A prenuptial agreement is a binding legal document between a prospective husband and wife, which addresses the financial consequences of their marriage ending.
Technically, all couples who are married already have a "prenuptial agreement" - it is the particular divorce laws of the state. In Arizona, for example, absent a prenuptial agreement, community property principles will apply to all financial aspects of the divorce. Needless to say, many people will find the application of community property laws a difficult pill to swallow, and would prefer to take control of their lives rather than leaving it in the hands of divorce lawyers, their spouse and the Judge. In most cases, it makes smart financial sense to have a customized prenuptial agreement drafted by a competent domestic relations lawyer.
The question begs whether or not a premarital agreement is right for everyone. While I believe such an agreement should be contemplated in virtually every marriage, there are seven scenarios which cry out for the preparation of an iron-clad premarital agreement prior to tying the knot. Those situations are as follows:
1. You have significantly greater assets than your partner.
2. There exists now, or will exist, a significant income disparity between you and your partner (You will want to limit your spousal maintenance exposure in such a situation).
3. This is not your first marriage.
4. Your future partner has significant debt obligations.
5. You own a business or have a significant interest in a business (Remember, even if the business is not worth much now, it could be worth significantly more later - and your future spouse would likely be entitled to the appreciation in value of the asset).
6. To solidify your estate planning.
7. If you anticipate significant lifestyle changes in the future (for example, you are going to retire early, or drastically reduce your income even though you have the potential to earn more).
Jaburg & Wilk, P.C. has extensive experience in drafting, negotiating and crafting complex and creative pre and postnuptial agreements which have consistently upheld challenges over the years.
About the author: Laurence Hirsch is a family law attorney at the Phoenix law firm of Jaburg Wilk. He is a member of the State Bar of Arizona in the Family Law and Young Lawyers sections. He was formerly the Vice President of the Maricopa County Bar Association, Family Law Section. More recently, Larry was selected as a 2012 and 2013 Southwest Super Lawyer Rising Star and also chosen by the Phoenix Business Journal for induction into the 2011class of "Forty Under 40". He has expertise representing high net worth individuals who have closely held businesses in their marital community. He can be reached at 602.248.1000 or firstname.lastname@example.org .