Getting divorced is difficult enough. The last thing you must regret as you process your feelings is that you did not sign a marriage agreement.
A marriage agreement is a contract that sets out the terms and conditions in the event of a divorce.
When couples ask me if they need one, I tell them that a marriage agreement is there to protect both of them if they get into one of the most important contracts they’ll ever sign. Some shy away from the idea, but a marriage agreement is an important step in taking care of one another.
Anyone getting married should sign a marriage agreement. It’s a contract, pure and simple. The marriage certificate you have signed is a contract, but it does not contain any information about the conditions that will arise if you decide to terminate it and terminate your partnership.
I’ll cover what you should put on this contract in another part of this series, but for now I’ll go into why you (and your future spouse) should get one.
Reasons Couples Should Get a Marriage Agreement
Many couples quarrel bitterly about who should have what when a marriage falls apart. You may also struggle with other family members – such as stepchildren – over the assets that need to be separated. Without a formal agreement, things can get messy. If you contributed more to the marriage than your spouse, handing over half can quickly add up to a significant number.
However, all of this can be avoided. A marriage agreement allows you to pre-designate what is yours. Should the marriage fall apart, you will not regret for days, months, and even years.
Think about it: what do you have that is exclusively yours? What about those heirloom teacups your grandmother left you? What about that humble cabin you built in the mountains? What about that classic piece of art hanging on your wall? The longer you’ve been married, the more likely you’ll be fighting over valuable mementos or valuables.
What about the house, the timeshare, the cars, and everything else? Start your list. Encourage your spouse to make their own.
Having a marriage agreement in place takes much of the “guesswork” to determine what will happen financially during a divorce. For example, some laws regarding marital property rights depend on many factors. For example, if a spouse owned a house before and during the marriage, he or she could claim it was theirs, but if the mortgage is repaid during the marriage, there is a complex formula (called Moore-Marsden). This will determine how much to reimburse according to the current value of the home.
The formula I am referring to requires at least three different property appraisals and the work of a forensic accountant to determine the value. Added to this are the costs for these experts to calculate the final result as well as the costs for the lawyer’s billable time for the analysis / review of documents. What you may have accumulated in value can suddenly decrease as you pay all of these people. And what about the time it takes from work to get through all of this?
A pre-marital agreement also allows you to assign maintenance terms to limit or induce your spouse to forego support from the spouse. The amount and length of maintenance depend on many factors, including income from all sources for each party and the cost of the “marital lifestyle” that the parties once enjoyed.
As a rule, alimony is paid for half of the marriage period, possibly longer if the couple has been married for more than ten years. Worst of all, if the marriage lasts longer than ten years, the maintenance allowance can be “indefinite” – that is, until the payer dies, the payee dies, or the payee remarries. Many may recall that Tom Cruise filed for divorce on the eve of his ten-year wedding anniversary with Nichole Kidman. Many legal experts speculated that he took this as a wise financial move to avoid making larger and longer-term payments to Kidman for spouse support.
Child benefit cannot be negotiated or specified in a marriage agreement. I’ll address this issue directly later in this series.
The above are just some of the solid reasons why you should need a marriage agreement. Getting divorced is difficult enough. The last thing you must regret as you process your feelings is that you did not sign a marriage agreement.