Premarital and Cohabitation Agreement
You can call them prenups, or antenups, antenuptials, prenuptials, or some other type of pre-marriage agreements or contracts designed to govern control and ownership of property during marriage. But in Kansas, such agreements are now properly referred to as premarital agreements. A premarital agreement is simply “an agreement between prospective spouses” made prior to marriage. Unlike regular contracts that are effective upon signing, the premarital agreement may not become effective until marriage is finalized.
For the unwary, the advent of Google, Findlaw, and other internet tools, make the process of drafting a premarital agreement seem as easy as printing out a few free forms and signing on the appropriate dotted lines. But, there are dangers lurking for future newlyweds.
The insidious reality for all is that no one can foresee the disasters that may occur because an agreement was improperly drafted or the parties had no idea of what they were doing. Problems only become evident years later when the couple divorces, or one spouse dies, and the courts are called upon to enforce the agreement. Surprise at that stage is almost always bad news. As Newsweek contributing editor Jane Bryant Quinn once noted in a column, “doing a prenup isn’t for sissies.” The Law Office of David J. Brown, LC, has the experience necessary to help avoid those pitfalls.
A premarital agreement allows a couple to take control of property in situations where the government will otherwise decide. State laws will govern division of marital assets in divorce, just as they will govern in the event a spouse dies without a will. While premarital agreements are often thought of as tools for the wealthy, arguably they are valuable for all couples contemplating marriage.
The discussion of financial assets and liabilities required to enter into a premarital agreement provides couples a non-threatening method of discovery of issues that are frequently ignored, or glossed over as love-blind couples contemplate matrimony. That information can be important for all couples, no matter what their net worth, as they make plans for life together. Indeed, the sober analysis of current status, future goals, and realistic expectations may provide a foundation for a more stable marriage.
The protections afforded by a premarital agreement for those with substantial assets are certainly important; just as they are for couples where there is a significant difference in net worth of the parties. On the other hand, even when both parties are near broke, one future spouse may have debts or liabilities that pose a threat to the other future spouse and a premarital agreement will be needed for that party’s protection.
Further, those who are involved in small partnerships or closed corporations may need to enter premarital agreements to protect their business interests or business partners’ interests. Premarital agreements may also be used to protect the interests of a future spouse who is embarking on a potentially high-profit business venture, or one who is entering a high-salary career.
Those with children from prior relationships may want to enter premarital agreements in an effort to protect those children’s financial interests. Alternatively, those without children may want to enter a premarital agreement to ensure that their property is distributed to any other third party in the event of death or divorce. Or, one party may want to enter into a premarital agreement to be certain that family heirlooms stay in the family.
In short, presumptions that premarital agreements are for the wealthy alone are old-fashioned and simply incorrect. Virtually every couple contemplating marriage should, at the very least, consider the benefits of a premarital agreement in light of their individual circumstances.
When you are planning your wedding, remember that the enforceability of a premarital agreement will depend, in part, on how long before the marriage it was executed. Courts generally will not approve agreements signed at the last minute under duress. So, planning ahead is important. And, each party will need to be represented by a different attorney. If only one attorney is involved, there is a serious risk that the resulting agreement will be unenforceable.
We at The Law Office of David J. Brown, LC, can help you assess your situation and determine if a premarital agreement will benefit you. If you decide to go forward with an agreement, we will also help you avoid the errors that could render your agreement worthless when you really want to rely upon it.
A brief mention should be made of post-marital agreements. If you fail to complete a premarital agreement, or have been married for a while and have decided that you would like a similar agreement to be in place, you can still execute an enforceable agreement.
There can be many reasons for entering into a post-marital agreement regarding division of assets if the parties divorce or one party dies. If you are considering such an agreement, however, it is critical that you understand that as a married person you now have the rights of equitable property division in divorce and inheritance rights if your spouse dies. Thus, you may be giving up a great deal by entering into such an agreement.
The Law Office of David J. Brown, LC, can provide the advice and counsel you will need under such circumstances. We will explain the rights you obtained by being married. We will also explain how your proposed agreement would affect those rights. And, we will help you evaluate the choices open to you.
A cohabitation agreement is an enforceable contract between two or more unmarried persons who live in the same home and intend to assume the marital rights, duties, and obligations which are usually manifested by married people. In most instances, the agreement is entered into by an unmarried couple, although such agreements have been used by larger family units.
There are some basic principles that cohabiting couples must understand. First, if they do not intend to be married, they should be warned about the dangers of holding themselves out as being married and creating a common law marriage. The basic elements to create such a marriage in Kansas are:
- Capacity of the parties to marry.
- A present marriage agreement.
- A holding out of each other as husband and wife to the public.
An improperly drafted cohabitation agreement could be used as proof of a common law marriage.
Cohabiting couples should also be aware that since they are not married, gifts between them will potentially be subject to gift tax under federal law. A common pitfall is when unmarried couples create a joint bank account to pay expenses. Technically speaking, there is a potential that a “gift” has been made with every deposit, or alternatively, with every withdrawal. The Law Office of David J. Brown, LC, is aware of this problem and works with clients to draft cohabitation agreements that avoid such tax traps.
There are other concerns cohabitating couples and others need to keep in mind as they consider a written agreement:
- The cohabitation agreement should not be written in such a way that it would be interpreted as a contract for sex.
- To be enforceable, every party to the agreement should have independent legal advice.
- The parties to the agreement should understand all rights they give up and receive by entering into a cohabitation agreement.
- The interpretations of cohabitation agreements is a rapidly changing area of law, particularly in terms of drafting and enforcing agreements between members of the LGBT community. This changing environment requires constant vigilance to be certain the agreements once drafted continue to conform to the law and meet the parties’ needs.
“Cohabitation Agreements” should not be used by couples or family groups living together without assuming the marital rights, duties, and obligations which are usually manifested by married people. In these instances, given the accepted definition of “cohabitation” in Kansas, the agreement between parties should be called a “non-marital” agreement.
David J. Brown has provided assistance to non-traditional couples and families for more than 20 years. If you are in a non-traditional relationship, please contact us for a consultation appointment. The Law Office of David J. Brown, LC, will help you to develop an agreement to meet your needs and protect your rights and assets.