Tag Archive for: prenuptial agreement

Legal and Illegal Prenuptial Agreements

Creating a prenuptial agreement before a marriage is an excellent idea. It protects your interests in the event that you and your spouse divorce down the line. It also prompts you and your spouse to communicate about important issues like finances, property, and shared bank accounts. 

But you must understand the difference between a legal and illegal prenup to ensure that yours holds up in court. Know what you can and cannot include in a prenuptial agreement under Pennsylvania law and how to validate one. 

What Items Can a Prenup Include?

One way to ensure a legal and valid prenuptial agreement is to address only the specific items that can be covered in these agreements. Typically, you can include provisions about all of the following in a prenup: 

  • Asset division: Distinctions about marital vs. separate property in a divorce, including what happens to shared property, what property will stay separate, etc. 
  • Spousal support: Whether one spouse will owe the other spousal support, waiving future requests for spousal support, the minimum or maximum amount owed, etc. 
  • Providing for children from previous relationships: If one spouse has a child from a previous relationship, the prenup can include provisions for how both partners will financially provide for them and what assets (if any) the child would receive in a divorce. 

Meanwhile, a prenuptial agreement generally cannot protect any of the following: 

  • Child custody and support: Your prenuptial agreement cannot include terms regarding child support or custody. The court will decide these matters in the final judgment based on the child’s interests, not the parents’. 
  • Financial incentives for divorce: The prenup cannot encourage divorce in any way, such as providing a financial incentive for filing for divorce
  • Day-to-day household matters: This agreement shouldn’t cover any day-to-day household matters like who will complete certain chores, how you will raise children, what religious beliefs you will adhere to, etc. 
  • Anything inherently unfair: Prenups should spell out terms that are fair and just for both spouses and should not explicitly favor either spouse. Attempting to enact unfair terms could lead to a contempt of court charge in a divorce. 

How Do You Validate a Prenuptial Agreement? 

Take these steps to ensure that your prenuptial agreement is valid: 

  • Put the agreement in writing. Oral prenuptial agreements are never valid. 
  • Ensure full disclosure: You and your spouse must fully disclose your finances to ensure the prenup will hold up in court. 
  • Have an attorney draft it. Don’t create a prenuptial agreement without the help of an attorney. Better yet, you and your spouse should enlist separate attorneys to support your interests. 
  • Notarize the agreement. Have a notary sign and validate the prenup and give you a certified copy. 

Karen Ann Ulmer, P.C., Offers Support With Prenuptial Agreements 

Do you need help distinguishing between a legal and illegal prenup and ensuring the validity of your agreement? Karen Ann Ulmer, P.C., can help you draft a prenuptial agreement that will hold up to court orders, enforcement actions, and legal scrutiny. Contact us today at (866) 349-4117 for a consultation. 

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If You Plan to Marry, and One or Both of You Own a Business, a Prenuptial Agreement Makes Sense

A properly drafted, enforceable prenuptial agreement may greatly reduce, if not prevent, disputes concerning the equitable distribution of marital property if a married couple divorces. Making such an agreement before you marry is not a sign your marriage is doomed. It only means you are smart and preparing for a life-changing event that may or may not happen, especially if one or both of you own a company. 

If you own a business, do not have a prenup, and the business grows, your spouse would be entitled to half of that growth upon your divorce. You could be forced to give up other assets, pay your spouse over time, or, in the worst-case scenario, close the business. However, a well-crafted prenup can protect you and your business.  

What Is Equitable Distribution? 

Part of the divorce process is the equitable division of marital property. The couple’s assets and debts are organized, and their values are estimated. The parties must decide which are separate or personal and belong to the individual and which are marital (normally property acquired during the marriage) and belong to the couple, or a court will do it for them. 

Marital property is subject to fair or equitable division during a divorce. The increased value of separate property could also be divided depending on the circumstances. The parties can agree to this, or it will be resolved at a trial. 

What Is a Prenuptial Agreement? 

