Premarital Agreements in Virginia
The Virginia Premarital Agreement Act, first adopted in 1985, allows parties to enter into premarital agreements (commonly referred to as “prenuptial agreements” or “prenups”).
Despite the widely held belief that prenups are only for the rich and famous, a premarital agreement is something that every couple should consider. A prenup protects the premarital assets of one or both parties and allows a couple to contemplate the division of assets prior to the marriage. More importantly, it allows a couple to consider these issues prior to a divorce—when neither party is angry or emotional.
Virginia Code Section 20-150 defines the parameters of prenups in Virginia. It allows for couples to determine such things as (a) the disposition of property, (b) each party’s right to buy, sell, or lease property, (c) spousal support, (d) making a will or trust in order to carry out the terms of the prenup, (e) how to deal with life insurance policies in the event of divorce, and (f) any other personal rights and obligations, so long as they are not illegal or contrary to public policy.
Although any marrying couple may enter into a premarital agreement, some of the more common reasons for entering into a prenup include:
- Marriages where the parties are older, and have significant assets they have acquired over the years, that they want to keep separate;
- Marriages in which one party who has acquired wealth through an actively managed business or investment portfolio wishes to ensure that the wealth remains separate property;
- Marriages in which the parties wish to clarify which items of property are marital and which are (and shall remain) separate property; and
- Marriages in which one party wishes to limit or eliminate altogether the possibility of spousal support (alimony).
While being forced to think about and discuss what would happen in a potential divorce is not the most romantic task, it is certainly something that can add security and trust to a marriage as well.
The bottom line really is that every couple—young, old, rich, middle class, same-sex or heterosexual—should at least consider a prenuptial agreement. Hopefully it is never needed and your union lasts forever. However, the statistics related to divorce make it very clear that many marriages do not last forever. Divorce can be one of the most unpleasant and emotionally draining experiences of a person’s life. It can also be very expensive. Many times it may also be unfair. A prenup can serve to protect the rights of both parties and lay the foundation for fairness in the dissolution of a marriage. That alone is priceless.
Six Things to Keep in Mind Before Signing a Prenup
If you or your soon-to-be spouse are pursuing a prenuptial agreement for your upcoming marriage, here are six things to keep in mind as you move forward:
- Remember the purpose. The purpose of a prenuptial agreement is more about simplifying and reducing the costs of a potential divorce, and less about defining the marriage relationship or dictating the behavior of either spouse. Keeping this in mind should help you determine which terms are necessary to include and which terms are not.
- Protect what you have now. People often enter into prenuptial agreements to protect the separate assets they are bringing into the marriage. If that applies to you, make sure to specify each separate asset in your prenup, and consider contingencies to make sure you keep those assets protected throughout the marriage. For example, you should consider what happens when a separate asset is merged into or commingled with a marital asset.
- Protect what you acquire with your spouse. Decide how marital assets are going to be divided. Will they be split 50/50? Are there certain types of property that, despite being acquired during the marriage, will remain separate?
- Don’t sell yourself out of your future. Know what you don’t know. What you don’t know is what sacrifices you are going to make in your marriage for your spouse and/or your children. What you don’t know is whether your job will always be in demand, or whether you will make a major career change 10 years into the marriage. Selling yourself out of spousal support now may put you at financial risk at a later time. It may even define the choices you make throughout your marriage.
- Don’t spend much time on custody and visitation. You can try to come to an agreement on custody and visitation of future children, but it is unlikely that your prenuptial agreement will play a major role in your custody and visitation battle 10 years down the road. The reason for this is that Virginia courts consider a variety of factors in determining the best interests of the children, and it is unlikely that your prenuptial agreement will carry much weight in that determination.
- Know your bottom line. Finally, if you are unable to reach an agreement with your soon-to-be spouse, know what your bottom line is, and when you will need to walk away.
An experienced family law attorney can help you draft a premarital agreement, or can advise you as to whether to sign a prenup presented to you by a prospective spouse. You absolutely should not sign a prenuptial agreement before reviewing it with a knowledgeable family lawyer.
Virginia law allows married couples to enter into what is referred to as a “postnuptial agreement” or “marital agreement.” This type of agreement offers all the same benefits of a premarital agreement but is executed after the parties are married. The only real difference is that, because the parties are already married, any postnuptial or marital agreement becomes effective immediately upon its execution.
So why might a married couple wish to pursue a postnup? One reason might be that a spouse is set to inherit a sizable estate. Under Virginia law, inherited property starts out as the separate property of the individual spouse. But, if its owner puts that inheritance into a joint account, or otherwise mixes it with marital assets, the inheritance can be turned into marital property. Moreover, a surviving spouse can retain inheritance rights over the estate of their deceased spouse, even if the deceased spouse had a will or trust. A spouse (or, more likely, the spouse’s family) may want to keep inherited property “on their side of the family,” making a postnup the best way to guarantee family estates are not lost.
Another potential reason to consider a postnup is the creation of a business. A business venture started during the marriage would likely be categorized as marital property in a divorce action. Potential business partners may be wary of creating a business without assurance that a chunk of their enterprise will not be sliced off and awarded to a spouse. A postnup could establish between spouses what rights each of them have (or do not have) in an otherwise marital asset.
There is one very common form of postnuptial agreement used in Virginia, and it is one that is covered in our Guide to Separation in Virginia in great detail: a separation agreement. Parties signing a separation agreement are agreeing to settle their “rights and obligations” to each other, just as in a prenup or the other examples of postnups provided above. But with a separation agreement the parties are dividing these responsibilities specifically to then begin living as separate individuals (usually leading to a divorce). In some cases, the parties’ inability to reach a postnup to protect inheritances, income, or business ventures could well end up leading to the need for a separation agreement instead.
Our Family Lawyers
The award-winning attorneys at Livesay & Myers, P.C. have years of experience in the drafting, negotiation and review of prenuptial and postnuptial agreements. If you need assistance with a prenup or postnup in Northern Virginia, we can help. Be sure to read our client reviews, then examine the profiles of each of our attorneys to find the one who is the best fit for you.