Why and how to create a premarital agreement
Couples may want to sign premarital agreements before their weddings that detail how they will divide any property in case of divorce. Some might even want to consider a cohabitation agreement, which can set out expectations if a couple is moving in together instead of marrying. However, it is important that both parties participate in the creation of these agreements and that they are happy with the division of property specified.
This was not the case for a woman whose boyfriend gave her a cohabitation agreement that included provisions she disagreed with. The home they were moving into belonged to him, and his mother had cosigned for it and paid half of the down payment. The couple had already agreed that his name would stay on the mortgage and the woman would pay a small amount of rent.
However, according to the agreement, if they got married, she would not receive any financial compensation for the home even if she put a significant amount of money toward the mortgage. Furthermore, state law regarding spousal support would be disregarded. A better solution might have been to allow her to acquire equity in the home over the years of their marriage. Premarital agreements can also include a clause that allows them to expire after the couple has been married for a certain number of years.
While couples have a lot of leeway regarding how they can craft their premarital agreements, these documents should be prepared correctly, or they could be declared invalid. For example, unlike prenuptial agreements, these documents cannot address issues pertaining to children, such as child custody and support. There should be no indication that one person may have been coerced into signing. Preparing the document too close to the wedding could give this impression. Both people should also have access to legal counsel, ideally with separate attorneys.