What is a prenup? A prenuptial or antenuptial agreement is a contract entered into before marriage. The parties can agree on which assets and debts are personal and which are marital and identify them accordingly. The agreement should include how marital assets and debts will be divided, possibly preventing disputes during a potential divorce.  

Why Is a Prenuptial Agreement a Good Idea? 

Just creating the document can be beneficial. The two of you need to think about your financial lives and assets and your duties and rights during and after your marriage. These agreements may be particularly helpful if one or both parties have significant assets before the marriage, a well-paying job, or a business. One or both parties may feel more at ease if they know what will happen financially if the marriage ends in divorce, and the outcome will be fair and mutually agreed upon. 

If one or both spouses start a business during the marriage and it is not mentioned in the agreement, who ends up owning what can be determined by a contract made during the marriage (a postnuptial agreement), by amending the prenup, through negotiations during a divorce, or at a trial. The issue can also be part of a business ownership agreement covering what will happen if you divorce. 

What Effect Does Business Ownership Have on Equitable Distribution Without a Prenuptial Agreement? 

Consider what would happen if a marriage ends in divorce and one or both spouses own a business but there is no ownership, prenuptial, or postnuptial agreement. One spouse could argue it would be fair and equitable that they should get part ownership (if they do not already have it) and make the case for how much that should be (whether they own part or not.) The outcome would depend on how actively the spouse aided the business and what sacrifices they made so it could be a success, including contributing personal funds, working for the company, or sacrificing their career to help it. 

The fate of family-owned businesses can be a highly charged divorce issue. A prenuptial or other type of agreement would spell out how this would be handled and should prevent these types of conflicts from erupting. 

Karen Ann Ulmer, P.C., Can Help You With a Prenuptial Agreement 

Contact us if you have questions about a prenuptial agreement, want one created, or think you are being forced to sign one. For a confidential discussion with a Doylestown premarital agreements attorney at Karen Ann Ulmer, P.C., call (215) 752-6200 or email us. We can meet in our Doylestown or Langhorne office or speak with you by phone.

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How Do I Use a Prenup If I Divorce?

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A prenuptial agreement, if properly executed, can make a divorce much simpler, so the process consumes less time, energy, and money. If you plan on getting married, it’s something worth considering. Here in Bucks and Montgomery Counties, we make sure that you have an airtight prenup when you get married and also skillfully use your prenuptial agreement should you get divorced.  

What is a Prenuptial Agreement? 

A prenuptial agreement, or a premarital contract or “prenup,” is a contract between two people planning to marry. It’s a written, signed document containing mutual promises. It goes into effect when the two marry. The parties release their rights when they divorce, or one dies.  

It can cover who pays what expenses during the marriage and what will happen if there’s a divorce: 

  • Who will receive how much alimony 
  • How property will be divided 
  • How assets and debts will be divided 

Who will get what kind of child custody and who will pay how much child support are not topics in a prenup. Those agreements will be part of your divorce agreement.   

What Makes a Prenup Valid? 

To be enforceable, the agreement must be: 

  • Written 
  • Voluntarily signed by the parties 
  • Not severely unfair and one-sided (one party will not be left destitute)  
  • A result of both parties fully disclosing their financial information 
  • Free of fraud or duress 

Both parties need to have attorneys help them put the agreement together and review it. This is a significant component in ensuring that the prenup is enforceable.   

Can a Prenup Be Disputed? 

A prenup can be challenged if a party can make a good faith argument that it isn’t enforceable. A court should uphold the prenup unless there’s clear and convincing evidence showing legal requirements weren’t met. A prenup may have been very fair when it was written but due to a change of circumstances, one party is going to now be left destitute.  That will not be allowed.  

What are Potential Complications? 

When a marriage starts, both parties make assumptions based on what they want to do or what they think will happen. But life is complicated: 

  • Both parties may be employed, so the agreement may be made based on that continuing. One or both may be temporarily unemployed at some point. One may suffer a disability, so that person has a lower or no income.  
  • A party may own a business before the marriage or start one after the wedding. The business may do very well, so there’s more income and assets than expected, or very poorly, so the income is much lower than what they planned for, or a spouse (or both spouses) may be deep in debt.
  • The two may have a child and one spouse may become a stay-at-home parent. If they weren’t planning for a child, expenses might be much higher than expected and income much lower 

Prenups should account for many possibilities, not just what the couple plans to do. If they encounter financial challenges that aren’t covered, it can cause conflicts during the divorce. 

