Benefits of Pre-Marital Mediation
With more and more couples entering a second marriage later in life, or having earned or inherited non-marital assets, Pre-Nuptial and Post-Nuptial Agreements are becoming the standard. Many people have found that pre-nuptial agreement mediation can be the friendliest approach to an often uncomfortable topic. It allows couples to work together through non-threatening, informal discussions to develop an agreement that they both believe is fair before a pre-nuptial or post-nuptial agreement is drafted.
Couples Discuss All of the Important Issues Well In Advance of Their Marriage.
These candid discussions are healthy for the relationship and make it less likely that you will ever need to use your pre-marital agreement or pre-nuptial agreement. Margaret Bennett is trained in mediation and skillful in helping couples through non-adversarial and friendly discussions.
The Agreement Reflects Both Parties’ Input.
When individual attorneys draft pre-marital agreements, sometimes they reflect only their client’s wishes, without input from the other fiancé, and as a result many changes must be negotiated between the parties’ respective attorneys often just before the marriage creating a rift before their nuptials. By mediating the goals and content of your pre-nuptial agreement first with Margaret Bennett, you are in agreement before any documents are prepared.
The Outcome is Tailored to Your New Family.
Agreements made in mediation have a higher degree of compliance and success than those negotiated in an adversarial or one-sided manner, which means that the chance decreases that you will ever need to use your agreement. If you ever need to use your pre-marital agreement, there is a better chance that your spouse will abide by it and the Courts will declare the agreement valid. Margaret Bennett will make sure that your agreement is balanced.
It is the Mediator’s Job to Make Sure You Both Get a Chance to Express Any Concerns.
If you are concerned that your fiancé will not listen to your concerns about the finances or the pre-marital agreement, your fiancé cannot understand why you feel a pre-marital agreement would be helpful, or you have been too shy to express yourself, Margaret Bennett will help balance the power between the two of you in a positive, non-adversarial manner.
Issues to be Considered for a Pre-Nuptial Agreement
Pre-marital Assets and Debts:
Marital Property (assets and debts accumulated together after marriage):
- How will you handle premarital assets and debts in the event of a divorce?
- Will your separate property be inter-mingled with your marital property?
- What if one person’s pre-marital property is used to pay off the other person’s pre-marital debts (i.e. school loans)?
- What if you use premarital property to buy a home you’ll own together?
Management of Assets and Income:
- How will you handle the income and assets you accumulate together?
- Will they be joint, and 50/50 or use another arrangement?
- Do you want to exclude certain assets acquired during the marriage from the marital estate?
People tend to be either spenders or savers. For example, one partner might be concerned about retirement savings and future security. The other partner may feel that money is to be enjoyed and spent for things like vacations and luxury vehicles as part of a well-lived life. Can these styles be reconciled? The answer is yes, of course, provided that you have a plan for what will be set aside for retirement and what is available to use for enjoyment. These discussions should occur prior to your marriage in a friendly, non-adversarial environment through open and honest discussion facilitated by mediator, Margaret Bennett. These discussions should include:
Credit and Debt:
- Will you work together to develop a monthly family budget?
- Will you have joint bank accounts, separate bank accounts, or both?
- Have you discussed your long-term financial goals, and how each of you will contribute?
- Will the decision-making authority be different for pre-marital property or debt that belonged to one of you before the marriage?
- If one of you owes spousal support or child support from a previous marriage, will payments be made from joint property or income, or separate property?
- In the event of a separation or divorce, would the other spouse want or expect a reimbursement for these payments made during the marriage?
- What if the obligation is informal—like voluntarily paying for a child’s college?
Couples should discuss priorities with respect to paying off old debt or accumulating new debt.
- Consider joint credit issues, as well as issues like pledging your home as collateral on business, or using a home equity line of credit to fund a business or tide it over in an economic downturn.
- Do either of you have bad credit? Will you and your spouse jointly sign on new credit obligations?
- Are back taxes owed? If so, will they be paid jointly or individually?
What are your views on non-monetary contributions, like raising children or managing the household? Most states recognize these types of contributions during a marriage, but it’s important that you share your attitude, and that you know your fiancé’s attitude about these types of roles in a marriage.
- What is your expectation about the kinds of jobs and income you will each have?
- Do either of you anticipate a career change at any point in time?
- Changing your job can impact the other spouse, especially if you become disabled due to an on-the-job injury.
- How would you feel if your spouse changed careers?
- When do you plan to retire? As early as possible, or do you plan to work as long as you’re able?
- Do you anticipate both of you continuing to work after having children? Or would one of you stay home? For how long?
- How will you handle move-away decisions?
- What if one of you was transferred for your work and had to move to another state?
