Marital Property Agreements – What You Should Know About Prenuptial and Postnuptial Agreements

What is a Marital Property Agreement?

Marital Property Agreements -- also called prenuptial and postnuptial agreements -- are flexible planning tools that assist couples who are getting married or are already married, and who would like to designate how their assets and debts should be divided upon divorce and/or death.

Why should I have a Marital Property Agreement?

A popular reason for having a Marital Property Agreement is that you are entering the marriage with significant assets such as investments, real estate or retirement accounts. Should you divorce, you can pre-designate which assets and debts will be allocated to you at the time of the divorce rather than rely on marital property laws. Should you pass away, you can determine the assets you would like to go to people other than your spouse, such as parents, siblings or other relatives.

Another common scenario for entering into a Marital Property Agreement would be if you have children from a prior relationship. With a prenuptial agreement, you could allocate the assets that you would like to go to your children upon your death. Likewise, by protecting your assets should you divorce, you can ensure your inheritance will be given to your children and not be divided in half from the divorce.

How does a Marital Property Agreement work if I am already married?

This is called a postnuptial agreement. At the time of entering into the agreement, you would re-classify your assets as “Individual” and “Marital” and would complete a financial disclosure statement that fully discloses all of your income, assets and debts.

If I got divorced, what would happen if I did not have a Marital Property Agreement?

When you get married in Wisconsin, all of the assets you have at the time of marriage are considered divisible in the event of a divorce. The only exceptions are those assets that that are gifted or inherited -- and even those assets are subject to division if they are combined with marital assets and not kept separate.

As an example of marital property laws in Wisconsin, say you owned a house at the time of marriage, and the mortgage and note were solely in your name. Upon marriage, the house and the mortgage and note would be considered to be equally owned by the spouses. Thus, they are subject to equal division at the time of divorce, meaning your spouse would have the ability to request that he/she receive one half of the equity in the home. With a Marital Property Agreement, you and your spouse could designate that if you were to get a divorce, the house and all of the equity would be allocated to you, since you brought this asset to the marriage

It’s important to note that there are several factors that allow the courts to deviate from the equal division of property upon a divorce. Some factors include length of marriage, property brought to the marriage by one party, and the contribution of each party to the marriage. However, the blanket rule is that everything (other than a gift or inheritance -- as long as it is kept separate and distinct) becomes divisible and subject to division once you get married.

Can my future spouse and I hire the same attorney to draft the Marital Property Agreement, if we agree on all issues?

No. It is a conflict of interest for an attorney to represent spouses when drafting a Marital Property Agreement. Each party should retain a separate attorney to represent them for the one agreement.

My future spouse has a significant amount of debt. Can a Marital Property Agreement protect me from creditors?

Yes. The Marital Property Agreement can identify debts as individual property and allocate them to one party and not the other. The signed agreement must be given to all of the creditors.

I am getting married and my future spouse earns approximately the same as I do. Can we agree to waive maintenance (alimony) in the Marital Property Agreement so I do not have to worry about paying maintenance if we were to get a divorce?

Yes. You can each waive your right to receive maintenance in a Marital Property Agreement. However, if circumstances were to change in the future, this provision might be considered to be unfair and no longer valid. For instance, if your spouse decided to forego his/her career to stay home and raise children, this could be a “change in circumstances” and allows your spouse to seek maintenance even though the Marital Property Agreement states otherwise.

If you are thinking about including a maintenance waiver provision in your Marital Property Agreement, be sure to seek an attorney to help so that you can avoid potential misunderstandings.

What documents do I need to provide an attorney in order to draft my Marital Property Agreement?

For a Marital Property Agreement to be valid, there must be a full disclosure of all of your income, assets, debts and liabilities. A fully completed financial disclosure statement will be provided to you for your completion.

Documents that you need to provide to the attorney include the following:

  • current paystubs (6 weeks)
  • 2 years of tax returns
  • current statements for all of your retirement plans
  • a real estate appraisal for your home
  • a current tax bill for your home
  • any life insurance policies on your life (including the beneficiaries)
  • bank account statements
  • securities statements
  • copies of any documents that reflect your estate or trust interests
  • any vehicle loan statements
  • copies of any judgments or pending lawsuits against you

Additional documents may be required depending upon your situation.

Can I update my prenuptial agreement after marriage?

Yes, but it would be considered a postnuptial agreement, since the agreement is being made in contemplation of the continuation of the marriage, and no longer in contemplation of getting married.

Can I use a Marital Property Agreement to pre-determine where my assets should go in the case of divorce or death? Do I need both a Will and a Marital Property Agreement?

You can use the Marital Property Agreement to designate where your assets can go at your death. You can also use the Marital Property Agreement to designate where your assets should go in the event of a divorce. It depends on the situation, but it is advisable to have both a Will and a Marital Property Agreement.

To get started with a prenuptial or postnuptial agreement, contact a family law or estate planning attorney.