Utilizing Premarital and Postnuptial Agreements to Build Trust, Reduce Conflict, and Save Money

undefinedWe recently sat down with Attorney, Abby Cettel, to pick her brain about premarital and postnuptial agreements, and how they can contribute not only to transparency between engaged or married couples, but can also contribute to saving thousands of dollars and headaches in the event of a future divorce.

What is a Premarital/Prenuptial Agreement?

“A premarital agreement is a contract between two people who intend to get married. It's a document that’s signed before your marriage, and outlines both of your positions on the different rights that you will have as a married couple,” says Cettel. “It's a document reviewed, signed and drafted by both parties before marriage that lays out what you expect in case of a divorce.”

Can You Create a Similar Contract After You’re Married?

“Yes, there is something called a marital agreement, or people might refer to it as a postnuptial agreement,” says Cettel. “There are a few different circumstances when this happens. Sometimes you're about to get married, and you mean to sign a premarital agreement, but it just doesn't happen for the wedding. At that point, the agreement becomes a postnuptial agreement. These also happen many years later on in the marriage. Quite frankly, I often see them after the parties have talked about separation and decided to stay together, but only on certain terms— those terms become reflected in a document, which becomes a postnuptial agreement.”

What Exactly Can Be Covered in These Agreements?

“In the state of Oregon, when you get married, all of your income, your assets, your houses, your cars, that all becomes a portion of your marital estate. And what both a premarital agreement and a postnuptial agreement can do is outline how each of those assets are going to be treated [in the event of a divorce]. You can outline if you want to pursue mediation before you actually go to attorneys and go to court, or how one party will pay the other's attorney fees,” Cettel explains.

“You can also talk about what to do in the event of one spouse's death. I think we all have experienced losing a loved one, and there's a lot more to it than saying, ‘their bank account goes here, and this gets paid off’, especially for persons who have children from other marriages. [With this contract], you can outline exactly how you anticipate a child would be taken care of, and ensure that your child from your first marriage is given access to your estate.”

Are These Agreements Enforceable in Court?

“Premarital agreements are generally enforced in court with the exception of long-term marriages. The court will not enforce agreements made about child custody or child support. This is because courts in Oregon and all over the country use something called the best interest standard to determine your child's parenting plan and custody, and we use a calculator for child support. All of those things are dependent on what's going on in the child's life right then, not necessarily when you made the agreement” says Cettel. “Also, postnuptial agreements aren’t as enforceable as premarital agreements. [This is because] the court assumes that later on in the marriage, the parties aren't on equal footing. Typically, when you make a postnuptial agreement, it's under the pretense of 'I want these things to continue to stay in the marriage', as opposed to both parties choosing to enter into a marriage. So, the burden becomes lower to overturn a postnuptial agreement.”

Why Are Premarital Agreements Less Enforceable for Long Term Marriages?

“When you start getting into longer term marriages, there's a chance that the court will choose not to enforce a premarital agreement because the circumstances of the parties have changed so significantly,” explains Cettel. “For example, say we get married when we're 20 years old, we don't have two pennies to rub together, and I invent the computer. Now I've got a billion dollars, but my premarital agreement says that my husband gets nothing— I retain all of my own bank accounts, and I retain all of the retirement that I make. Well, that’s not fair, and the court will not enforce something that unfair.”

Why Are Premarital Agreements Advantageous?

“As an attorney, my answer is always that everyone should get a premarital agreement. Even if you don't have any money--no house, no big bank accounts, no investment accounts--what you can decide is how you're going to deal with each other in case of a divorce. We all know getting married is expensive, right? What people don't realize is that getting divorced is two or three times more expensive than getting married. So if you decide together, early on, that you're going to use a mediator and avoid the court as much as possible to get that done, it's better for everyone,” Cettel explains.

“In the very least, it opens up a really honest conversation between engaged people to talk about how they’re going to deal with something really hard. It also lets everyone know, on the day of marriage, ‘Here are my debts, and here are my assets.’ It means that you trust each other enough to have a very honest conversation about finances and expectations in your marriage-- conversations that everyone should be having, but often they’re not. And in the end, if you start the conversation and choose not to sign that premarital agreement, or even draft it, at least you're discussing what exists and what your expectations are for the future.”

If you’d like to speak with Abby or one of our other experienced family law attorneys about drafting a premarital or marital agreement, call our office today at (503) 227-0200 to get started!