Many individuals when preparing for marriage find it in their best interest to enter into a prenuptial agreement. Prenuptial agreements establish the guidelines and rules for dividing property in the event of a divorce. Such agreements may be advantageous to individuals who have a large net worth and/or important family assets.
Although prenuptial agreements can be beneficial, those who have already entered into such agreements, or who plan to in the future, should be aware that such agreements are only valid when they are entered into and adhered to properly. In this article I will discuss how to properly enter into such an agreement and keep it valid after execution.
As the name implies, prenuptial agreements must be executed prior to marriage. Ohio law does not recognize postnuptial agreements. The most important thing to remember when entering into a prenuptial agreement is that both potential spouses must deal on an even playing field. This typically means that both spouses should understand how much property is owned by the other and what will or will not be split upon divorce. Timing is also an important aspect of forming a prenuptial agreement. If you spring a prenuptial agreement on your fiancé the day before your wedding, the agreement will likely not be valid. Both parties need to be given time to review and understand the agreement before signing it. This includes allowing time for each spouse to consult an attorney if he or she so chooses. However, merely creating a valid agreement is not enough; it must be carefully followed as well.
In the event of a divorce, there are two types of property to be considered, “Marital property” and “separate property.” As the names imply, marital property belongs to the couple together, whereas separate property is considered the property of one of the spouses alone and is not shared.
Marital property is simply any real estate or personal property acquired during the marriage, or any property jointly owned, regardless of when it was acquired. Marital property can also include income or appreciation on separate property due to investments into that property during the marriage.
Separate property includes property acquired by one spouse prior to the marriage; any passive income or appreciation from such property; an inheritance by one spouse, regardless of when it was obtained; any gift made to one spouse, if it can be shown that it was meant for only one spouse; any property obtained after a legal separation or divorce; and any property intended to be kept separate by a valid prenuptial agreement.
In order for a prenuptial agreement to work effectively, the language of the agreement must be precise and must be carefully followed. If you want to make sure that any real estate you purchase individually during the marriage is kept separate, it must say so specifically. Also if you want to make sure that any income from that property be kept separate, it must clearly state that as well. However, merely identifying property in your prenuptial agreement as separate is not enough. Careful accounting practices should be used to show that the property is in fact separate.
For example, if a prenuptial agreement states that all property purchased by one spouse individually during the marriage is separate, a court could still determine that it is marital property and divide it up. This is because a judge would not only look at the name on the title to the property, but would look at the funds used to purchase the property and anything else that might indicate that it was shared. If it cannot be shown that the money used to purchase the property came only from only one spouse, then that property could be considered marital property. Therefore, careful accounting practices should be used when purchasing property during marriage, if it is intended to remain separate.
In regards to gifts given to one spouse that are intended to remain separate, that spouse must show that the gift was not intended for both spouses. This may require that the gift giver make a declaration specifically stating the intent that the gift be given only to the individual spouse.
Ultimately, if you take special care in entering into a prenuptial agreement, and carefully account for any separate property during the marriage, your prenuptial agreement is much more likely to be valid and followed by a judge in a divorce proceeding. Of course, these are merely general guidelines to follow. Each individual situation will be different, and it is always wise to seek the advice of a qualified attorney to assist you in your specific circumstances.