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Pre-nupt

Prenuptial Agreements on the Rise Nationwide

Thursday, February 6th, 2014

The connotation that prenuptial agreements are legal tools that are only useful to the wealthy is still widely held. However, according to a survey of several family law attorneys nationwide, it appears that this view is dissipating and prenuptial agreements are gaining more and more popularity nationwide. According to a survey of the American Academy of Matrimonial Lawyers (AAML), 63% of the divorce and family law attorneys report seeing an increase in clientele seeking prenuptial agreements within the last three to five years. Specifically, many attorneys reported seeing a 46% increase it the number of women requesting prenuptial agreements.

This increase in the interest and the instance of couples seeking prenuptial agreements prior to marriage may be due to several factors such as the current state of the economy, the trend of individuals tending to wait until later in life to marry and society’s increasing acceptance of prenuptial agreements. Regardless of the rationale explaining the recent upsurge in the popularity of prenuptial agreements, as Georgia divorce attorneys we suggest that any individual or couple considering entering into a prenuptial agreement seek independent legal representation to discuss the merits and possible drawbacks of a prenuptial agreement in the context of their specific situation.

Asset Protection Alternatives to Prenuptial Agreements

Tuesday, November 26th, 2013

Prenuptial agreements, otherwise known as antenuptial agreements or prenups, are becoming increasingly popular as several individuals are postponing marriage until later in life and often after amassing personal wealth and significant separate assets. However, as prenups become more popular, they are also garnering a bad rap. Among couples seeking to wed, prenup is often viewed as a dirty word because it suggest to some that the party suggesting it is planning for divorce instead of focusing on the marriage.  Because of this, many chose not to discuss prenuptial agreements in order to avoid conflict.

But, just because the topic of prenuptial agreements may be a touchy one doesn’t mean that a future spouse seeking to protect his or her separate assets in the event of divorce are out of luck. There are alternatives to prenuptial agreements that may allow an individual to ensure that his or her separate property is protected in the event of divorce, and these alternatives do not require their future spouse’s consent or agreement.

Keeping separate property separate.

One of the simplest ways of ensuring that any separate property you have obtained prior to marriage is maintaining the separate nature of this property after marriage. This may sound simple, but during the course of marriage, especially a long term marriage, maintaining separate accounts and separate assets may be extremely difficult. For this reason, many individuals look to the options below in lieu of prenuptial agreements.

Trusts.

A trust is a relationship created at the direction of an individual, where that individual entrusts one or more people, often referred to as trustees, to hold the individual’s property subject to certain duties, and to use and protect that property for the benefit of others. Trusts may either be used by the family of a future spouse to protect an inheritance or family assets in the event of divorce, or a trust may be used by a future spouse to protect his or her individual assets. Trusts offer asset protection in the event of divorce, because once money or property has been placed in trust, it is deemed to be the property of the trust for legal purposes. If a spouse does not legally own property, it generally may not be subject to equitable distribution upon divorce. There are several types of trusts, and there are very stringent procedures that must be adhered to in order to ensure a trust is validly created and effective. If you are looking for an effective method of protecting your assets upon divorce, a trust may be a good option. Speak with a family law attorney for more information and details concerning how to structure your financial affairs prior to marriage, in order to protect your separate assets in the event of divorce.

Prenuptial agreement upheld in Georgia divorce case

Monday, December 26th, 2011

The Supreme Court of Georgia recently heard an appeal of a divorce case, which highlights the security, or risk (depending on which side you are on), of entering into a prenuptial agreement in Georgia. Sides v. Sides, S11F1140 (2011). In that case, the parties began dating in 1989 and, shortly thereafter, the Wife became pregnant. Id. Due to the great disparity in assets and income between the parties, they negotiated and signed a prenuptial agreement before marrying in 1990. Id. Under the agreement, “Wife would have been entitled to substantially more resources if the parties divorced after their twenty-year anniversary, and substantially less if the parties divorced prior to their twenty year anniversary.” Id. at 2. Nearly twenty years later, the Husband filed a Compliant for Divorce and Motion to Enforce the Prenuptial Agreement, which the trial court granted a mere 62 days prior to the couple’s twenty year anniversary, and the Wife appealed. Id.

The Supreme Court of Georgia affirmed the enforcement of the prenuptial agreement. The Court first laid out the factors to be considered by the trial court in deciding the validity of the prenuptial agreement: “(1) [W]as the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts? (2) [I]s the agreement unconscionable?(3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?” Id., quoting Scherer v. Scherer, 249 Ga.635, 641 (3) (1982).

