer create a rift but rather clarity, definition and understanding particularly if all is addressed prior to the nuptials.
Thus premarital agreements can provide an effective and enforceable roadmap in case of separation or divorce. The key is to draft the agreements all encompassing and comprehensive while making sure it remains enforceable and valid if challenged.
CONTENT: WHAT IS PERMISSIBLE TO INCLUDE
The agreement can address a myriad of subject matters including but not limited to:
- Ownership, disposition and division of property
- Manage and control of property
- Spousal support, modification or elimination thereof
- Trust and estate issues
- Death benefits and life insurance policy
- Choice of law
- Any other subject matter not against the law or public policy
The premarital agreement should however be specifically drafted with three main categories in mind:
1) Sole and Separate property of each spouse prior to the marriage:
There should be a detailed list attached to each agreement under separate exhibits detailing all financial assets prior to the marriage for each of the parties. This serves two purposes:
- Provides full and complete financial disclosure which the Statute requires;
- Clearly delineate what constitutes as “Sole and Separate “ properties of each of the parties.
2) There should be specific clauses addressing property acquired during the marriage and how it would be designated either as:
- Marital property or;
- Sole and separate property assigned to a particular spouse.
- The presumption is that all property acquired during the marriage would be deemed a marital property regardless of how the property is titled unless specifically excluded in a valid prenuptial agreement.
3) How the assets, properties, and retirement accounts would be divided in the event of divorce or dissolution of marriage:
This part of the agreement requires very specific clauses addressing how all property would be divided among parties, whether it would be equally divided or equitably divided and what specific formula may apply. Each material property should have a designation and specific math for division.
The agreement may also either eliminate spousal support or significantly limit the spousal support or provide some tiered support platform. Or even address legal fees and spousal support toward legal fees.
It is of utmost importance that the drafted agreement is balanced as the unconscionability test linked to enforceability of agreement will hinge on whether there has been sufficient disclosure, notice, and if the agreement is reasonable giving the economical position of the parties.
Premarital agreements are not enforceable if:
- Not voluntarily executed by both parties
- The agreement was unconscionable
The unconscionability test is dictated by whether:
- There was full, fair and reasonable disclosure of assets and property to be considered
- There was a voluntary waiver in writing to claim over property already disclosed and excluded
- There was reasonable and adequate knowledge and understanding of the finances and property involved
- Both parties to the agreement had the benefit of legal counsel to obtain independent advise
Moreover, specific clauses should also be drafted to address how to keep certain properties excluded from marital designation during the marriage by focusing on sole and separate funding for the property, sole title designation as well as focusing on the use, intent and treatment of a property during the marriage.
There should be also definition and description as to what constitutes commingled property. An effective premarital agreement should clarify how property would be commingled and how the division of such commingled property should be executed.
Child support and child custody agreements can be addressed in the separation agreement but are both exclusionary subject matter in the premarital agreements. That is one cannot by agreement pre determine child custody arrangement or the child support payments as both are specifically addressed in dedicated and expansive DC statutory provisions.
TRUST AND ESTATE ISSUES
If at all possible the agreement should address trust and estate issues. If either party is a direct or indirect, vested or otherwise attached to a trust agreement and provision then the agreement should have an appropriate clause pertaining to trust benefits during marriage as an evolving asset to be precisely defined and disclosed. The trust agreement should be carefully deconstructed to determine direct or inferred benefits in order to make an effective and precise disclosure. Moreover, as the DC estate laws in absence of clear will or devise make a surviving spouse defacto beneficiary, an effective and complete prenuptial agreement should have a trust and estate planning stand-alone sister agreement or a detailed incorporate language.
Our Washington DC divorce lawyer via a comprehensive, inclusive and enforceable pre-material agreement can significantly reduce the need for litigation in event of separation or divorce. In the end marriage in part is a financial arrangement and parties should insightfully set out from the very outset to predict and protect assets not deemed marital.
Contact our Washington DC Divorce Lawyer/Washington DC Prenuptial Agreement Lawyer to schedule an intake appointment and to discuss the specifics of your case.