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Originally Posted On: https://thevalleylawgroup.com/blog/common-prenuptial-agreement-mistakes/
Top Mistakes People Make with Prenuptial Agreements
A prenuptial agreement can benefit both members of a couple who own assets and are about to enter into a marriage. This agreement is a legal plan detailing how assets will be divided or kept by the original owner in case of a divorce. Unfortunately, any mistakes made during the drafting or negotiation process could result in an unfair or invalid prenuptial agreement, leaving the couple to work everything out in a divorce proceeding.
As you begin to create your prenuptial agreement, it is essential to recognize that making mistakes could result in the agreement’s invalidation in divorce court. This means that if you were to get divorced, the agreement would be null and void, and you would either need to renegotiate or allow a judge to settle the terms of your divorce.
Working with an experienced attorney can help ensure your prenup is legally sound and enforceable. At The Valley Law Group, we specialize in guiding couples through the prenuptial agreement process, ensuring that every detail is carefully considered and legally binding.
Learning more about the top mistakes people make with prenuptial agreements can be critical to avoid making them yourself and ensuring a valid prenuptial agreement that will benefit you both. Then, assess how well you understand the prenuptial process and get help determining whether a prenup can benefit you by taking The Valley Law Group’s Prenup Quiz.
Mistake #1: Using a DIY Approach
As you discuss the terms of your marriage, it can be tempting to create your prenuptial agreement using a do-it-yourself approach to save money. Unfortunately, you may be hurting your future self by doing so. Prenuptial agreement laws can vary from state to state, and if you use a generic template, it may not include all your state’s required information, which would result in an invalid prenuptial.
Using online forms or services without the guidance of legal counsel can also result in an invalid prenuptial agreement. You may make one or more of the other mistakes on this list; for example, you may fail to include certain assets, the division of assets may be unfair, or you and your future spouse may not properly negotiate financial matters. This is why it is important to have an attorney help you tailor your prenup to meet your unique financial situation and meet state requirements.
Mistake #2: Failing to Disclose All Assets
To ensure a legally valid prenuptial agreement, both individuals must provide full disclosure regarding all financial matters. This includes revealing all assets, any debts owed, and all sources of income. If one or both individuals do not reveal all pertinent financial information and conceal or omit assets, one spouse will have an unfair advantage. This action can cause the individual concealing assets to face legal consequences and, most importantly, invalidate the agreement altogether.
Here are some prenup tips for organizing and documenting your financial information:
- Gather all necessary documents before drafting your prenup, including all bank information with bank account numbers, loan information, and tax documents.
- Have all valuables appraised to assess their value.
- Discuss your financial expectations and future with your partner.
- Document all gifts and inheritances.
- Keep all retirement accounts and debt information in one place.
By organizing your finances, you are less likely to miss important financial information when drafting your prenuptial agreement.
Mistake #3: Signing Too Close to the Wedding Date
Waiting too long to sign a prenup agreement can lead to claims of coercion or duress. As Arizona follows the Uniform Premarital Agreement Act (UPAA), the prenup is only considered valid if both individuals willingly agree to sign and provide full disclosure of financial information. In addition, all the terms of the prenup must be fair and reasonable.
The prenuptial agreement process takes time and should not be rushed. Both spouses should have time to consult with a lawyer who can help them conduct negotiations and review all terms included in the prenup.
Most attorneys recommend that prenups should be drafted and finalized no later than one month prior to the wedding date. In some cases, however, the process can take closer to two months to complete, so it is highly suggested that you complete the agreement as early as possible.
Mistake #4: Ignoring Future Financial Changes
An important part of creating a prenuptial agreement is accounting for the possibility of financial changes taking place during the course of the marriage. This includes changes like business growth, receiving an inheritance, or career changes for one or both spouses.
While it is impossible to anticipate every change, it is important to be flexible and plan for the future while drafting your prenup. This includes adding clauses that take future possibilities into account. If you want to ensure your prenup continues to reflect your current needs, you may revisit and update your agreement after a time.
Mistake #5: Not Including Specific Details
A prenuptial agreement is a contract, and as such, it must include concise language that clearly states the wishes of both spouses. If vague or ambiguous language is included in the agreement, it will not only cause confusion but also make the divorce process difficult if one spouse decides to challenge the unclear terms.
This is why it is important to clearly address common situations that could arise in the event of a divorce.
Specific matters that you may want to add to your prenuptial agreement may include the following:
- Spousal Support – Most courts in Arizona will follow a spousal support agreement listed in a prenup unless the terms detailed in the agreement are unfair, leaving one spouse destitute.
- Property Division – Because Arizona is a community property state, most items obtained during the marriage are considered marital property. Having separate property listed in the prenuptial agreement, as well as how you wish to divide joint property, is especially helpful in the event that a divorce takes place.
- Debt Responsibility – You should outline who will be responsible for personal debts and future joint debts if the couple were to divorce. This serves as financial protection for both spouses, as you will only be held accountable for the debts that you agreed to take on.
- Business Ownership – If one or both partners own a business, a prenup can outline who will keep ownership of the business in the event of a divorce.
