After an engagement, one of the last things a couple wants to think about is a possible divorce. But, if avoiding some of the uncertainties and trauma that comes with divorce sounds appealing to you, then a prenuptial agreement may be a beneficial precaution. Prenuptial agreements, commonly called “prenups,” are contractual agreements entered into before the couple is married which become effective upon marriage. Post-nuptial agreements, commonly referred to as “postnups,” are entered into after the parties have already married. Both agreements enable couples to define for themselves how assets will be classified and divided in the event of a divorce or death. They also clarify whether each spouse will have a support obligation to one another.
Under the Illinois Uniform Premarital Agreement Act (750 ILCS 10), a couple may decide to predetermine various of issues that are addressed resolved during a divorce proceeding. This includes:
- the rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
- the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
- the disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
- the modification or elimination of spousal support;
- the making of a will, trust, or other arrangement to carry out the provisions of the agreement;
- the ownership rights in and disposition of the death benefit from a life insurance policy;
- the choice of law governing the construction of the agreement; and
- any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
Although the Illinois Uniform Premarital Agreement Act (750 ILCS 10), includes a wide range of topics that may be covered in a prenuptial agreement, it does not include issues related the custody, visitation, or support of any children born of the marriage. It is generally considered against public policy in Illinois to make contracts regarding children. Issues related to the children are determined by what is in “the best interest of the child,” which would be completely undermined if parents were able to sign contracts about what is best for children before any of the children’s details and the family situation is known. Therefore, if children are a part of your divorce, you will still need to determine all issues related to the children’s primary caretaker, where the children will reside, the parenting time schedule , how much support will have to be paid for the benefit of the children, and any other issues in contention.
When considering whether a prenuptial agreement is right for you, it is important to consider the benefits and drawbacks of prenuptial agreements.
Classification and Division of Property
One of the significant benefits to a prenup is the ability for a couple to decide how property and assets will be classified and divided upon a divorce or in the event of a death. This is typically appealing for individuals that come into a marriage with a considerable amount of wealth, and for those who get married later in life. Because assets acquired during the marriage, using money earned during the marriage, are presumed to be marital and subject to equitable division, a couple can decide how to classify assets and divide assets to avoid any debate in the future. This minimizes future litigation and adjusts expectations. Additionally, also could be beneficial for individuals who expect inheritances and want freedom to dispose of assets as they please.
Prenups can also be used to classify property as marital that would not be otherwise be considered part of a party’s non-marital estate. Couples that had an extensive relationship before getting married and acquired immense property during their relationship, despite not being married, may prefer to classify certain non-marital assets as marital property. Additionally, Couples may agree to classify certain nonmarital property as marital in exchange for another concession, such a waiver of spousal support.
Individuals who come into the marriage with few assets, and lower income or income earning capacity, can also benefit from a prenup by negotiating terms that clearly protect their interests. For example, in light of lower income earning capacity, they can negotiate for a higher distribution of martial assets in their favor, a guaranteed lump sum payouts upon divorce based on the number of years married, and any other contingencies.. Prenups also provide the lower income earning individuals’ clarity and certainty over their financial future before they get married.
Either way, a prenup may a good option for you and your future spouse to ensure that your assets are divided in a way that best works for your unique circumstances.
Assigning Debts and Liabilities
A prenup can also be beneficial when addressing how debts and liabilities are going to assigned during the marriage. In Illinois, debt that is incurred during a marriage is generally considered marital and is subject to division between the parties regardless of who incurred the debt. However, a couple can mutually agree, for example, that certain marital debts be the assigned of one party entirely, that debt resulting from nonmarital assets be paid for out of nonmarital assets, or that the higher income earning spouse be responsible for a higher split of marital debts upon a divorce. This may be beneficial for the lower income earning spouse who has a lower ability to cover marital debts after divorce.
Waiver Of Spousal Maintenance
Parties may deviate from the maintenance guidelines in a prenuptial agreement. They can agree to waive spousal support, limit the amount of spousal support, or guarantee a certain amount of spousal support from one spouse to another. Because spousal support is a highly contested issue in many divorce cases, deciding on the amount or duration of spousal support in a prenup may be beneficial for both spouses. Specifically, it can provide the higher income earning spouse with certainty while providing the lower income earning spouse with security, which that spouse may not otherwise receive. If the higher income earning spouse has a change in financial circumstances for the worse, the lower income earning spouse would still be entitled to the amount of spousal support agreed-upon regardless of the other spouses’ financial circumstances. By the same token, if the higher income for the better, the higher income earning spouse would be limited in the amount of spousal support that they are obligated to pay.
