How to Write a Marriage Contract

Consider the benefits of marriage contracts. Marriage contracts are commonly known as "prenuptial agreements," "prenups," and "premarital agreements." A well-drafted marriage contract can protect the parties' property and make a divorce a lot less painful, but contemplating divorce and talking about finances can be very challenging for a couple. Some advantages of marriage contracts are:

• Defining what property is separate property and what is community property (belonging equally to the couple)
• Clarify agreements between the spouses
• Establish how future matters will be decided
• Support your estate plans
• Reduce conflicts and save money on attorneys' fees in the event of a divorce^[2]

Anticipate the downsides of marriage contracts. There are some reasons not to enter a marriage contract. Negotiating a marriage contract isn't romantic.^[3] Discussing divorce and asset division can cause bad feelings between couples. It can be hard to imagine that the person you want to marry could try to take advantage of you during a divorce, and it can be even harder to face the implication that you might do the same to them. If your relationship can't withstand these challenges, a marriage contract may not be a good fit for your relationship.^[4]

• State law may protect you without a marriage contract.^[5] There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin (Alaska also has an opt-in community property law).^[6] In community property states, most property acquired during marriage is presumed to be community property, while property acquired before or after marriage, or inherited or purchased with funds earned before marriage, is considered to be separate property. If you live in a community property state, you might forego a marriage contract and just rely on the law for the division of your property in the event of a divorce.^[7]

Start talking to your partner about a marriage contract. Start talking about a contract early, and try to get it signed six months before the wedding.^[8] This minimizes the pressure either of you feel to sign an agreement with which you're not completely comfortable.

• You might consider giving your partner some reading material about marriage contacts, like a book or website, to read on his or her own time. Then you'll both have a better understanding of the basics, and will be more emotionally prepared to have an honest conversation.

Consult attorneys. Your contract may be invalid if a court determines that one spouse waived his or her rights without fully understanding the contract, and some courts require that both parties are represented by attorneys.^[9] You and your partner should each hire different attorneys to avoid any conflict of interest. Have each attorney review the contract terms and explain what rights you gain or waive under each provision. Remember that the contract is a compromise and that some of the terms may not be in your best interests. Your attorney will point this out and ask you to consider the contract carefully.

• Several high profile cases of marriage contracts being overturned have demonstrated that it can be cheaper and simpler to not have a marriage contract at all than to have one that is drafted incorrectly.^[10]
• An attorney can also advise you of any specific state law that relates to your agreement.^[11]
• You can get referrals from friends and family, or from attorneys who may not practice family law but know a trusted colleague who does. You can also use referral services through your state and local bar associations, or just search online.

Consider hiring an accountant. An accountant can help you take stock of and evaluate your assets, as well as estimate to what extent those assets will appreciate or depreciate in the future. This can be extremely useful for planning for your family's future needs, as well as anticipating each spouses needs for the division of assets in the event of a divorce.

Consider pre-marriage counseling. Relationship counseling can be helpful for couples who want to improve their communication skills.^[12] After all, communicating your feelings effectively while listening and responding to another's concerns are skills that need to be practiced and developed.

Create lists of your assets and debts. You and your partner should create and share detailed lists of your property. This includes bank accounts, vehicles, real estate, business ownership, investment accounts, credit cards, loans, etc. You will refer to these lists as you determine what will be shared and what will be separate. It is also important to completely and honestly disclose your assets and debts to your partner prior to executing the contract. Otherwise, the contract may not be enforceable.^[13]

Look at sample contracts. Before you begin drafting a marriage contract, look at sample contracts with your partner. Get familiar with the terminology, and identify clauses you think would be useful in your situation. You can find sample marriage contracts online.

• This sample is designed to give the spouses community property rights.
• This sample is designed to keep all earnings and property separate. You can modify any sample to suit your circumstances.

Come up with a plan that fits your situation. The law allows a lot of flexibility in marriage contracts. You can work out just about any financial arrangement, within certain legal limitations. You may want to keep certain assets and earnings of the wealthier spouse separate so that he or she doesn't lose half of that wealth in a divorce. You may also want to designate certain assets to the less wealthy spouse in the event of a divorce, so that he or she gets a fair share and is able to live independently.^[14]

• There are some provisions that courts will not enforce, including:^[15]
  • Agreements regarding child support, custody, and visitation;
  • Financial incentives that promote divorce; and
  • In some states, waivers of spousal support/alimony, especially if one spouse would have to collect welfare.^[16]

Describe the parties and state the date the contract will be signed. You and your partner are the parties to the contract. When describing a party, include his or her name and the title by which he or she will be referred to throughout the contract ("husband," "wife," or just your first names).

• For example, "This contract is entered into by John Doe ("John") and Jane Smith ("Jane") on May 12, 2009.

Specify that you want to decide your own property rights. State that you are making your own property division decisions independent of the default property laws of your state.

