Pre-marital Or Post-marital Agreements: Asset Protection

Schwartz, Fox & Saltzman, LLC. – Philadelphia Divorce Lawyers

Drafting Agreements

Pre-Marital Agreements can be very valuable documents in many cases. These Agreements are prepared and signed before parties enter into a marriage. Simply put, any person who has assets of their own, at the time of marriage, are serious candidates for such a document.

It is critical that these documents be signed before you are married. The completion of the marriage provides the “consideration” which makes the document valid. Under our system of law, any contract (and a Marital Agreement is a contract in Pennsylvania) must have “consideration” to make it valid. In effect, both parties must give something up in order for any contract to be valid. In a Marital Agreement, both parties generally are “giving up” any interest each of them might otherwise have in the assets of the other party.

If you have assets (a house, a retirement account, bank or brokerage accounts, etc.), at the time you are married, the value of those individual assets, on that date, are owned by the person in whose name those assets are titled. However, the increase in the value of these separate assets is a marital asset.

Example: Spouse A owns a house, titled in her name, before marriage. The house is worth $300,000.00 on the date of marriage. This $300,000.00 value is all owned by Spouse A. The spouses remain married for twenty years. They divorce after twenty years. On the date of divorce, the house is worth $600,000.00. While the $300,000.00 date of marriage value is only Spouse A’s property, the increase in value during the marriage is Marital Property. Hence, Spouse B would be entitled to share in this increase in value.

This applies to all assets. Further issues arise if Spouse A puts Spouse B’s name on the house’s deed during the marriage.

Other than pre-marital assets, pre-marital debts can also be addressed in a Marital Agreement. Below you will find some of the other more common issues, which can be addressed and resolved in a Pre-Marital Agreement:

The parties can address how assets acquired after marriage will be owned. For example, what if Spouse A sells her pre-marital home and uses the proceeds to buy a home to be lived in by the spouses. Is the value of this second home a marital asset or is it a separate asset, because Spouse A used the proceeds of this pre-marital asset to buy an asset purchased during the marriage? The value of this asset can be protected, it can be a marital asset, or some portion of it can be a marital asset, as the parties agree.

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The above are but a few examples of the value of a Pre-Marital Agreement. Your needs will dictate the issues which need to be addressed and resolved in such an Agreement.

Don’t wait until several weeks before your wedding date to begin the process of discussing and preparing such an Agreement. Good marital planning dictates that this process begin a number of months before your wedding. You do not want to be discussing and negotiating the terms of this Agreement the week of your wedding. It is best to have this discussed, negotiated, prepared and signed well before the wedding.

In cases where only one party is in need of this document (for example, Spouse A in our example, has the assets needing protection), this can be a sensitive subject to bring up to your intended Spouse. It can be very emotional. With fifty percent of first marriages ending in divorce, and sixty percent of second marriages, this is a practical document. It has nothing to do with whether a spouse trusts the other party or loves the other party; it has everything to do with reality.

Lastly, using “cooking cutter” samples off the internet or from a third party is often a tragic error. If you have assets to protect, it is worth the investment for you to hire a good, seasoned Family Lawyer. Whether you are the party needing the Agreement or the party marrying the person who presents you with one, hiring a lawyer is critically important.

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