If you have been married before, are getting married again, and have a retirement account, you should at least consider getting a prenuptial agreement. More than likely, your retirement account has already been divided once. So, it’s important to secure what remains, since no one knows for sure what tomorrow will bring. The Uniform Premarital and Marital Agreements Act, which Illinois lawmakers recently adopted, makes it easier to draft and enforce these agreements.
Incidentally, a prenuptial agreement is more than divorce insurance. In many situations, these contracts make your marriage stronger. Money is one of the leading causes of marital problems, and prenuptial agreements remove these concerns from the scene. Additionally, to many people, a prenup is like a life insurance policy. No one wants or expects to die early, but responsible people prepare for the unexpected. A premarital agreement fills the same need.
Whether you want to make a premarital agreement or break one that is unfair, you have important legal and financial rights. A DuPage County prenuptial agreement lawyer stands up for these rights in court. The UPMAA streamlined the laws and procedures in this area, but they are still rather complex. And, unless both spouses have an independent lawyer throughout the process of making or breaking a prenup, there’s a good chance a judge will invalidate the contract.
What A Prenuptial Agreement Cannot Cover
The UPMAA significantly expands the law as to what is fair game in a premarital agreement. So, this section will be rather short.
Prenups cannot address child custody, child support, or related matters. Under Illinois law, the best interests of the children, as opposed to the best interests of the parents, controls these areas. Some factors relevant to the best interests of the children include:
These factors have little or nothing to do with the parents’ financial portfolio.
Additionally, under general contract law, prenups cannot contain any illegal agreements. Such agreements could include money laundering or placing assets in an illegal holding corporation.
Speaking of contract law, informal prenuptial agreements, such as a string of text messages or emails, are usually not enforceable in court. Such pacts usually lack mutuality or a meeting of the minds. The two parties must agree on the same terms at the same time.
Areas A Prenuptial Agreement Can Cover
If the agreement is enforceable, as outlined below, it can cover pretty much anything, not on the above-prohibited list.
The average marriage which ends in divorce lasts a little over seven years. During this time, most people do more than make substantial contributions to retirement accounts. They also borrow money and acquire assets. Sometimes, marital and nonmarital property become commingled.
Student loans are the most common example. These obligations are almost always nonmarital debts since the spouse usually borrowed the money before the marriage. Most people use money from their paychecks to make these loan payments. The problem is that these funds are marital assets.
Anything acquired during the marriage, including a paycheck, is marital property that’s subject to an equitable division. So, in this case, the marital estate could be entitled to reimbursement for the funds expended on a nonmarital debt.
That’s an extremely complex situation. Such a financial knot is difficult to untangle. Almost literally with one stroke of a pen, a premarital agreement entirely settles this time-consuming matter.
Most property agreements designate all the couple’s assets and debts as marital or nonmarital. Generally, these contracts also include management provisions, such as who primarily drives which vehicle. From this perspective, a premarital agreement is basically the stitch in time that saves nine.
Usually, a prenuptial agreement cannot recharacterize marital property as nonmarital property, or vice versa. But a prenup can confirm the characterization. Assume that, when they get married, the wife has a classic car that is in very poor condition. The husband spends his weekends, as well as some money he got from his parents, restoring the vehicle. If the couple divorces, a judge could rule that the car has transmuted and is now the husband’s nonmarital property. A prenup eliminates that possibility. It puts the property characterization in black and white.
Most prenups do not stop with property characterization. They also include provisions about property distribution. Sometimes, the distributions are specific, such as the husband gets the good china and the wife gets all the Christmas decorations. Many people have their DuPage County prenuptial agreement lawyers draw up executory documents, such as wills and trusts, to go along with their property agreements.
On a related note, prenuptial agreements also often include inheritance and succession provisions. Divorce is tantamount to death, as far as these things are concerned. So, children from a first marriage are usually unable to inherit property or step into a family business. Frequently, that’s not the intended result. A premarital agreement clarifies these issues, so no one gets blindsided later.
The authority in this area is not absolute. Prenups can contain property distribution provisions, but these provisions must still equitably divide marital property. Note that “equitable” is not necessarily the same thing as “equal.” Equitable, like “fair,” is a much more subjective term.865
Spousal Support Caps
These provisions were extremely common before the law changed in 2016. Back in those days, judges had almost unlimited discretion to set the amount and duration of payments. Therefore, even after a relatively brief marriage, a spouse could be forced to pay substantial alimony, largely based on the standard of living during the brief marriage.
Now, a formula dictates the amount and duration of payments, at least in most cases. This formula only accounts for the income discrepancy between the spouses and the length of the marriage. So, today’s spousal support awards are much more predictable than they were under the previous law.
Nevertheless, many premarital agreements still include spousal support caps. Frequently, the agreement includes variable caps. The amount goes up if the marriage lasts longer.
Breaking a Premarital Agreement
Just like any other contract, a premarital agreement is difficult, but not impossible to break. If in the eyes of one spouse the premarital agreement unfairly divides a retirement account or other asset or debt, the challenging spouse can overturn it based on:
Most prenuptial agreements include severability clauses. If a judge throws out one portion, the remainder is still in effect.
Love and Marriage and Divorce and Baseball and Prenuptial Agreements: A Case Study
The bases for overturning a premarital agreement are rather hard to understand. So, let’s look at a recent example. Although these events happened in California, since it is also a UPMAA state, the results would have been about the same in Illinois.
Some baseball fans might remember Frank and Jamie McCourt, the uber-wealthy Los Angeles power couple who owned the Los Angeles Dodgers in the early 2000s. The Dodgers won the World Series in 1988, largely on the strength of Kirk Gibson’s storybook home run. But over the next several years, although they made the playoffs several times, the Dodgers consistently underachieved. Fan interest, as well as ticket sales and the team’s TV value, waned accordingly.
Things got worse on Opening Day in 2011. Two fans wearing Dodger apparel violently assaulted a San Francisco Giants fan, leaving the man with serious brain damage. Predictably, that incident kept even more fans away.
The years of lost revenue finally caught up to the team in June of that year. Reportedly, Frank McCourt, the sole remaining owner (more on that below) was so cash-strapped that he could not make payroll at the end of that month. On June 27, the team filed for bankruptcy.
Financial fortunes reversed quickly. The arrival of new players, such as pitching ace Clayton Kershaw, along with additional on-field success, caused the team’s value to skyrocket. In 2012, Frank sold the team for a then-record $2.15 billion.
Team In Bankruptcy – Owners In Divorce Court
While the team was in bankruptcy court, its owners were in divorce court. In 2010, shortly before a judge finalized their divorce, Frank and Jamie signed a property agreement. Jamie gave up her half of the team, which was essentially worthless at the time, for about $130 million in cash and property. After Frank sold the team, Jamie tried to overturn the property agreement on the grounds that it was grossly unfair and that Frank tricked her into signing it. She lost both arguments.
So, Jamie lost her appeal. She also had to pay her ex-husband’s $1.9 legal bill. However, a few years later, then-President Donald Trump made the longtime GOP fundraiser the U.S. ambassador to France and Monaco. That’s not money in the bank, but it is a pretty nice consolation prize.
Connect with a Thorough Wheaton Prenuptial Agreement Attorney
A prenuptial agreement can protect your 401(k) and other assets in a divorce. For a free consultation with an experienced prenuptial agreement lawyer in DuPage County, contact Keller Legal Services at 630-505-1515. We have three Chicagoland offices.