Premarital Agreements
Premarital Agreements are governed in Arizona by the Arizona Uniform Premarital Agreement Act as set forth in Arizona Revised Statutes Sections 25-201 through 25-205. The statutes, in part, provide that such agreements must be in writing. It is important that the parties disclose in writing their individual assets, debts and incomes as part of the process. Parties are lawfully entitled to enter into premarital agreements regarding property interests, income, expenses, spousal maintenance, what happens to their property upon their death, and any other terms that are not “unconscionable”, in violation of “public policy” or that would constitute a crime. Premarital agreements regarding future custody and child support are not enforceable.
Premarital Agreements come in all shapes and sizes. Some persons merely want to protect the property that they have acquired prior to marriage as sole and separate property, but agree that all income earned during the marriage is community property. Other persons desire to enter into a more involved premarital agreement whereby their individual incomes earned after marriage remain as his or her sole and separate property. Some persons merely desire to agree that no spousal maintenance (alimony) will be paid in the event of divorce.
It is advisable to always obtain legal advice from an attorney experienced in drafting premarital agreements prior to executing such agreement. Although legal counsel is not “required” by Arizona law, there is a much higher risk that a pre-marital agreement will be “thrown out” or lead to litigation if the document is not properly drafted and/or if parties do not have independent legal counsel.
Premarital Agreements received from forms stores or non-attorneys can be poorly drafted and can lead to major problems. In fact, some premarital agreements drafted by attorneys are poorly drafted and lead to litigation and substantial attorneys fees. For example, some premarital agreements may state that a person’s future income is his or her sole and separate property, but then fail to address how joint expenses are to be paid. Some premarital agreements have conflicting terms that could give rise to the premarital agreement being only partially enforceable or may lead to the premarital agreement being held as unenforceable altogether.
It is quite common for one of the parties to desire to enter into a premarital agreement while the other person feels that such is an indication that the person is “planning for a divorce”. Although such feelings are understandable, modern realities suggest that it makes good common sense to at least look into the possibility of a premarital agreement even if you fully intend your marriage to last forever. Marriage itself is a contract in many ways, i.e. many years of Court cases and statutes govern property, assets, spousal maintenance and other issues. Many of such Court cases were based upon social norms that are outdated and do not take the parties’ actual intent or modern realities into account. Moreover, a well-drafted premarital agreement can save the parties substantial adversity and attorney's fees in the event of divorce as many of the issues are essentially agreed upon in advance. It is our philosophy that a premarital agreement is merely providing defined terms, which would otherwise be governed by a different contract - i.e. complex Court cases, and statutes that are difficult for a non-attorney to understand.
Without a premarital agreement, many people make mistakes that lead to results that they did not intend. For example, people often place their premarital sole and separate residence into both parties' names after marriage. Sometimes such is required by a lending institution if the person refinances the underlying mortgage. In most cases, the courts will hold that the person intended a gift to the community, and the residence will then be divided equally. Similarly, a person may lose his or her claim to pre-marriage financial accounts merely by adding the other person’s name to the account, even if the person only intended that the other spouse would receive it in the event of death. Sometimes, a person’s pre-marriage funds are co-mingled with community income, thus leading to the entire account being divided 50-50 including the sums saved prior to marriage.
If a parent has children from prior marriages or relationships that they want to make sure receive at least some assets in the event of the parent’s death, it is especially important to at least consult with an attorney prior to marriage.
The following are potential issues to address in a premarital agreement. Such list is not all-inclusive, but rather sets forth major issues often addressed in premarital agreements.
- Premarital real estate
- Premarital financial accounts
- Personal items owned prior to marriage
- Business interests established prior to marriage
- Income during marriage
- Expenses during marriage
- What happens to property in the event of either person’s death
- Debts incurred prior to marriage
- Debts incurred after marriage
- Inheritance funds and property
Not everyone needs a premarital agreement. Sometimes, applicable community property laws are consistent with a person’s desires regarding the marriage. For example, community property laws can protect a person’s pre-marriage property to a certain degree without such agreement. However, there are many claims that can be made in a divorce, which the parties did not intend at the time of marriage. A good family law attorney will advise you whether a premarital agreement makes sense for you. Consulting with an attorney who is experienced in drafting and litigating premarital agreements may save you a great deal of heartache and expense in the future.
Call Gregory A. Riebesehl at Riebesehl Family Law Offices at (602) 621-0779 today to arrange for your free initial consultation regarding any questions or concerns you may have about premarital agreements.