• For example, "Each Party wishes to define and determine his or her respective rights and obligations with respect to his or her own property and in the property the other in the event of a dissolution of their marriage, regardless of whether their property rights are to be governed by the laws of the state of New York or any other domestic or foreign jurisdiction."^[17]

Acknowledge your right to advice from independent attorneys. To ensure that neither party was forced or rushed into signing the contract, acknowledge that both parties have had the opportunity to have the contract reviewed by a lawyer.

• For example, "Each party has had the opportunity to retain his or her own lawyer and receive independent legal advice regarding the terms of this Agreement."^[18]

State that both parties understand the contract. Another common clause is a statement that the parties fully understand and agree to the terms.

• For example, "The Parties each warrant and represent to the other that they each fully understand all the terms, covenants, conditions, provisions, and obligations incumbent upon each of them by virtue of this Agreement to be performed or contemplated by each of them hereunder, and each believes the same to be fair, just, reasonable, and to his or her best interests."^[19]

Note that the contract is contingent upon the marriage. Of course, if you and your partner decide not to get married, the contract will have no effect. Note this fact in the agreement.

• For example, "This Agreement is contingent upon the Parties' contemplated marriage. In the event the marriage does not occur, then this Agreement shall and void and of no force or effect."^[20]

Describe your separate property. You can use this section to designate property you currently own and property you expect to own in the future as your separate property. Do the same for the separate property of your spouse. Refer to this sample for ideas and phrasing. Some common types of property that couples choose to designate as separate property include:

• Property acquired prior to marriage;
• Property acquired during marriage by bequest, devise, descent, or gift to one spouse;
• Compensation for personal injuries;
• Property acquired after divorce or separation;
• Property purchased with or exchanged for separate property; and
• Appreciation, profit, or other increase in value from separate property during marriage.^[21]

Create schedules of your separate property and debts. Make two lists of the property you each want to keep separate, attach them to your contract, and refer to them when you describe your separate property.

• For example, "The Parties have made full and complete disclosure of their assets and liabilities; and all assets and liabilities have been accurately stated on Exhibits A and B attached hereto."

Describe your community/marital property. You can use this section to designate what property you want to treat as community/marital property. This property will be considered to be equally owned by both parties. Marital property typically includes all property acquired during marriage prior to the date of separation that is not within an exception that makes it separate property, such as a gift or inheritance. Spouses can also voluntarily contribute separate property to the community, or transmute separate property into community property by written agreement.^[22]

Define the termination event. The termination event is the date or occurrence that triggers the asset division provisions of the contract. This is important, because when couples get divorced without a marriage agreement, they often disagree about when the marriage was officially over, raising questions of how to divide any property acquired between their competing dates of separation. Specify your terminating event clearly to avoid confusion.

• For example, "Termination Event is defined to be the soonest occurrence of the following events:
  • "The date on which a Party provides the other Party with written notice that he or she intends to dissolve the marriage. Said notice shall be delivered by United States Postal Service by registered or certified mail, return receipt requested, or overnight courier with proof of delivery thereon;
  • The commencement of an action for divorce, separation, or annulment;
  • "The execution of a written separation agreement."^[23]

Describe what will happen upon the Termination Event. Once you have categorized your assets as separate or community property, use this section to specify what will happen with the community property if the Termination Event occurs. First, specify that each party will keep his or her separate property. Then describe what will happen to the marital property. Consider the following questions:

• Who will keep the family home? Should you sell the home and split the proceeds? If so, when will the home be sold, and who will get to live in it in the interim?^[24]
• Will one spouse receive spousal support? If so, how much? (Your state law may prohibit a spouse from waiving his or her right to spousal support.)
• Which assets, such as bank accounts, will be split 50/50?
• Which assets will be divided according to some other scheme?
• Will any major assets need to be sold, or can one spouse keep a major assets in exchange for letting the other spouse keep something else?
• Will some assets be set aside for someone else, such as a child's college fund?
• What happens if one spouse dies after the Termination Event, but prior to a divorce decree?

Consider a "sunset clause." A sunset clause is an optional clause that states that the contract will become null and void if a certain event happens or if enough time passes. If the contract becomes null and void, then the property will be divided according to state law in the event of a divorce.^[25] For instance, you might specify that the contact will remain in effect for 10 years, or until you have children. This arrangement would protect each party's assets until it has become clear that the marriage is going to last.

• For example, "This Agreement shall become null and void and of no force or effect upon the earlier occurrence of either of the dates upon which: (1) the Parties remain married for ten years, or (2) the Parties have a child together."

Verify that both parties have disclosed their assets. Include a section specifying that both parties have made complete financial disclosures to each other. Remember that failing to do so may invalidate the agreement.