Get Help With a Prenup From an Attorney You Can Trust 

If you have questions about prenups, want help creating one, or feel the one you signed shouldn’t be enforced, use our online calendar to schedule a free consultation or call us at (215) 752-6200. 

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Divorcing doesn’t have to ruin the family business in Pennsylvania

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Small businesses are the heart and soul of the economy in Bucks County and throughout the rest of the country. According to the Small Business Administration, approximately 90 percent of all of the businesses in the U.S. are family owned and run. Running a small family business comes with several advantages, like more convenience, flexibility and lower employment costs. However, things can quickly get complicated when the owners of the business decide to separate and divorce.

It all starts with the prenuptial agreement

Before a couple even says “I do,” they should already be planning for their financial future with a prenuptial agreement. This document acts as an insurance policy in case divorce ever becomes part of the equation. One of the mistakes that small business owners often make is not drafting this important document until it’s too late since they previously believed that divorce would never become an option. However, according to Forbes, over 50 percent of married couples in the U.S. eventually divorce so obtaining a prenuptial agreement should be a priority for all married couples, and those that own a business together in particular.

This agreement should be in writing, provide a full disclosure of the business’ assets and liabilities, be executed by both parties and without coercion from one side and documented in a recordable format.

Making it work after the divorce is finalized

Just because a marriage is ending doesn’t mean that the business has to go down along with it. Divorced couples can still stay in business together and be successful if:

  • They are rational and consider compromise.
  • They hire an independent business appraiser as part of the divorce proceedings.
  • They consider how their roles will shift in the workplace after they are divorced.
  • The business stays relatively the same and doesn’t undergo any big changes until after the divorce is finalized.

Although it can be a daunting task to split with a partner and still maintain a business, it can be done with a little work and a lot of communication. For example, according to Businessweek, a divorced couple that owns a bakery in the Boston area worth $2.5 million has been in business together for over 35 years. The couple, who were married briefly from 1979 to 1981, found that although their marriage didn’t work they were able to keep their business going out of admiration for the each other’s business skills.

If you and your spouse are considering divorce and are concerned about the future of your family business, contact an attorney in your area that can work through these concerns and ensure that you and your spouse are able to transition smoothly from being marital partners to business partners. You should also realize that a business has value and a competent attorney can assist in ensuring that both partners get value for the efforts they contributed to the business and find ways to separate while preserving the business.

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Why do I need a prenup for a remarriage?

Prenuptial agreements offer blended families a way of estate planning as well as protecting spouses in the event of a future divorce.

Anyone in Pennsylvania who has been prematurely widowed or divorced at least once knows that sometimes a marriage does not last as long as originally hoped or planned. Many people choose to get remarried and often question whether they need a prenuptial agreement for various reasons.

The American Academy of Matrimonial Lawyers noted in a 2016 survey that the prior three years had seen a jump in the number of prenups created.

Protection in the event of another divorce

The possibility of a divorce always exists and that can spell financial disaster for some. In addition to salvaging some assets, U.S. News and World Report notes that a prenup might even help protect one spouse from getting stuck with the other person’s debt.

Many people go into second or third marriages with children (or grandchildren) from previous relationships whom the parents or grandparents want to protect financially in case remarriage ends in divorce.

In divorce, separate property that belongs only to one spouse because he or she owned it prior to the marriage or received it as a gift or inheritance that continues to be held in that person’s name alone normally remains the property of that spouse, however, the increase in value becomes marital. This can be sheltered by a prenuptial agreement so that the increase in value can also be protected. Marital property, meaning assets accumulated during marriage by either spouse or by them jointly, is divided equitably or fairly in divorce unless a prenuptial agreement determines what assets are distributed and in what percentage. A prenuptial agreement also may be used to determine the level of spousal support or alimony or if there is a payment at all to the other spouse.

