Asking a loved one to enter into any kind of agreement can often be a sensitive subject. While it may be difficult to think about a time when any marriage or romantic relationship may end, there may come a time when it does. Taking preventative measures now may make all the difference later on. Whether prenuptial, postnuptial or cohabitation, an agreement is an excellent way to preserve and protect each other’s assets before things get emotionally charged.
Prenuptial and postnuptial
Prenuptial agreements, also called antenuptial agreements, are often used when contemplating marriage in order to protect assets like real estate property and savings that either party is bringing into the union. On the other hand, postnuptial agreements are generally created after the wedding date in order to protect assets that either party obtained during the marriage and that both are in agreement should be considered separate property if there would be a divorce. Both are enforceable contracts under Pennsylvania law.
Either type of agreement can be simple and only address one term, or they can be extremely comprehensive and address the distribution of property, support, alimony, custody, inheritance, business rights, etc. Some common terms in an agreement address who would keep which assets upon a divorce (i.e. each may keep his/her own respective retirement account), when and how a residence will be distributed (i.e. the parties may agree that the house would be sold upon separation and each obtain a 50% share of the equity in the house), or that one party waives any and all interest in the other party’s family business. They can further outline terms for situations where a spouse engages in infidelity or terms that change based upon the duration of the marriage, etc.
While individuals entering into these agreements may have great leniency when it comes to the terms entered into, they should take great caution before doing so. Since they are valid legal contracts, even if the terms are weighted considerably in favor of one party, the contract will likely be upheld by the court.
Both agreements require full and fair disclosure of each party’s financial position, and each party should engage the services of an attorney to advise him/her of the legal impact of the contract. As these contracts involve looking at the hypothetical future of the parties and their finances, it is imperative that each individual fully understands how the contract affects his/her respective future upon divorce.
So maybe marriage isn’t your intended path but you’d still like to set some of the legal framework in place to protect your rights in situations where the relationship ends or a death occurs? Enter the cohabitation agreement. It is similar to a prenuptial agreement, just without the use of a marriage date as a trigger. Among other things, a cohabitation agreement can address the sharing of living expenses during the course of the relationship, the division of acquired assets/debts in the event of a death or separation and financial support following a relationship’s dissolution. It should be noted that while these agreements are not enforceable in family court, they are enforceable in civil court as a contract between two persons.
Whatever the agreement, Burns White Family Law attorneys can assist with both the drafting and reviewing of agreements to protect your assets and alert you of any future legal ramifications.