Premarital agreements are becoming more common, below are some answers to the most commonly asked questions:
Q. What are the benefits of a premarital agreement?
A. These agreements provide financial security and planning opportunities. They allow you to predetermine property division and make your own decisions about the financial aspects should the marriage results in divorce. They also reduce the possibility of a protracted and difficult divorce … at least regarding financial matters.
Q. How do I know if I need a premarital agreement?
A. A great many people can benefit from the use of a premarital agreement. You are in particular need of one if: (1) you have much greater assets, or earn much more, than your partner; (2) your partner is in substantial debt; (3) you own all or part of a business and want to avoid the cost and uncertainty of valuing, or losing, that business in a divorce; or (4) you have children from a prior marriage and wish to preserve your assets for them.
Q. Are premarital agreements only for the wealthy?
A. No. You can protect current assets and any income you will acquire in the future. You can also agree to things such as purchase of insurance policies or the creation of trusts for children.
Q. Would a premarital agreement protect me from my spouse’s debts?
A. Probably so. In divorce, the family court can assign to one spouse responsibility for the debts incurred in the sole name of the other spouse. A premarital agreement could prevent this.
Q. Are premarital agreements useful in second marriages?
A. Emphatically yes! They are particularly useful to help preserve assets for your children from a first or earlier marriage. Our office currently receives almost half of its requests for premarital agreements from older couples who want to protect assets for their children from prior marriages.
Q. Are premarital agreements legal and binding in the state of Hawaii?
A. Yes. They became specifically authorized by statute in 1987, when the Hawaii Legislature passed the “Uniform Pre-Marital Agreement Act”. The trend of the court’s policy is to uphold proper premarital agreements. Premarital agreements will generally be enforced by the family court absent any problems such as coercion, duress, lack of opportunity to legal counsel or no disclosure of assets.
Q. What formalities exist for a premarital agreement to be binding?
A. The agreement must be in writing and signed by both parties prior to the date of marriage. The agreement will be of no effect if the marriage does not take place.
Q. What types of agreements can be included in a premarital agreement?
A. Almost any financial agreement which does not violate public policy. Commonly, such agreements include the allocation to one spouse or the other of any property item such as real estate, stock or investment accounts, retirement plans, vehicles, debt and whether any spousal support would be paid.
Q. Can the obligation to pay alimony be eliminated by a premarital agreement?
A. Yes, unless the elimination of spousal support causes one party to be eligible for support under a program of public assistance.
Q. Are there any matters which you cannot address in a premarital agreement?
A. Yes, the parties cannot predetermine custody or child support.
Q. What financial information must be disclosed?
A. All assets and debts, and income and expenses, should be disclosed. It may even be prudent to mention contingent items such as the expectation of a substantial inheritance or the pendency of a lawsuit.
Q. Can we decide to divide our property differently than it might be divided under Hawaii law by the family court?
A. Yes. This is precisely why many premarital agreements are done. You can create an agreement that is tailored to meet your specific needs.
Q. Do we need witnesses?
A. No, but generally the attorneys also execute the agreement confirming their representation and the lack of the appearance of coercion.
Q. Can we amend the premarital agreement later?
A. Yes, but only in writing, signed by both the parties.
Q. If I am not sure whether a premarital agreement will benefit me, what should I do?