Prenuptial and Postnuptial Agreements
The divorce rate in the U.S. is at an all-time high. Nearly half of recent first marriages end in divorce. In addition within our current society and culture, the rate of domestic partner relationships is increasing. With the increase in such relationships, there is an accompanying rise in the dissolution of such relationships.
Types of Nuptial Agreements
There are two types of nuptial agreements:
1. Prenuptial agreements (also known as premarital agreements or antenuptial agreements) are agreements entered into by the parties prior to marriage. Such agreements set forth the rights and obligations of each party in the event of death or divorce. One purpose of a prenuptial agreement is to provide for the protection of assets in the event of divorce of the parties. In property division, Florida follows the theory of equitable distribution. In other words, the court will make an “equitable” distribution of the property and assets of the marriage based on the circumstances of the parties. F.S. §61.075 provides for the equitable distribution of marital assets and liabilities. A second purpose of nuptial agreements is to provide for the distribution of the parties’ assets in the event of the death of a party. Certain provisions should be included in a nuptial agreement to ensure that each party’s assets are protected in the event of such party’s death. A third purpose of nuptial agreements is to delineate the obligations of each party during the marriage. For instance, the nuptial agreement may address which party is responsible for certain expenses during the course of the marriage. The nuptial agreement may also dictate whether the parties must file joint federal income tax returns, or must do so only at the request of one party.
2. Postnuptial agreements (also known as postmarital agreements) are agreements entered into by the parties after marriage that set forth the rights and obligations of each party in the event of death or divorce. Postnuptial agreements can be used when no divorce is contemplated or when divorce is not imminent. When divorce is imminent, postnuptial agreements are referred to as marital settlement or sseparation agreements. Many of the reasons set forth above are the same for entering into postnuptial agreements.
Florida Statutes 61.079 provides that a premarital agreement must be in writing and signed by both parties. It is enforceable without consideration other than the marriage itself. It also provides that parties to a premarital agreement may contract with respect to the following:
Specific provisions of an agreement:
• Waiver of Equitable Distribution of Property and Interest in Marital Earnings and Appreciation of Separate Property — The court must uphold the intent of the parties as expressed in the agreement regarding the waiver of equitable distribution of property. If the parties intend to keep all income and earnings, including such income earned during the marriage, as separate property, such intention must be clearly stated in the nuptial agreement. Otherwise, income and earnings, and the assets acquired with such income and earnings, will be marital property subject to equitable distribution. In addition, if the parties desire to ensure that separate property, including all appreciation thereon, remains separate property, the nuptial agreement must clearly state such desire.
• Waiver of Alimony — If intended, the nuptial agreement must expressly waive the party’s right to alimony. The waiver provision should include all types of alimony, such as rehabilitative, permanent, periodic, bridge-the-gap, and lump sum alimony. Note that in Florida, temporary alimony (during the divorce proceeding) cannot be waived.
• Waiver of Interest in Homestead Property — A provision waiving a party’s constitutional right to homestead property may only be waived knowingly and intelligently. Therefore, if each party intends to waive his or her homestead rights in the other party’s homestead property, the nuptial agreement should provide the following: 1) the definition of homestead property; 2) the homestead rights that each spouse would enjoy in the absence of the nuptial agreement; and 3) that each party knowingly and intelligently waives such homestead rights.
• Waiver of Interests in Retirement Plans — For many clients, the most significant asset is the client’s retirement plans. Accordingly, the preparer of the nuptial agreement must ensure that any waiver of retirement benefits complies not only with Florida law, but with federal law as well. Section 7 discusses the federal laws of which the practitioner should be aware in connection with the waiver of rights to retirement plans.
• Waiver of Rights Upon Death — If intended, the prenuptial agreement should provide that each party waives the following rights upon the death of the other party: a) rights to elect against the will or any other testamentary instrument of the other party, for example, the elective share rights as a surviving spouse; b) dower or curtesy rights; c) rights as intestate heir; d) rights as a pretermitted spouse; e) exempt property rights; f) family allowance rights; g) homestead rights (discussed above); h) right to qualify and serve as personal representative of the other party’s estate or trustee of any trust created by the other party.
These same type of contracts can be entered into between domestic partners. In so doing, domestic partners are better able to define their relationship with regard to their respective property rights and contributions to their relationship.