In a prenuptial agreement, the parent of a child from a prior relationship could negotiate that part of future marital property go to that child. For example, the parent might want to direct the marital part of his or her retirement accounts or part of the equity in other accounts or assets go to support or benefit the child, rather than becoming part of the marital property subject to division.

If the child has disabilities, the parent might want certain assets of the marriage to go into a special needs trust to protect the child’s future.

A prenuptial agreement entered into before the marriage can set forth the course of what will happen in a divorce and eliminate doubts on motives of the spouse.

Lifestyle provisions

Trying to include some lifestyle provisions might not be reasonable, such as how one spouse should wear their hair. Other matters may well be included in a marital contract. According to Time, use of social media is a topic often referenced in these documents nowadays to prevent one person from publicly humiliating or denigrating the other during or after a divorce.

A prenuptial agreement might also designate who will get the family’s pets if the couple divorces.

Estate planning assistance

Fidelity Investments explains that a prenuptial agreement can aid in a couple’s estate planning, especially when one or both spouses has children from prior marriages.

People may understandably want to take care of their spouses after they die. They also might want to make sure that their children or grandchildren from previous relationships receive certain assets or family heirlooms.

With no prenup directing assets to people outside the marriage, a spouse might automatically inherit certain assets when the other person dies even if there is a will in place as a spouse can elect to take against a will. The surviving spouse could live for quite some time longer in which case there may be little to nothing left of the estate to pass on to the deceased spouse’s children. The surviving spouse might also leave remaining assets to their biological children only and not the children of the spouse who died first. A prenuptial agreement can be used to waive that elective share and allow the will to control in the event of death.

Family businesses

Oftentimes there may be a family business that a spouse wishes to keep separate in the event of death or divorce. The spouse and his or her family may desire to keep the business intact and in the hands of family members or other owners or to avoid expensive and intrusive evaluations of their records. A prenuptial agreement can aid in easing the mind of other family members and creating a better family environment without the threats that may otherwise occur.

Otherwise, if the other spouse has an interest in the business in divorce or as an heir, the business might have to be sold or take on significant debt to pay the other spouse his or her share. In addition, if the business becomes embroiled in a court proceeding, the discovery process to determine its size, value and ownership can be expensive.

Legal assistance

Anyone contemplating remarriage should contact an experienced attorney prior to walking down the aisle for the second time. This will give him or her the insight of a professional to help make decisions about a prenuptial agreement. At a minimum, no potential spouse should sign a prenup before talking to a lawyer about its implications.

The family lawyers at Karen Ann Ulmer, P.C, represent people approaching remarriage in Eastern Pennsylvania and New Jersey, including providing advice about, reviewing, drafting and negotiating prenuptial agreements. The are available for consultations by phone prior to coming in to the office to determine if you would benefit from a prenuptial agreement.

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Pre-Nuptial Agreements

A pre-nuptial agreement is a private contract between the parties entered into prior to their marriage that outlines how assets and debts will be handled if the parties subsequently divorce. A basic and straight-forward pre-nuptial agreement could provide that each party retains anything they came into the marriage with as well as anything they acquire in their own name and that anything acquired jointly during the marriage will be divided equally or pursuant to their jurisdiction’s divorce laws. A pre-nuptial agreement can also be much more specific and detailed in how it addresses pre-marital and marital property, regardless of how it’s titled. An agreement may also address support for a spouse in addition to division of assets. For example, an agreement could provide for an increasing amount of support to a spouse based on the number of years married or number of children produced. It could also act as a waiver to any future support such that neither party could subsequently request any form of spousal support.

A pre-nuptial agreement is a form of contract and must meet several requirements to be valid. One, there must be a full and fair disclosure of the financial resources/existing assets by both parties. If there is not such a disclosure, there must be a provision in the agreement providing that the parties voluntarily and expressly waived the right to disclosure. Two, it must be clear that both parties voluntarily entered the agreement. For these reason, the agreement should be signed well before the wedding to avoid any challenge to the agreement that a party was under duress or felt forced to sign because the wedding date was fast approaching. Finally, steps should be taken to make sure the agreement is not invalidated on the basis of fraud or misrepresentation. Any challenge under the above listed causes of action will result in a fact-based analysis with the standard being a preponderance of the evidence, or more likely than not.

