Premarital Agreements in Minnesota

Well, prenups aren’t just for the rich.  Many others should have them, too.  We can think of at least twelve kinds of people who should have prenuptial agreements in place before marrying:

1. People Who Like to Control Their Own Affairs. You know the statistic, don’t you? Approximately half of all marriages end in divorce. That means, when a couple marries, the odds of their marriage surviving are the same as a coin flip.
   
   Most soon-to-marry couples might think not having a prenuptial agreement means there is no plan in place should they divorce. Not true. There is a plan in place. Unfortunately, it’s the state’s plan, based on the state’s sense of what is fair.
   
   As it turns out, especially in North Dakota, hardly anyone thinks the state’s approach makes sense. For example, in North Dakota, the estate that you inherited—or might someday inherit—is at risk of being distributed to your spouse in a divorce.
   
   

2. People Who Might Inherit Well. Though you may not have much now, maybe you stand to someday inherit a decent estate from your parents or other family members. Look out! Without a prenuptial agreement in place, that inheritance could be divided in your divorce.
   
   Unlike other states, North Dakota doesn’t protect inheritances and doesn’t require divorce courts to award those assets to the inheriting spouse. Minnesota does protect such assets, but not with 100 percent certainty.  For example, in Minnesota, income earned from your nonmarital assets is deemed “marital” and will be divided during a divorce.
   
   Is your son or daughter getting married soon? Do you want to make certain their partner doesn’t end up with all, or part of, the estate you leave behind? Then talk to them about the need for a prenuptial agreement.
   
   

3. People With Kids. Along those same lines, maybe this is your second marriage, and you have children from your first. Whether you’re “rich”—or even if you’re not—you probably want your kids to end up with whatever you’ve accumulated, not their ex-spouse.
   
   Without an agreement in place, if you divorce your second spouse, those assets might go to him or her. Then, in time, your assets will make their way to your new spouse’s children, not yours.
   
   Even if your second spouse has no desire to claim any portion of your premarital estate, your kids might still suspect it. Resentments might brew and fester. A prenuptial agreement might help keep family peace.
   
   

4. People Who Earn More Than Their Partner. Maybe you aren’t rich just yet. But it’s possible you’ve worked hard to be rich someday. If you are about to acquire a degree, or make a deal, or buy or build the next big thing, maybe you’d like to keep the fruits of your own labors should your marriage fail.
   
   

5. People Who Earn Less Than Their Partner. Do you intend to be a stay-at-home parent? Well, if your marriage fails in middle age, your partner will have spent all those years climbing corporate rungs and reaching upper income levels. In the meantime, you may have little more than an entry-level earning capacity.
   
   All those years you spend at home frees your spouse to increase his or her earning capacity. If the marital partnership ends, should only one partner end up with 100 percent of that “asset”?  If so, your partner’s post-divorce net income will continue its upward arc. Yours may flat-line…or worse.
   
   A prenuptial agreement can provide essential protection.
   
   

6. People Who Own a Business. Without a prenuptial agreement, not only will your spouse likely be awarded half of what your income brought to the marital estate, but half of your ownership interest in the business, too (or its value).
   
   For example, do you make your living from the farm land and implements you own? Do you make money from any kind of self-employment assets? Well, if you divorce, you may need to “buy” those assets again. This time, though, your payments will be to your ex.
   
   

7. People Whose Partners Have Debts. Does your fiancé have student loans? High credit card balances? Outstanding 401K loans? Medical debts? Well, beware! In the event of a divorce, you might end up being responsible for those liabilities, too, in one way or another. A prenuptial agreement can help.
   
   

8. People Who Want Protection from Their Partner’s Unhealthy Behaviors. A surprising number of marriages fail due to mental health issues, often related to compulsive or addictive behaviors. Addictions can cost tens of thousands—for the habit itself, treatments, attorney’s fees, lost wages, criminal fines, and fees.
   
   A prenuptial agreement can keep your money safe if your partner engages in such unhealthy behaviors.
   
   

9. People Who Like to Go into Things With Their Head Up. You have never entered a relationship as important as this one. Shouldn’t it be preceded with some conversation—even agreement—about financial goals, obligations, and expectations?
   
   Will all of your income, and your spouse’, be deposited in one account? Or will you keep your respective earnings in separate accounts?
   
   Will your income be devoted to payment of household expenses, while hers is saved and invested?
   
   Do you have the same standard of living expectations? Have you talked about your monthly budget? Do you have net worth goals? Savings goals? Charitable giving desires? Does your partner share them?
   
   Even though having the “prenup talk” might be hard, it might well be one of the wisest, healthiest conversations you ever have.
   
   

10. People with Heirlooms: A prenuptial agreement invariably lists treasured assets and assures they remain with the person who brought them into the marriage. Make sure Grandma’s treasures, Mom’s jewelry, and Dad’s shotgun all stay with you.
    

11. People Who Don’t Like to Give Their Money to Lawyers. Divorces can be more expensive than you’d imagine. In this region, a middle-class couple’s divorce often involves $5,000 to $15,000 in fees, even when the case settles. If the couple can’t reach an agreement, and they press on to trial, those fees can exceed $50,000—sometimes for each spouse. Even their divorce lawyers often shake their heads, incredulously, at the parties’ stubborn folly.
    
    Well, here’s a secret. Cases whose outcomes are predictable do not go to trial! After all, who would spend tens of thousands of dollars to find out how a judge will divide their estate when they already know the answer?
    
    In other words, prenuptial agreements can go a long way to making divorce more peaceful, more predictable, and more affordable.
    
    

12. Rich People. OK, OK. Yes. If you are wealthier than your partner, you should definitely have a prenuptial agreement. You like your money and other assets, don’t you? You want to keep them, right? Enough said.

Prenuptial agreements anticipate, essentially, two concerns: (1) How to contend with financial issues as part of a divorce; and (2) How to distribute assets in the event of a spouse’s death.

There are, however, issues that are beyond the influence of a prenuptial agreement, things it cannot do.

For example, spouses-to-be cannot pre-decide who will take custody of children in the event of divorce. Likewise, they can’t decide the shape, scope, and conditions of the other’s visitation. The Court retains authority to make final decisions about such matters, and a marrying couple cannot, by agreement, remove it.

Likewise, a couple can’t use their prenuptial agreement to establish child support amounts in advance or to waive that obligation entirely. Our law requires child support to be set according to specific guidelines and to change to specific amounts when the parties’ income changes. Parties cannot agree to terms different than the state’s.

Here are the basic requirements:

1. The agreement must be in writing, appropriately signed by both parties.

2. The parties must enter the agreement voluntarily. For example, the agreement should be signed well before the wedding to avoid the appearance of a coerced last-minute signing (leveraged by the possible embarrassment of a cancelled ceremony).

3. The agreement cannot be “unconscionable” (lawyer lingo for really, really unfair).

4. The parties must make full disclosure of their assets, debts, and income.

5. The parties should be represented and advised by separate lawyers.

6. The parties should then follow the terms of their agreement during their marriage. For example, if the agreement says they’ll deposit their income in separate accounts, describes bill-paying methods, and investment or saving approaches, the parties should follow their agreement.

There are a lot of things you can obtain online. You just can’t rely upon online resources for everything, can you?  There is no substitute for a one-to-one, face-to-face, relationship with a professional, though.

Again, this is important stuff—too important to leave to a one-size-fits-all online form, or to any old lawyer. You’re more likely to receive good advice and help from someone (1) with expertise, (2) who understands your specific circumstances. That means working with a qualified family law attorney, familiar with divorce and estate-planning considerations.