• For example, "Each Party confirms that he or she has received sufficient financial disclosure of the other Party's assets from the other party and the other Party's attorneys, that the other Party offered to respond fully and directly to all questions such Party and the Party's attorneys might have concerning such financial information, that such Party regards such information and the information set forth in Schedules A and B attached hereto, as sufficient disclosure, both in form and substance, and that, upon the advice of such Party's independent counsel, such Party is fully aware of and understands all of the rights which he or she is surrendering pursuant to this Agreement. Each Party agrees that to the extent that any assets, income, or liabilities have not been disclosed for any reasons to either of them, knowledge of such additional assets or liabilities would not be relevant to the determination to enter into this Agreement and to be married, and shall be no bar to the enforcement of this Agreement or any provision hereof because their knowledge of the assets and liabilities which have been disclosed is sufficient basis for this agreement."^[26]

Add a choice of law clause. This standard clause specifies what state's law will be used to interpret your contract. You can pick any state, but picking the state you live in is most common.

• For example, "The laws of the State of New York will govern the interpretation of this Agreement, and the status, ownership, and division of property between the Parties wherever either or both of them may from time to time reside.^[27]

Verify that both parties enter the contract voluntarily. Add a clause stating that each party considers the contract to be fair and was not pressured or forced to sign it.

• For example, "Each Party acknowledges that this Agreement is fair and equitable, that it is being entered into voluntarily, and that it is not the result of any duress or undue influence. Each Party has read this Agreement prior to its execution, understands it, and is fully aware of the rights that he or she is or may be releasing pursuant to the terms of this Agreement."^[28]

Add a "necessary documents" clause. This clause states that the Parties promise to sign any documents necessary to carry out the agreement. This prevents a party from agreeing that some asset is community property and then refusing to formally transfer ownership.

• For example, "Each Party shall, upon the request of the other or of any third party with an appropriate interest, execute, acknowledge, and deliver any instruments appropriate or necessary to carry into effect the provisions and intent of this Agreement."

Consider an "entire agreement" clause. An "entire agreement" clause, also known as an integration clause, states that this document is the complete agreement of the parties, and supersedes any prior oral or written agreements.^[29] This prevents a party from claiming later that some there was an agreement on some term, not included in the contract, that should be made part of the contract.

• For example, "This Agreement sets forth the entire understanding of the Parties and supersedes all other agreements, written or oral, between the Parties, including, without limitation, any implied or other agreements arising in connection with any period of cohabitation. The Parties affirm that no agreements have been entered into between them prior to the date of this Agreement. Neither Party has relied upon any representation of the other Party except such as are specifically mentioned in this Agreement."^[30]

Describe amendment procedures. You and your partner may want to amend or revoke the contract in the future. Describe how that process will work.

• For example, "This Agreement may not be amended or revoked except by an instrument in writing signed by both of the Parties and acknowledged and witnessed with the same formalities of this Agreement, expressly modifying or revoking one or more or all of the provisions of this Agreement."^[31]

Add a "binding effect" clause. This clause states that the Agreement shall govern the rights of your heirs and others who may have an interest in your property upon your death.

• For example, "This Agreement will be binding upon and will ensure to the benefit of the parties, their respective heirs, executors, administrators, and assigns."^[32]

Include a "partial invalidity" clause. This clause states that the contract will remain in effect generally even if part of it turns out to be unenforceable.

• For example, "Should any portion of this Agreement be held by a court of law to be invalid, unenforceable, or void, such holding will not have the effect of invalidating or voiding the remainder of this Agreement, and the Parties agree that the portion so held to be invalid, unenforceable, or void will be deemed amended, reduced in scope, or otherwise stricken only to the extent required for purposes of validity and enforcement in the jurisdiction of such holding."^[33]

Include a section on lawyers and legal fees. If the parties have been advised by independent counsel, mention the attorney's name. Specify which spouse is responsible for legal fees relating to the agreement, and decide who will pay legal fees if one spouse contests the contract during divorce. For example:

• John declares that he has been represented by independent counsel in the negotiation and execution of this Agreement, having been represented by Green and Associates, LLP, and that he fully understands his legal rights and liabilities."
• John agrees that he shall be responsible for Jane's legal fees incurred in connection with the negotiation, preparation, and execution of this Agreement."
• If either Party contests the validity of this Agreement or any provision thereof, that Party shall be responsible for the reasonable value of any legal services rendered on behalf of either Party by reason of the other Party's unsuccessfully contesting the validity of this Agreement or any provision hereof, whether such services arise out of court action or otherwise, and shall be paid by the Party unsuccessfully contesting the validity of this Agreement or any provision hereof."^[34]

Create a signature block. The signature block should include a line for each party to sign, with the typed or printed name of the party below his or her signature. Also include a place for a notary public to sign, verifying that the notary witnessed the signatures of the parties.

Consult attorneys. Remember, courts strongly prefer that both parties be fully advised of their rights before signing. To minimize the possibility that your contract will be enforceable, both parties should hire separate attorneys before signing the contract.

Sign the contract before a notary public. Visit a notary public with your partner and sign the contract in the presence of the notary. The notary will also sign and stamp the agreement. Bring a valid form of identification, such as a driver's license or passport, to verify your identity.

• You can also find a notary public by visiting your local bank. Most banks do not charge a fee for notary services if you are a bank customer. If you are not a bank customer, you can use the bank's notary service for a small fee.