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How to Approach the Subject of a Prenup

As a wedding day approaches, most couples are consumed with thoughts of dresses, flowers, music, food, fun, and love. The last thing anyone wants to think about, much less talk about, is how assets will be divided in the event of divorce! However, this is a conversation that many couples need to have. Marriage is full of tricky discussions – it’s ok to start practicing that skill now.

There are many benefits to talking about a prenup. One of those is that the discussion will force you to look at your financial situation and examine both of your attitudes about money. Frankly, a deep discussion about finances should be a prerequisite to marriage, as money is a huge source of friction and discord in many relationships.

Beyond the benefits of discussing financial matters, there are several situations in which having a prenup in place is a good idea, such as:


  • If there is a large financial disparity between the two parties
  • If you own all or part of a business
  • If one of you has a large amount of debt
  • If you are remarrying, especially if there are children involved.

Regardless of your reasons, discussing a prenup can be difficult. Sometimes both parties heartily agree to a prenup. In other cases, one person has to convince the other. Here are a few tips for approaching the subject of a prenup:

Pick the Right Time

Don’t bring up a prenup in the heat of the moment or in the middle of an argument. Likewise, don’t introduce the topic in the middle of a romantic dinner to commemorate the anniversary of the day you met. Pick a quiet, neutral time to bring up the topic – when you are both well-rested and calm.

Consider a Mediator

You could suggest a meeting with a mediator who can help you discuss the advantages of a prenup impartially and without emotion. If you decide to move forward and draft a prenup, the mediator can also help you by asking all of the important questions, gathering information, and offering sound, logical advice. Again, a mediator can remove the emotion from a tender subject.

 

Be Honest

Be truthful and straightforward about why a prenup is important to you. Be very open about your financial situation – the good, the bad, and the uncertainties.

Listen

If your partner is opposed to the idea of a prenup, listen to their concerns. Don’t jump right in with arguments.

While you certainly do not expect your marriage to end in divorce, a prenup can allow you to open important lines of communication, have an honest dialogue about financial matters, and ultimately allow you to retain more control of your financial situation, rather than giving that control over to the court system. Approaching the topic is not easy. Remember that a trained attorney can help.

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What Makes a Prenuptial Agreement Valid in Pennsylvania?

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Gone are the days when prenuptial agreements are viewed as contracts on a marriage or a guarantee on divorce. While some religions and cultures still do frown upon them, they can be a great way to talk about finances and strengthen your marriage with clear expectations. If you have children from a previous relationship and significant assets to protect, a prenup can also make everyone feel more comfortable.

What is a prenup? A prenuptial agreement, also known as an antenuptial agreement here in PA is a formal agreement entered into before marriage in which the future spouses agree to provisions for equitable distribution of assets, debts and spousal support in case they divorce in the future or if they wish to provide for what happens to assets in the event of death by waiving a spousal election which is provided for in each state under the state law. In this document you can discuss current financial positions and how finances are going to be handled during the marriage, and whether you wish your will to control in the event of death.

The general purpose is for future spouses to think about and decide, prior to a marriage, their rights and duties concerning financial issues. These agreements can be especially helpful because putting one together forces the parties to discuss financial issues, a topic many of us avoid and is a common reason for divorces. If one or both parties have a substantial income, assets or debts these agreements may be a good option.

If one of you has significant assets or had to pay handsomely in a previous divorce, a prenuptial agreement can put one’s mind at ease that the less well-off party is not marrying for money.

In case a divorce does happen and if the agreement is valid, the issues agreed to in the contract are settled. Whatever issues not included in the agreement need to be worked out or failing that, litigated.

What makes a prenuptial agreement valid?
It is important to note that a prenuptial agreement’s validity is only determined when it comes into question in either a divorce or estate proceeding. This is why the writing of a prenuptial agreement must be done by an attorney who has significant experience in this area. There are a few general requirements to which make a prenuptial agreement valid:

· The agreement is in writing,

· Signed by both spouses, and notarized.

