Prenups are not just for the rich and famous, nothing says I love you and not your money like a prenup. They are a great tool for farm operations to address uncertainty, provided for orderly estate planning and growth, and occasionally, thaw relations between a new comer and the established members of a family farm enterprise.
Prenups shouldn’t be viewed with distaste or anger. They are a way to address the unknown. Not every divorce is scandal ridden teledrama. Sometimes peoples basic personalities are altered by stroke, accident or events beyond their control. Having a well reasoned exit plan protects each party.
The best time to decide how to not be in business together is before you start being in business together. The same holds true for relationships on a personal level. Having a well thought out and articulated prenuptial agreement requires you to get, in the words of an ag law divorce lawyer from Illinois , Cari Rincker, “financially naked” with another.
Pre Nuptial agreements require:
Full disclosure of assets, separate lawyers, no duress or undue influence and executed correctly.
What does that really boil down to?
Most couples start with the premise of we have nothing- so who cares?. You do have separate property, however small it might be, and you might have separate debts. Finding out your spouse to be has a $35,000 credit card balance because of a shopping addiction before you weld your self to one another financially is a great thing to find out. If the other spouse helps pay that down during the marriage and then it goes south, that pay down should be part of the peaceful uncoupling of the marriage.
Things that grow in value ( like farm equity ) during the marriage are likely considered joint assets of the marriage that need to be allocated between the couple. The classic example is farm is owned by the spouse prior to marriage and other spouse actively is involved in the farm operation but never on title, and then a divorce occurs. The difference in the pre marital value and the dissolution date value is an asset to be divided by the court or by the prenup in advance. Parties can agree now on a walk away provision, a structured pay out and even a structured “vesting” in equity , meaning that the longer you are there the more you get paid out. Income accumulated is another asset that needs to be addressed along with retirements, inheritances, and property of all types. Consider the need for disability policies and who pays for them if one spouse is physically exhausting themselves in the income generation while the other is able to preserve their health (Looking at you open stall diary farmers). You can address who stays in the house and who goes, how the house gets sold, or an agreement to go to a mediator to resolve any issues prior to asking a court to make a decision.
Alimony aka Spousal maintenance can be addressed, but child support and child custody cannot be addressed. They are not iron clad, actions post marriage (like changing the title of an asset from yours alone to yours and your spouse’s name) can void some of the planning that went into the prenuptial agreement.
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