- Inheritance – Inheritance funds or family heirlooms that have sentimental value to one spouse are important to protect from being taken away or divided between the couple in the event of a divorce. A prenup can protect an inheritance or family property from being divided as community property.
- Income and Liability from Sole Businesses – One individual may enter the marriage with a sole business and with the intention of keeping the income earned in their name only. A prenup can include terms addressing any growth that the business may experience, as well as keeping the earnings as separate property.
Adding solutions for these issues to your prenup can prevent potential arguments and unfair division of property if the marriage ends in divorce. Be sure to use concise terms for these situations to ensure both spouses are protected from an unfair divorce settlement.
Mistake #6: Overlooking Legal Requirements
Prenuptial laws vary by state, so it is important to note that Arizona law dictates the validation of prenuptial agreements. If the agreement does not meet state requirements, it will be rendered invalid.
Here are the essential legal requirements for creating a valid prenuptial agreement according to Arizona’s prenuptial laws:
- The agreement must be in writing
- It must be signed by both individuals
- Both individuals must agree to sign it without being forced or pressured
- It must be signed well before the marriage takes place
- It must be notarized
- The agreement must include fair and reasonable disclosure of financial assets
- It must be legally fair for both individuals involved
- It must not include provisions for eliminating or making changes to spousal support where the other party must rely on public assistance
- It should not include details regarding child custody or support from either spouse
Aside from following the above requirements, it is also essential for both individuals to seek their own legal representation. Both need an attorney to represent them when the agreement is being drafted so that there is no opportunity for a power imbalance or a financial imbalance between the couple. It also ensures that each person’s interests are protected and the negotiation process is conducted fairly. Working with an experienced attorney ensures legal validity.
Mistake #7: Failing to Consider Emotional Impact
Another common prenup mistake involves failing to consider the emotional impact that creating a prenuptial agreement could have. Some people may have negative connotations regarding prenuptial agreements, often because they don’t want to enter marriage with a plan to get divorced. In addition, if the couple cannot effectively communicate their needs or if there is a lack of sensitivity, failure to consider the emotional impact of a prenup could cause harm to their relationship.
It is important to remember that couples do not enter marriage with the plan of getting divorced, but creating a prenuptial agreement can be a partnership-focused tool that can protect both individuals. When a couple is able to clearly outline their expectations regarding the future of their marriage and their financial expectations, a prenup can bring peace of mind to both partners.
If you want to create a prenuptial agreement but your partner is hesitant, approach the conversation with empathy and honesty. Share why you want a prenuptial agreement, explaining that it is not a matter of not trusting your partner but rather protecting your assets and financial future for both of you. Be open to listening to your partner’s wishes and concerns. Reassure them kindly without trying to pressure them into signing an agreement.
How to Avoid Prenup Mistakes
Avoiding prenup mistakes is possible with careful attention to detail and your partner’s emotional state.
To ensure a valid and effective prenup, consider following these prenup secrets so you can keep the terms in your prenuptial agreement clear and enforceable:
- Avoid Overusing Jargon – Legal terms are essential, but avoid overusing jargon so your partner cannot claim they signed a prenup they didn’t understand. If jargon is needed, include an explanation of terms.
- Hire Experienced Attorneys – An experienced family law attorney understands the legal terms and consequences of the agreement and can help you understand, as well. They will also make sure the agreement meets Arizona’s prenuptial laws, help you negotiate details so that your interests are protected, and help you avoid adding ambiguous language or failing to disclose important financial information.
- Begin as Soon as Possible – If you know that you want a prenuptial agreement, don’t wait to start the process; the prenup must be finalized before the wedding day. Start as soon as you can and avoid making rushed decisions to prevent either of you from feeling pressured into doing something that you are uncomfortable with.
- Stay Transparent – Make sure you and your partner are transparent about financial matters, including your current financial situation and your financial expectations. You should also discuss your hopes for the future, including what you hope to accomplish financially.
- Customize Your Prenup – Customization can help ensure your prenup meets the needs that you have listed. Then, you can make modifications so that you and your partner can agree on all of the terms included in the prenup.
How The Valley Law Group Can Help
At The Valley Law Group, we recognize the value of a well-written prenuptial agreement and the protection it can provide for you and your assets. This is why our team uses a personalized approach when crafting agreements to ensure that your interests are protected.
Our skilled attorneys can help you create a prenuptial agreement that is both fair and enforceable. No matter what happens as your marriage progresses, a solid prenuptial agreement will continue to protect your assets and provide you with security as you examine your options. We will work diligently to make sure your prenuptial agreement complies with Arizona state laws and that it is legally valid. Schedule a consultation with The Valley Law Group today to get started on your prenuptial agreement.
Protect Your Future with the Right Prenup
A well-drafted prenuptial agreement is beneficial to both individuals, as it can provide peace of mind that you and your spouse are protecting your financial futures. It is important to avoid making common mistakes when drafting your prenuptial agreement to ensure that it is valid and enforceable. Work with our skilled team to create a customized prenup that meets your needs.
Don’t forget to take the Prenup Quiz to see if a prenup is right for you. For personalized advice, consult with The Valley Law Group.