· Accompanied by a statement of assets for both parties and includes an estimated net worth as well as previous tax and salary information.

· The agreement cannot be the result of fraud or duress. It is a good idea to complete the prenuptial agreement and signing far before the wedding to rule out the appearance that it was forced on one party by the other.

· The parties understood and accepted the terms and conditions of the agreement, agreed to it voluntarily and had enough time to think about it prior to signing it. This includes the opportunity for both parties to consult with their own attorneys and make changes to or discuss points in the document.

· The agreement is fair and not “unconscionable,” which it may be even if what one spouse receives is small or disproportionate compared to what the other spouse receives, as long as one spouse is not left destitute.

Prenuptial agreements, like any contract, can be changed with the agreement by both parties.

A valid prenuptial agreement should shorten if not prevent disputes over financial issues if a marriage ends or a spouse dies, but issues they don’t cover are child custody and child support which can be especially contentious depending on the parties. If they can’t reach an agreement these issues would be decided in court, which can be a long, expensive and emotionally painful process.

Whether or not you signed a prenuptial agreement and your marriage is heading for a divorce, contact our office so we can talk about how mediation could bring an end to the disputes between you and your spouse, allowing you to start a new chapter in your life without the emotional and financial trauma that a divorce can inflict.

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How to Preserve Premarital Assets without a Prenuptial

If you are getting married and the idea of a prenuptial agreement puts a distaste in your mouth or that of your spouse, but you are still concerned about losing your premarital assets, there are a few things that you should and should not do if you get married without a prenuptial. Never add your spouse’s name to the house or bank account you had prior to marriage unless you are willing to gift this asset to the marriage. This is not to say that the house you own prior to your marriage will not be distributed in a divorce, but you can minimize the amount by keeping it separately deeded. The equity that you have when you get married will remain your asset should you get divorced. You should know what this value is when you get married by having the house appraised and keeping documentation on your mortgage balance at the time of your marriage. Without a prenuptial agreement, the increase in value during the marriage will become marital, whether or not you add your spouse to the deed or title of your account. If you have a mortgage and pay it off during the marriage, you will be accumulating marital equity even if the house does not go up value. In addition, if you have any bank accounts, you will want to keep the funds that you had going into the marriage in your separate name.

Once you start putting your premarital assets into a joint account, they become a gift to a marriage. This means that if you get divorced and have no prenuptial agreement, the Court will have to decide how to distribute this asset if you cannot agree. If you are in Bucks County, the court will normally apply a diminishing credit value meaning for every year that it was transferred into joint names, 1/20 of the asset will be considered as marital and you can seek a credit for the balance. After 20 years, you will get no credit for the premarital asset you contributed to joint names. When you start gifting your premarital assets to the marriage without a prenuptial in place, you should be very careful to document both the amount of your contribution and the source of funds. This way, if you do end up in a divorce, you will be better prepared to argue for the diminishing credit if you are in Bucks County or a more equitable share of the asset.

For more information on prenuptials, see /Family-Law-Divorce/Prenuptial-Agreements/

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Reasons to consider a Prenuptial Agreement

If you are getting married, you may want to consider a prenuptial agreement before you tie the knot.  A prenuptial agreement is not necessary in every situation, but is very useful to avoid conflict in certain situations.  It is not always just for divorce.  You may want to use it to allow you to decide how your assets will be distributed in the event of death rather than have your spouse be entitled to their elective share.  

A prenuptial agreement allows you to predetermine in the even of death or divorce how some or all of your assets will be distributed.  In the case of death, you will also need a will.  Some situations where it is very useful to have a prenuptial agreement are when you have children from a prior relationship, a closely held business, or assets accumulated prior to the marriage.   Even if none of those apply, you can still use it to help you save the expense of protracted litigation in the event of a divorce.

For more information on prenuptial agreements, please click here:/Family-Law-Divorce/Prenuptial-Agreements/

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