As a South Florida family law attorney, I am encountering more and more individuals (straight and gay) who enter into marriage completely naïve about the financial ramifications of a divorce.
(A far too common) example
John and Jim marry on January 1, 2015.
John purchases a $500,000 residence with pre-marital funds on January 10, 2015.
The residence is titled in John and Jim’s name because they are now a happily married couple.
Jim files for divorce on January 30, 2015.
Jim is entitled to half the proceeds from the residence to the tune of $250,000. despite not contributing one penny to the purchase of the residence.
How can that be? We were only married for 30 days?!
Pursuant to Florida law (Florida Statute §61.075: Equitable Distribution), the parties’ marital assets (and liabilities) are presumed to be distributed equally. The residence – and any other asset (or liability) acquired during the marriage – is considered marital property. In layman’s terms, everything acquired during the marriage is presumably split 50-50.
The magic elixir: the prenuptial agreement (pre-nup)
A prenuptial agreement is simply a contract entered into prior to marriage which clearly defines the terms of the marriage to avoid future confusion as to what happens in the event of a divorce. The prenup can also identify non-marital property and set alimony at a certain dollar figure or percentage of income regardless of the actual amount of money earned by the spouses.
Who should consider entering into a prenuptial agreement?
Everyone should consider entering into a prenuptial agreement. It is most beneficial, however, if one (or both) spouses come into the relationship with: (1) significant assets or earning capacity; (2) owns/maintains a thriving business; and/or (3) maintains lucrative investments or an inheritance or trust. The prenup can designate assets as non-marital (i.e. business, home, investments, etc.) shielding them in a divorce unless later “co-mingled”, titled, or gifted converting the asset into a marital asset.
Additionally, prenups often discuss alimony in the event of divorce. In some prenups, the parties agree to no alimony in the event of divorce. Occasionally, a prenup will include a clause limiting alimony in the event of adultery.
No one enters into a marriage expecting to get divorced. That being said, before entering into marriage – the most significant contract you will enter into your life – it is worth spending an hour or so discussing the pros/cons of a prenuptial agreement with an experienced family law attorney to ensure your assets are protected.
The author, Philip M. Snyder, is an AV-rated attorney at Lyons, Snyder & Collin. Mr. Snyder is a frequent legal analyst for CNN and FOX News. For more information, visit lyonssnyder.com.