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Prenuptial and postnuptial agreements do the same thing — protect the assets and the rights of both spouses, define the terms of the marriage and set expectations regarding the disposition of property and other issues. The main difference is one of timing – prenups are agreements made before getting married, while postnuptial agreements are entered into after marriage has taken place.
While some people feel that making such an agreement puts the marriage in a confrontational mode, the truth is that a prenuptial agreement, postnuptial agreement, or domestic partnership agreement can remove many areas of potential conflict from the relationship. It can provide peace of mind for both parties over the course of the marriage or relationship and actually serve to strengthen it.
Why Agreements are Important
Realistically speaking, divorce is a common occurrence in the United States, with about 40 to 50 percent of first marriages ending in divorce; and the divorce rate for subsequent marriages is even higher. Illinois is an equitable distribution state, meaning the courts will divide property according to what the judge feels is fair and equitable, and not necessarily equally.
Many couples do not want to leave the fate of their property in the hands of the court, and since people are getting married later, with assets they may not wish to comingle, it makes sense to have an agreement in place to simplify matters if necessary. And working out the terms of an agreement can actually help strengthen a marriage by dealing with issues and providing a solid foundation that will protect both spouses. Agreements can serve a positive role in communicating expectations and helping the parties avoid mistakes that can prove costly.
Prenuptial Agreements in Illinois
Under Illinois law, a prenuptial agreement made before marriage between potential spouses, is called a “premarital agreement” and is governed by the Illinois Uniform Premarital Agreement Act. These agreements typically state how a couple will handle assets, debts, and other financial issues during their marriage and how these matters will be handled should the marriage end. A premarital agreement is a contract that becomes effective upon marriage.
Agreements may address issues that include:
• Who pays alimony after divorce, how much and for how long
• Which spouse will own what property after divorce, how property will be sold, transferred, or managed, and what will happen to property acquired during the marriage
• Creating a will or trust to carry out the terms of the agreement
• Death benefit rights from a life insurance policy
• What happens to future inheritance for children from another marriage
• Protecting a business, retirement accounts, or any pre-owned property from potential division if you divorce.
Postnuptial Agreements in Illinois
In Illinois, a postnuptial agreement entered into after a couple is married is a legal contract where the parties agree what would happen to the marital property and spousal support should a divorce occur. Post-nuptial agreements may be made if couples didn’t have the time or inclination to write agreements before marriage or if circumstances change that increases the need to do so.
Reasons may include:
• Going through a tough time in the marriage and desiring to figure out property division to get a sense of what would happen should the divorce take place
• Creating an agreement before entering a new business venture
• Regretting not having made a prenup.
Dangers of Pre- and Postnuptial Agreements
While these agreements can benefit both spouses, there are some risks involved. Since these agreements are legal contracts, you cannot change your mind and try and back out of one because you didn’t read or understand the document.
As in any legal contact, you should make sure not to give away important rights that could hurt you in the event of a divorce. Both spouses should have their own lawyer to examine the agreements and make sure their rights are protected and that the documents are written and executed properly.
Agreements may be amended or canceled at any time in writing if this notice is signed by both spouses.
When Agreements Are Not Upheld
Under the Illinois Marriage and Dissolution of Marriage Act, a premarital agreement may not adversely affect the right of a child to support or bind courts in determining child custody. Agreements are not valid if they are extremely unfair to one party, entered involuntarily, or as the result of coercion or fraud. In addition, agreements cannot require anyone to do anything illegal or against public policy.
Copyright Wolfe & Stec, Ltd.