Many people ask whether they should enter into a prenuptial agreement before getting married. For Florida residents, there are many reasons to enter into a prenuptial agreement. Here are 7 such reasons.
To fix the amount of alimony in case of divorce.
Florida recognizes several types of alimony, and trial courts have significant discretion in the amount and duration of alimony is some situations. The length of the marriage, however, can be the most significant factor in determining the length of time alimony must be paid (which for spouses of unequal earning power may itself be the most important part of the alimony determination).
Recent Florida law creates a rebuttable presumption against permanent alimony in a short-term marriage, which is defined by Florida statutes as 7 years or shorter. There is now a rebuttable presumption for an award of permanent alimony in a long-term marriage, which is 17 years or longer. There is no presumption for or against permanent alimony in a moderate-term marriage, which is a marriage greater than 7 years but less than 17 years.
The expectations of the parties regarding their role in the marriage, and the resulting economic consequences should the marriage end, make fixing the terms of alimony in a marital agreement of paramount importance. Interestingly, because the Florida legislature attempted to remove some of the discretion previously given to trial courts regarding the length of marriage by the new short term / moderate term / and long term concept, we have heard of situations where a divorce petition is filed in the 6th year of marriage (to guarantee against having to pay permanent alimony), or in the 16th year of marriage (to eliminate the near certainty of having to pay permanent alimony).
Rather than relying on the Florida legislature’s views on alimony, a premarital agreement provides the flexibility necessary to take into account the needs, wants and individual expectations of the parties to the marriage.
It is not just the spouse of superior economic earning power that benefits from a premarital agreement. The economically dependent spouse, who may have given up educational or career opportunities to marry someone of higher earning power, can also benefit from having guaranteed support as negotiated in the prenup agreement.
Subsequent to an award of permanent alimony, the court may terminate or modify that award if it finds that the payee spouse is in a supportive relationship. There are several factors the court must consider before finding a supportive relationship exists, but a supportive relationship is essentially a relationship akin to a marriage and one based on financial support. Read Florida Court Determines Whether Marital Agreement Provides For Payment of Alimony After Death.
To protect children from earlier marriages in the case of death or divorce.
Marriages with children from earlier marriages can greatly benefit from a premarital agreement. For example, someone with children entering college may need the certainty of being able to pay for college without the possibility of a messy divorce and the payment of alimony. Likewise, wealthy individuals with large estates may not want to be required to provide all of the spousal entitlements to a spouse in the event of death.
Even without expensive college bills and a large estate, the economic consequence of a divorce may severely interfere with being able to carry out pre-existing plans for children from earlier marriages.
To protect a family owned business.
If one party to the marriage works at and owns part of a family-owned business, the business itself, as well the income derived from the business, can be at risk in a divorce, as the result of equitable distribution and alimony. In a divorce proceeding without a prenuptial agreement in place, the other spouse would end up getting full access to the books and records of the business would be able to take the deposition of the key officers and employees of the business, and otherwise put the business under a microscope. In the end, the former spouse could end up owning part of the business and also receive alimony payments derived from working in the business.
Some of the larger family owned businesses in this country require any family member who wants to join the business to have a prenuptial agreement in place, for good reason.
To limit the rights of surviving spouses at death.
Florida law gives a veritable smorgasbord of benefits to a surviving spouse upon death, including a minimum of 30% of the value of the estate (in the form of the elective share). The elective share applies to assets acquired during the marriage, as well as assets owned before the marriage. The elective share also covers inherited assets. A prenuptial agreement can eliminate the elective share and other spousal entitlements, so that the spouse can receive a predetermined amount of assets at death. In many instances, the deathtime spousal obligation is handled through life insurance. Read Florida’s Elective Share, a Prenuptial Agreement, and a Revocable Trust.
Florida law also gives a surviving spouse rights to an existing Florida homestead property, in the form of a life estate or a 50% tenant in common interest in the property. A valid prenuptial agreement can waive this right.
To determine how the marriage is going to operate.
Open communication in a relationship, before and after marriage, can be critical to the success of the marriage. Because a prenuptial agreement requires that issues be properly dealt with, it requires discussion and agreement of issues. For example, if the economically stronger spouse is going to continue to support young adult children and have an estate plan mostly in their favor, this should be identified before marriage.
There are many issues that can be, and sometimes should be, addressed. For example, who is going to support the household. Is the economically stronger spouse going to help support any children of the economically weaker spouse?
To ensure that both parties are getting married for the right reasons.
While no one reading this post would ever get married for economic reasons, there are some people who do get married for economic reasons. Eliminating the economic uncertainty involved in a marriage can ensure that the marriage is being entered into for valid non economic reasons.
To protect an inheritance in the event of death or divorce.
For purposes of equitable distribution, inherited money is not really in play in terms of giving inherited assets to the non-inheriting spouse. But inherited assets can be considered in how to divide up the marital property, and inherited assets can also e considered in the award of alimony. By fixing the term and amount of alimony in a prenuptial agreement, entangling an inheritance with a divorce can be avoided.
In case of death, inherited assets are treated just as any other asset. Therefore, in the absence of a prenuptial agreement, inherited assets are subject to spousal claims just like any other asset.
These are just seven reasons why to get a prenuptial agreement in Florida. Not every reasons applies to every situation, and indeed there are many other reasons that are unique to the particular couple. Read the Effect of Divorce On the Estate Plan – What Happens In Florida.