Saving Time and Money in the Long Run
Divorces are often a drain on resources and time for both parties. Therefore, a prenup may be a cost saving tool in the long run. Because a prenup is meant to establish the terms of your divorce before it even happens, it reduces the material issues that can increase the cost of future litigation. For example, if a piece of real property is awarded to one spouse in the prenuptial agreement, the parties will not spend time and money arguing over who should be awarded that piece of property, they will not need to hire appraisers or other professionals ot value the property, and so on. The issue of that property would be settled. The process for drafting and negotiating a prenup usually take far less time and resources than divorce negotiations.
Although there is no requirement in Illinois, it is preferred that both spouses are represented by separate counsel while negotiating a prenup. This ensures that both parties understand the contract that they are agreeing to be bound by. This is no different than what couples have to do during a divorce proceeding. The only difference is that a prenuptial agreement will limit the contested issues between the spouses, which will reduce the amount of attorney’s fees that each spouse will have to pay, in order to resolve those issues through the court system. For example, if spouses agree to an equal division of marital assets in a prenuptial agreement, they will not be forced to spend time and money to appear before a Judge and argue over whether the marital assets should be divided equally or disproportionately.
Good For More Than Just Divorce
Although the primary reason that a couple will enter a prenup usually is to protect themselves, prenups can also be beneficial, even if a couple stays together.
A prenup can be a critical part to an estate plan. Although the marital agreement does not replace the need for a will, or other estate planning documents, a prenup can work in tandem with your estate plan to ensure your property is passed down as intended. If it is your wish that all or a portion of your property goes to your children or your parents, that sentiment may be clear in your will, but what is considered “your property” would be further clarified by your prenup or postnup. More importantly, your spouse would not have a claim against your estate with respect to those assets upon your death. Therefore, even if you and your spouse stay together, a prenup can still be beneficial.
Negotiating A Prenup Can Feel Like You Are Negotiating Your Divorce
Negotiating the terms of your divorce while in love and planning a wedding, can s become one of the biggest drawbacks of a prenuptial agreements. Couples who marry with the expectation of being together forever, seldom want to think about the possibility of divorce, let alone negotiate the terms of divorce right before marriage. Because of this, people often enter the negotiations assuming that the prenup will not matter. Divorce does not seem like an option for them. This assumption can cause individuals to agree to terms that would significantly disadvantage them in a divorce proceeding in unforeseeable ways. Entering into a contract assuming it will never be enforced can result in a prenup that causes more issues than it resolves. Retaining an attorney who is able to walk you through, and protect you against, all the ramifications of a prenuptial agreement is crucial.
Prenups Do Not Prevent All Litigation
Another drawback of prenuptial agreements is that it does not eliminate litigation. Even prenups that are “iron clad” can result in litigation if, for example, one party is determined to contest the validity of the prenup regardless of whether they have a valid basis for doing so. Contesting the prenup will cause litigation related to enforceability of the prenup and prolong litigation. The Court will be forced to first make findings the prenup valid before the case may be resolved.
Additionally, because the prenup does not address issues related to the minor children, parties can nevertheless remain in litigation for years fighting over the allocation of parental responsibilities, parenting time, and child support even if all other issues were resolved in the prenuptial agreement.
Most importantly, when a prenup reserves certain issues or is poorly drafted, the divorce proceeding may last just as long as it would have if the parties had not entered into a prenup to begin with. Therefore, it is crucial to retain an experienced divorce attorney who can help you negotiate a valid and enforceable prenup, is not vague, addresses all issues that could open you to significant liability during a divorce, and explains all the benefits and risks associated with the terms proposed.
Contact Hayes Law Today
Because of all the factors to consider, please contact an experienced attorney to fully understand whether a prenup is right for you and your future spouse. The attorneys at Hayes Law are well versed in all aspects of prenuptial agreements and are ready to discuss whether a prenup is the right choice for you. Contact us today for your complimentary consultation.
