Considerations in Entering into a Prenuptial Agreement

People planning for marriage often wonder if a prenuptial agreement is needed. One of the most common reasons for entering into such an agreement is the preservation in the event of a divorce of premarital assets or assets received during the marriage by gift or inheritance. While a prenuptial agreement can serve this purpose, it is often not necessary if certain protections are made. Ohio law provides that assets owned prior to the marriage, or received by gift or inheritance, will be deemed “separate property” in a divorce, and thus not shared with a spouse, as long as that separate property can be traced. For example, if someone holds 100 shares of GE stock at the time of the marriage and still holds those GE shares at the time of divorce, that asset is clearly traceable as a premarital asset. The same would be true of an investment account if that account was maintained without any additional contributions made during the marriage. Let's say the account was at Fifth Third Bank at the time of marriage and sometime after the marriage, the funds were moved to a second bank and then a third. As long as there were';t any contributions made to that account during the marriage, it is still considered

separate property.

What is critical is that complete records are maintained that can demonstrate that the assets that exist now had existed at the time of the marriage or were received by gift or inheritance. However, if contributions are made during marriage to the same investment or account, and funds go in and out, it may be impossible to determine if the money remaining in the account at the time of a divorce is separate or marital.

If a couple seeks a marriage where each keeps not only anything they own at the time of the marriage, but also anything they earn during the marriage, this can only be accomplished by entering into a prenuptial agreement. Without this agreement, the law considers everything earned during the marriage to be “marital property” that will be equitably divided in a divorce. The same would be true for debts incurred during the marriage. A prenuptial agreement can specify that neither party will be responsible for the debts of the other in a divorce.

Prenuptial agreements are quite common when one family has an ownership interest in a family business or expects to inherit or receive a family business by a gift. Families often want to make sure that their family business will not be diluted if a family member gets a divorce. A prenuptial agreement can specify that even if a spouse works in a family business during the marriage, or even becomes the president of that business, that the business itself will not be a marital asset subject to division.

Prenuptial agreements are entered into not only to determine what will happen in a divorce, but also to determine rights if a marriage ends by death. By law in Ohio, a spouse is entitled to a certain portion of the other's estate at death, preventing a spouse from being disinherited. However, often when people marry later in life, and have children, it is only with a prenuptial agreement that their children can inherit their entire estate, and their spouse will waive his or her rights to inherit. An agreement of this kind allows people to remarry without the fear that instead of their assets going to their children, it will

go to a spouse who may not need financial support and end up with their spouse's children or to a later spouse.

One of the biggest mistakes people make when considering a prenuptial agreement is that it can be quick and easy. Often, we are called a few weeks before a wedding. It is recommended that you contact a lawyer to discuss this option at least six months before the wedding date. This type of matter must be handled with sensitivity and without pressure. Arguments can be made about the validity of an agreement if it is made shortly before a wedding, and arguably under duress. The last thing people should be dealing with in the weeks before their wedding is a legal document with their soon-to-be

spouse, so it is recommended that you allow ample time. It is highly recommended that both parties are represented by counsel.