Spousal Support and/or Alimony:
You do not have to address spousal support in your agreement, but it makes sense to consider it.
- Do you want to make terms about spousal support or alimony that are different than what your state law allows?
- Do you both expect to work, and to contribute to the household?
Gifts from Families:
Sometimes one set of parents or relatives gives a couple a large monetary gift, loan or a home down-payment. It is important to make clear what kind of gift this is to avoid conflict in the future. Below are some questions to ask when faced with this situation:
- Would the gift from the family be marital or community property, or the property of the spouse whose family gave the money?
- If it’s a loan, who would be responsible for repaying it, and how and when? How formal will you be with the documentation if it is a loan?
Once you are married, your finances will be intertwined for tax purposes unless you agree otherwise as part of your premarital agreement. It is important to be clear on what your attitudes and opinions are in regards to paying taxes.
- Will you file separate tax returns, or joint tax returns?
- Does either partner have questionable tax deductions or a lighthearted attitude toward filing taxes at all?
- Is there old tax debt?
- Who will be responsible for that debt, knowing that a refund while you are married could be seized to pay an old, premarital debt?
Sometimes one spouse will want to or need to return to school. This situation may leave one spouse to support the other while he or she pursues a degree. In this situation, it is important to communicate clearly with each other the expectations of each party.
Duration of the Premarital Agreement:
- Will one of you have to support the other while he or she is in school?
- How will you deal with this sacrifice made by one person if the marriage doesn’t work out?
- How will student loans be repaid?
- Would the expectations about income and earnings change if one person wants to go back to school after you’ve been married several years?
It is up to you and your fiancé to decide how long a pre-marital agreement may remain in effect. Couples can ask themselves if the agreement will stand forever or if it will expire at some point:
- Does having children change your opinion on how your agreement should work?
- If you separate, does it matter who chooses to end the marriage? Does it matter why?
- Would the agreement ever expire, or do you want for the agreement to be renegotiated at a specific time, like 5 years after the marriage, or after the birth of the first child?
If you or your fiancé own a business separately, there are special issues you should consider.
- Would your pre-nuptial agreement include an indemnification on the business debts and taxes—business, personal, back taxes, payroll taxes?
- Are there issues with the type of business entity, like a subchapter S corporation or d/b/a, and how the corporate spouse determines his or her own income?
- Do you want to make provisions for a forensic accountant or auditing books
in the event of a separation or divorce?
- Do you want an agreement on how much income will be contributed to the
household and how much might be kept separate?
- What if a pre-marital business starts a new business or subsidiary after the marriage?
- What if one or the other of you works for the other person in a pre-marital business?
There can be many “out of job market” issues, so negotiating your terms of employment with your spouse before joining the business can be an important step.
Fault can be defined as who is to blame for the divorce. Fault can be evidenced by an affair, drug or alcohol abuse, among other things. However, most state laws either won’t consider fault, or barely consider fault, in dividing property or awarding spousal support in a divorce situation:
Death or Disability:
- How do you and your fiancé feel about fault?
- Would it make a difference to you in your property settlement or spousal support if you felt one person contributed more to the breakdown of the marriage than the other person?
You will want to have a comprehensive estate plan in place soon after your wedding, particularly if you have children from previous relationships, so that your assets and debts are handled the way you intend if you were to pass away.
- Would your prenuptial agreement end on death?
- Does it make a difference if you are separated or living separately when one of
you dies (even though you haven’t filed for a divorce) or if one of you dies while
you are happily married?
- Do either of you have children already, or people who’d inherit from you?
- Do you have life insurance? Often, life insurance can be used to protect either the spouse’s interests, or your children from a previous relationship’s interests.
- Who will you name as beneficiary on your retirement plans, IRA’s, and survivor annuity benefits on pension plans?
- Will the surviving spouse be able to support the same lifestyle in the event of your death?
- Would either of you have immediate access to funds if one of you dies?
- Will he or she be able to maintain residence if you pass away?
- Are there certain family heirlooms or money which you’d like to make sure ends up with one person’s family?
- What would happen if one of you became incapacitated or disabled?
- Would that change how finances are handled?
- What if one of you had to use separate property to support the other person?
- Do you need disability insurance? Long term care insurance?
You may also want to consider including a clause in the agreement that says you will mediate any issues that arise that you cannot be resolved on your own or that you will seek professional marriage counseling before considering divorce. Also, another helpful clause may state that the two of you agree to attend mediation in the event of a divorce, and/or use a collaborative law or alternative dispute resolution process rather than litigation.
Have questions about Pre-Marital mediation?
Contact our firm to inquire about Pre-Marital mediation with Margaret Bennett and for further information on the mediation process.