Prenuptial, Postnuptial and Cohabitation Agreements

As parties develop relationships, it often times becomes important for the parties to clarify their rights as to their respective property interests. Such interests may include real property, bank accounts, retirement benefits, employment benefits, financial investments and even jewelry. It would also include inheritances. When couples decide to formally live together, it is often a good idea for the parties to put down in writing their various rights and responsibilities in connection with their relationship. Various claims can be asserted and legal problems can arise as a result of the fact that the parties lived together. This includes, but is not limited to problems that arise when the parties decide to separate, and problems that arise at the death of one party during the course of the relationship.

When parties live together for an extended period of time, various rights may arise. Such rights may include actions pursuant to Marvin vs. Marvin (the seminal case often referred to as the case establishing a right to receive "palimony" ). Other conflicts arise wherein parties jointly buy real property together even though they are not married. When the Parties break up or marry or if someone dies, the ownership interest with respect to the real property may be hazy or in dispute.

In order to eliminate such ambiguities and problems, a cohabitation agreement should be prepared at or near the time the parties commence their cohabitation. Such an agreement can specify the parties' rights with respect to property interests and minimize or possibly even eliminate subsequent litigation. Such an agreement can then be the basis for a prenuptial agreement, thus eliminating much of the legal expense, should the Parties decide to marry.

Most people are also familiar with premarital agreements. Premarital agreements (also referred to as prenuptial agreements) are agreements that are signed by parties prior to their marriage. Such agreements act in much the same way has cohabitation agreements act. The agreement provides for a determination of the respective spouse's interest in the other spouse's property. Agreements can even provide that there will be no community property created during the marriage. Recent case law also provides that the parties can even agree to waive future right to spousal support (alimony). However, despite the existence of this case, waivers of spousal support are a relatively new concept and it is yet to be determined exactly whether and under what circumstances they will be enforced in the future.

Premarital agreements should not be entered into lightly. Although the concept is that they are generally unenforceable, in fact the opposite is true. A well written and properly prepared premarital agreement is usually enforced. One question that often arises with respect to premarital agreements is when to commence the preparation. Parties are customarily informed of the fact that premarital agreements prepared literally on the eve of a marriage will often times be set aside. This is because the aggrieved Party usually asserts that he or she was "pressured" into signing the agreement and felt unable to avoid signing it due to the fact that the wedding was rapidly approaching. Many lawyers have a motto that once the wedding invitations have been sent out it is already too late to prepare a premarital agreement.

In order to enter into an enforceable premarital agreement, both parties must have the ability to seek independent counsel and there must be a full and complete disclosure of all of each party's assets and liabilities. A party cannot intelligently waive their right to an asset unless they know of the existence of it. Declarations of Disclosure in addition to the accompanying documents must be exchanged well in advance of the wedding date.

Post marital (also known as postnuptial) agreements are utilized and prepared after the parties have already married but before they have separated. On occasions, parties may receive inheritances or may be utilizing their separate property for community property purposes. Again, in order to set forth in writing the understanding and agreements of the parties with respect to separate property or even community property interests after the parties have married, parties enter into such agreements. These agreements may also act as a preliminary division of community property to be implemented during the marriage but before the parties actually decide to separate or proceed towards divorce.

As is the case with Pre-Marital Agreements, Post-Marital Agreements require that each party provide full disclosure to the other party of all of the community and separate property assets and liabilities of which they are aware or can be reasonably determined. Both parties must be represented by independent legal counsel. An agreement wherein one party is represented by counsel and the other is not may be voidable and unenforceable.

Many times, as the wedding date approaches, couples have not gotten around to discussing, preparing and/or signing their pre-marital agreement and thus, after they are married and have the relative peace of mind to come to an understanding, they might elect to cause a Post-Martial Agreement to be prepared. The principles, concerning these two different agreements are often times the same, except for the fact that one is executed prior to the marriage date and the other after the marriage date. It is important to understand that agreements which are entered into after the marriage are just as enforceable as those entered into prior to the marriage. However, obviously once the parties are married, there is less urgency and/or incentive for the recalcitrant party to sign such an agreement. Furthermore, there is a higher level of fiduciary duty owed between two spouses than between unmarried persons and, therefore, such an agreement is subject to closer scrutiny and may be harder to uphold.

Occasionally, something happens during the marriage which requires a specific agreement. For example, one party might inherit a substantial asset during the marriage which he or she wishes to preserve as his or her separate property. Although, even though it was inherited during the marriage it remains separate property, in the event it is commingled with community assets it may lose its separate property character. Therefore, it may be wise for the parties to reach an agreement with respect to how to handle that specific asset prior to depositing the funds anywhere.

On other occasions, the parties wish to stay married but wish to divide their assets up for whatever reason. These types of agreements are often utilized when one or both parties have major financial difficulties or one party is contemplating filing for Bankruptcy, or the parties are either close to terminating their marriage or wish to save their marriage by dividing their financial obligations and/or other assets in anticipation of and/or avoidance of greater financial problems.

Our firm is skilled in preparing all three of these types of agreements. The attorneys in our firm have prepared numerous pre- and postnuptial agreements as well as cohabitation agreements. We would be happy to consult with you regarding the preparation of any of these documents should you deem them to be appropriate for your particular circumstances. In order to avoid many of these legal problems, it is often a good idea for the Parties to enter into an agreement to memorialize their understandings as to what their intentions are. We offer initial consultations at a reduced rate.

Consultation with one of our attorneys will assist the Parties in understanding their various rights and to clarify the exposure that one Party may have with respect to liability to the other Party. We can prepare an agreement to eliminate many of these legal problems and to establish exactly what the Parties' rights and obligations are.