WHAT'S MORE ROMANTIC THAN A PREMARITAL AGREEMENT?

There really is nothing romantic about a premarital agreement. In fact, more than one client has said that the mere mention of one creates a very unromantic environment. 

But, whenever a couple marries, there are probably expectations about financial arrangements during the marriage, in the event of a divorce, and in the event one of them dies while they are married. The law establishes the rights of the parties to a marriage. A premarital agreement can change those rights.

In the event of a divorce, a court has the power to decide what property acquired during the marriage is marital and separate, divide marital property, and award maintenance (also known as alimony). (The court also has the power to determine child custody and child support, but these subjects cannot be determined in advance by an agreement, because it is the court’s obligation to do what is in the best interests of the child.)

In marital property states, like Missouri, separate property is generally any property acquired before the marriage and any property acquired during the marriage by gift or inheritance. All other property acquired during the marriage is martial—including income from separate and marital property, salary and employee benefits. A premarital agreement can redefine marital and separate property and predetermine how property will be divided in a divorce.

In Missouri, when a married person dies, the surviving spouse is entitled to outright distribution of one-third of the decedent’s property of any kind. In addition, federal law requires that if a person is survived by a spouse, that the spouse be the beneficiary of all qualified retirement plans, unless the spouse has waived that right, in writing, before the decedent’s death. (This rule does not apply to IRAs.) A premarital agreement can limit those inheritance rights.

What does it take to make a premarital agreement valid? There must be a complete disclosure of the assets and income of the parties. Each party must make this disclosure in sufficient time to allow the other party to consider it. Both parties must be advised by independent counsel. The agreement must be supported by fair consideration on both sides—but the consideration does not have to be equal. The agreement must be mutual. The agreement must not be unconscionable at the time it is enforced.

If you would like more information, contact:  Christopher Anderson (816.472.3117), John Dooling (314.259.4743), Jonathan Igoe (314.342.8019) or one of the other attorneys in the Tax, Employee Benefits and Trusts and Estates Practice Group.

Please feel free to pass this on to any colleague or client who may be interested in this information.

The foregoing is a very summary discussion of the features and rights relating to a premarital agreement in Missouri at the time it was written. Each person’s situation is different and the nature of this law is constantly changing. You cannot rely on this summary for any purpose in a particular situation, and you should seek independent counsel for specific advice about your situation.