This past Saturday I was walking on State Street in Madison and saw at least four wedding parties. My wife commented about how nice it was to see all of the weddings. All I thought of was the statistics that if you were married and living in Madison or even Baraboo or anywhere else in the State of Wisconsin, of the four wedding parties that we saw, statistically, more than two of them would end in divorce. I wondered if anyone had told these brides and grooms of the difficult task ahead of them to keep their marriage alive and well.
All of the four couples were young and may have brought the same amount of assets and/or debts to the marriage. In those situations, pre-marital agreements may not be necessary. However, during their marriage one of them may have a large inheritance and he/she may want to use that money to invest in his/her future. I just finished two divorce trials in which the primary issue was a claim that one of the spouses get back his inheritance at the time of divorce. Those were difficult and expensive issues to litigate and most likely were not resolved to the client’s satisfaction. However, a marital agreement, a written agreement entered into during the course of the marriage, could have prevented the litigation and saved his inheritance.
A pre-marital agreement is a written enforceable agreement entered into prior to the marriage that sets forth the economic terms of a divorce should the marriage fail. Generally, these agreements apply in situations where one person has substantially more assets or, in some cases, substantially more debts at the time of the marriage. Wisconsin is a marital property state which means that once you are married, all the assets are presumed to be marital property – to be shared equally. Also, the debts become the other spouse’s responsibility. This is not only an issue during marriage but also at your death.
I have seen on many occasions situations where a young couple marries but one of them may have owned real estate prior to the marriage. They sell the real estate, which is in their name alone, and then purchase real estate in both names. The law says that at the time of divorce, all assets are presumed to be marital, meaning that the money for the down payment on the marital house by one of the spouses is considered a gift to the other and they divide equally at the time of divorce. There can be arguments and there is some case law to support an unequal division in those situations, but very seldom is it “dollar for dollar”. Again, a pre-marital agreement indicating that the person selling the house gets his/her money back in full, should the marriage fail can prevent these issues.
Marital agreements can be entered into both before the marriage, pre-marital, as well during the marriage. To be enforceable, both sides must fully disclose all income, assets, debts and liabilities and both should have their own separate legal representation. Also, the agreement cannot be under coerce, threat or duress. For example, you should not, the morning before the wedding, hand a paper to your soon to be spouse and demand that he/she sign or the marriage is off. In those situations, it is unlikely the agreement would be enforceable.
Is there a good time to talk about a marital or pre-marital agreement? Perhaps the divorce rate would not be as high if people could discuss financial issues. One of the main reasons for divorce is financial disputes. Often times, parties do not openly discuss these issues. If they did, perhaps the divorce could be prevented.
Pre-marital agreements are extremely important in situations, whether it be your first or second marriage, when one party has substantially more than the other. It could be a person owns a business, substantial real estate, received a large inheritance, etc. The list is endless. In those situations, a pre-marital agreement could prevent unnecessary expense in litigation, should the marriage fail, not to mention, will protect your financial estate. On the other hand, if the marriage doesn’t fail, which is what everyone hopes for, the document sits in a desk drawer and collects dust never to be used.
A marital agreement which is entered into during the marriage is often times done if there is marital waste such as one person having a substantial gambling debt, credit card problems, etc., and the other does not want all of the responsibility. The same is true for an inheritance or a large gift to one of the spouses by a third-party that the other would like to keep separate should the marriage fail.
Feel free to ask questions and add comments to this blog, I have been helping people solve their family law problems for more than 25 years and would be happy to assist and would be interested in reading your comments.