Learn about Prenuptial and Postnuptial Agreements and Your Options!
If you’re trying to decide whether or not to create a New Mexico pre- or postnuptial agreement, you’ll need to understand what these types of contracts can and can not do for you. For instance, a prenuptial agreement can define who gets what in case of divorce, but it cannot speak to future child custody rights. It is very important that your agreement contain only what is legally allowable; legally inappropriate or illegal clauses could cause a judge to reject your entire agreement.
New Mexico Financial and Family Law can assist you and your partner in understanding all of the legal issues and boundaries involved in prenuptial and postnuptial agreements in New Mexico. We can also assist you by explaining the financial and emotional benefits that can be derived by properly prepared and executed prenuptial or postnuptial agreements. Please contact us so that we can assist you in both the early discussion stages as well as in properly preparing the legal documents.
A prenuptial agreement (“prenup” for short) is a written contract created between two people before they are married. A prenup typically lists all of the property each person owns (as well as any debts) and specifies what each person’s property rights will be after the marriage.
A postnuptial agreement (“postnup” for short) is for all intents and purposes the same as a prenup except that it is a written contract created between two people after they are married. A postnup typically lists the same things included in a prenup and can specify what each person’s property rights will be after the marriage; including post-marriage acquired or earned assets.
What many people fail to realize is that prenuptial and postnuptial contracts (agreements) do not just simply address issues when a marriage is dissolved by divorce, they also can solve financial concerns that arise upon the death of one of the partners. This can be very important in second marriages where one or more of the partners want to protect or allocate assets for the use of children (or grandchildren) from an earlier marriage.
“What, you want a Prenuptial Agreement?”
Nothing has the potential to kill romance faster than the word “prenup.” But with about one in three of all first marriages ending in divorce, and fifty percent of second or third ones failing too, a prenup is smart financial planning, legal and financial experts say. “Think of it as a business arrangement or as an insurance policy to help remove some of the emotion that’s naturally involved,” says Nancy Dunnan, a New York City financial adviser and author. “Marriage is not just an emotional and physical union – it’s also a financial union.” A prenup and the discussions that go with it can help ensure the financial well-being of the marriage.” A prenuptial accord is a contract between two people about to marry that spells out how assets will be distributed in the event of divorce or death.
You should consider having a prenup if you fall into any of the following categories:
You have significant assets such as a home, stock or retirement funds
You own all or part of a business
You may be receiving an inheritance
You have children and/or grandchildren from a previous marriage
One of you is much wealthier than the other
One of you will be supporting the other through college
You have loved ones who need to be taken care of, such as elderly parents
You have or are pursuing a degree or license in a potentially lucrative profession such as medicine
You could see a big increase in income because your business is taking off
It is never too late to define and protect your marriage partnership. The process of creating a postnuptial agreement, a marriage contract created anytime after the marriage relationship has been established, can be a positive influence on both the emotional and legal dynamics of your relationship. For the most part, the items to be addressed are the same as those addressed in prenuptial agreements. And, the agreement (contract) has the same legal constraints and ramifications. There can be, however, challenges in defining ownership of pre-marriage property and their rights after the marriage has been established and separate property has been co-mingled. This is another area where New Mexico Financial and Family Law can assist you.
Community property – A method for defining the ownership of property acquired during marriage, in which all earnings during marriage and all property acquired with those earnings are considered community property and all debts incurred during marriage are community property debts. Community property laws exists in New Mexico
Separate property – In New Mexico, which is a community property state, separate property is that which is owned and controlled entirely by one spouse in a marriage. At divorce, separate property is not divided under the state’s property division laws, but is kept by the spouse who owns it. Separate property includes all property that a spouse obtained before marriage, through inheritance or as a gift. It also includes any property that is traceable to separate property — for example, cash from the sale of a vintage car owned by one spouse before marriage-and any property that the spouses agree is separate property. Compare community property and equitable distribution.
Division of Property and Debt – Because New Mexico is a community property state, the presumption is that all property acquired during the marriage and all debt acquired during the marriage is divided equally. That can be a headache and create post-divorce entanglement (if each ex-spouse shares each credit card equally for instance). The Courts can find ways to divide property “fairly” which does not have to be exactly equal, to avoid entanglement issues. However, equal division is the rule. A Court could rule at trial: “Sell everything, pay off the debt, and divide what proceeds remain.” That can be a waste, and a good agreement can avoid it.
Prenuptial and Postnuptial Agreements Can’t Control Everything
However, it is sometimes unsafe to leave your financial future unprotected! If you don’t have a prenup or a postnup if your marriage heads to a divorce and your soon to be ex-spouse have an unreconcilable dispute over the division of property, your case would then go to a divorce court, where a judge would mandate the terms of the split. This can be especially disastrous in the case of second marriages. Your assets could fall to the wrong people, like your spouse’s children from another marriage instead of your children (from a past or your current marriage). If you don’t want your financial affairs to be determined by a third party, it might be wise to sign an agreement. And don’t think that you need to have a fortune in order to justify such a contract. Such agreements may make sense for you if you: own a business, are a lot wealthier than your spouse, will be supporting your spouse through college, or if you foresee a big increase in your income in the near future. Even if none of these applies to you, who’s to say what could happen in the future? Perhaps you’ll receive an inheritance.
There is something to be said for planning for your financial future when you and your fiancé or spouse are in your right minds. Please contact New Mexico Financial and Family Law Firm and let us, with the possible assistance of our recommended qualified financial advisors, counsel you in the areas of Prenuptial and Postnuptial agreements.