I Am Getting Married. Do I Need a Prenup?
The big day is approaching and the thought of a prenuptial agreement has crossed your mind, but at what cost? Will it piss off my significant other? What will they think I am hiding? You want to protect your assets and possibly avoid paying alimony, but you need to know at what cost. Whether or not to obtain a prenuptial agreement is specific to each case, and depending on your goals, you may or may not need a prenuptial agreement.
Without a prenuptial agreement, Nevada community property laws will apply in the event of a divorce, as will Nevada law on alimony. This means that everything acquired during the marriage will be considered community property (with some exceptions) and everything you owned prior to the marriage will remain separate property (with a very big exception).
That very big exception – If you co-mingle any of your separate property assets owned prior to the marriage during the marriage, it is presumed to be a gift to the community. So, for example, you own a home before marriage but make payments to that home during the marriage, you have now converted a portion of this home to community property. If you put your spouses’ name on title, you have transmuted the entire property to community property (unless it is titled as joint tenancy, but that is a whole other topic to come later). If you continue to contribute to your retirement account, those contributions made during the marriage (plus growth) are community property. Your income is community property, your businesses can become community property. Even an inheritance you receive, which is generally considered separate property even if received during the marriage, can become community property if you put it in account with your spouses’ name on it. Also, if you spend money from that inheritance on community property expenses, or purchasing a car, or improvements on community property house, that too is presumed to be a gift and you are not getting that money back. Note the use of the word “presumed” in that when dealing with the designation of property in divorce, it is all based upon presumptions. Presumptions can be overcome, but it is mostly based upon your actions and the intent behind those actions that occur during the marriage. A prenuptial agreement is simply an agreement in writing demonstrating for the Court that you have agreed to alter these presumptions.
So, when should you get a prenuptial agreement?
-When you own a business prior to marriage
-When you own real property prior to marriage
-When you want to protect your retirement account contributions
-If you are expecting or have already received a significant inheritance and want to protect it against the co-mingling presumptions
Prenuptial Agreements can be as specific or as general as you want. You can agree to have the community property presumptions apply, and carve out exceptions, for example to protect a piece of real property, or your retirement account. You can also do an all encompassing agreement that covers all assets (and debts) acquired during the marriage. So long as you have an experienced attorney on both sides to prepare and review the prenuptial agreement that knows the requirements for a valid prenuptial agreement, you should be set. What do you need to have a valid prenuptial agreement? I will address that separately, but the one word to remember is disclosure – disclosure disclosure disclosure!
With regards to alimony and prenuptial agreements, I will cover that in a post to come soon.