Dress? Check. Rings? Check. Prenup?
What is a prenup?
A prenuptial agreement (“prenup”) is a contract between two people before they get married that does not take effect until the wedding day. It is used to deviate from Wisconsin’s marital property laws that would otherwise apply to a married couple.
Prenups create financial rules for three stages of life: during the marriage; upon the death of either spouse; and upon divorce. Prenups reclassify income, expenses, assets and debts as the individual property or the marital property of each spouse. Prenups can be as comprehensive or as narrow as the couple needs. For example, a prenup can be very limited and only reclassify one asset or apply to only one stage of life. Alternatively, a prenup can address every single dollar that either person owns, now or in the future. Each prenup is drafted and tailored specifically to that couple.
What happens without a prenup?
Wisconsin is one of nine states in the country that is a marital property (or community property) state. If a couple gets divorced in Wisconsin without a prenup, all income, assets, and debts owned by either spouse at the time of divorce are going to be divided between the spouses somehow. The starting point is an equal division and the spouse desiring an unequal division has the burden of convincing the court of the reasons why. An equal division is assumed regardless of how the item is titled, regardless of which spouse acquired it, and regardless of whether it was owned by either spouse prior to the marriage. The only exceptions to this rule are items that are received through gift or inheritance, which are not typically divided with the non-owning spouse. Similarly, if one spouse dies without a prenup, then the surviving spouse may have a right to inherit some or all of the income, assets, and debts acquired before or during the marriage, even if they were acquired in the name of the deceased spouse alone. These are general statements that may not apply in all situations, so consult with an attorney if you have questions about your particular situation.
Is a prenup meant only for wealthy people?
Prenups are a good tool if you wish to deviate from marital property laws, despite how wealthy or poor you or your future spouse might be. A prenup might be necessary if you are concerned about a family business or other asset staying within the family. Or maybe you have children from a prior relationship and you want to protect (or reduce), the inheritance rights of those children, compared to your future spouse’s inheritance rights. Prenups are also helpful if you and your future spouse prefer to lead two separate financial lives during your marriage – perhaps because one person has money-management issues or bad credit, or to prevent a creditor from going after the other person’s assets. There are many more reasons why prenups are not just for wealthy people.
Is it too late to get a prenup if I’m already married?
While it is too late to get a prenup after the wedding date, a married couple can instead enter into a postnuptial agreement (“postnup”). A postnup does all the same things as a prenup. The primary difference is that the couple is already married when they sign it and when it takes effect. For that reason, it may be harder to convince your spouse to sign a postnup, and to give up marital property rights that your spouse already enjoys. The leverage in negotiating a prenup is the risk that one party will not go through with the wedding if the prenup is not completed in time. Other than the risk of divorce, there is often little leverage in negotiating a postnup. Both prenups and postnups are types of Marital Property Agreements.
Can my partner force me to sign a prenup if I don’t want one?
No one can be forced, threatened, or tricked into signing a prenup. A prenup will not be legally enforceable if someone was under duress or fooled into signing it. Each person should be represented by a separate attorney, or at least have the opportunity to review the prenup with an independent attorney prior to signing. Additionally, financial information must be exchanged ahead of time, so that each person knows what financial rights he or she may be giving up by signing the prenup.
Prenups that are drafted and signed at the last minute before a wedding may be scrutinized more heavily by a court upon death or divorce, because of the risk that someone was pressured into signing or did not have the opportunity to thoroughly review and understand the terms of the prenup before signing. A couple considering a prenup should retain lawyers as early as possible before the wedding date.
How much does a prenup cost?
The cost of a prenup will vary, depending on its complexity and the extent of the negotiations and bargaining required between the two future spouses. Some lawyers may charge a flat fee, especially for a limited scope prenup that is created as part of a broader estate plan. Typically attorneys will charge an hourly rate, especially for more comprehensive prenups.