In this case, both attorneys “deposed that they would not have allowed their clients to enter the agreement without full financial disclosures being made,” and Wife was long aware of the “vast disparity” between their incomes. Id. at 3. Thus, the evidence supported that full financial disclosures were made prior to signing and the agreement was not unconscionable. In addition,the increase in Husband’s net worth was anticipated and, therefore, it was not a “change of circumstance that would make the enforcement of the agreement unfair and unreasonable.” Id. at4. The trial court, thus, did not abuse its discretion in upholding the prenuptial agreement.

An Atlanta Divorce Attorney’s Thoughts on Celebrity Divorce – Owner of Los Angeles Dodgers

Friday, October 15th, 2010

In this weekly installment of An Atlanta Divorce Attorney’s Thoughts on Celebrity Divorce, I will discuss the ongoing divorce action of the owner of the Los Angeles Dodgers. As you may have read in the New York Times or other news outlets, the owner of the Los Angeles Dodgers is going through a divorce,putting ownership of the Major League Baseball team in dispute. The key to this case is a post-nuptial agreement, of which there are two versions – one version gives the team to the husband/owner and the other version makes the parties joint owners of the team. The owner’s wife is asking that the agreement be thrown out and is alleging that the version giving complete ownership of the team to her husband was obtained fraudulently. If the agreement is thrown out, the team will be divided with the parties’ other assets under California’s community property law.

If this case was in Georgia and the agreement was invalidated, the team would be equitably divided. As explained in detail in previous blogs, equitable division does not necessarily mean equal. The judge would consider all the circumstances in deciding how (or if) to divide the team. Thus, the outcome of the case could be much different in Georgia than in it would be in California, where the parties would each receive50% of the team. Closing arguments were recently completed and the judge now has 90 days to decide the fate of the parties and the Los Angeles Dodgers. It will be interesting to see how this one turns out.

Pre-nuptial Agreements in Georgia

Tuesday, March 10th, 2009

An ante-nuptial agreement (commonly referred to as a pre-nuptial agreement or “pre-nup”, according to O.C.G.A. § 19-3-62, is a contract into which a couple enters prior to marriage, which divideshis or her assets in case the couple’s marriage ends in divorce. Many people usually associate pre-nups with the rich and famous or the wealthy, but anyone can obtain a pre-nup in Georgiaregardless of their wealth and assets. Typically, each party will keep the assets that he or she had prior to the marriage and the division of assets is detailed in the pre-nup. One party usuallykeeps all of their money and assets that he or she had prior to the marriage and the other party keeps theirs. It basically says what is mine is mine and what is yours is yours. Also, if the marriage does end in divorce, the pre-nup will detail what (if any) alimony or assets the other spouse is entitled to receive.

The only enforceable clauses in a pre-nup deal with the parties’ assets. Recently, family law attorneys throughout the country have seen a new trend in pre-nups. Couples now want to addhealth-related clauses, such as how much weight his or her spouse can gain during the marriage or when they will have their first child. For instance, a man may want to add a clause that stateshis wife is only allowed to gain a certain number of pounds during their marriage and if she gains any more than the allotted amount, then she will be subject to monetary penalties. Not only areclauses like this unusual (to say the least), but health related clauses are not enforceable in the State of Georgia. The only clauses in pre-nups that are enforceable in Georgia are the onesdealing with money and/or assets of the parties.

Post-Nuptial Agreements in Georgia

Saturday, December 1st, 2007

The concept of pre-nuptial agreements is widely known. However, there is another type of agreement that spouses may utilize in order to order their marital and separate property in the event ofdivorce. These agreements are known as post-nuptial agreements.

What is a Post-nuptial agreement?

Similar to pre-nuptial or ante-nuptial agreements, post-nuptial agreements are legal agreements entered into by both spouses during the marriage that spell out how assets or debts will be dividedin the case of divorce or death. Essentially, these agreements are pre-nuptial agreements that are signed after the marriage has occurred. Couples may seek post-nuptial agreements for all of thesame reasons that a couple would seek a pre-marital agreement. Couples make take this option because a pre-nuptial agreement was not necessary or not considered prior to the marriage.

Why would a couple enter a post-nuptial?

Couples often seek to enter into a post-nuptial agreement as the result of a major financial change that happens during the court of their marriage, like the occurrence of an inheritance or theimmense success of a business. Additionally, couples with blended families may which to enter into a post-nuptial agreement in order to safe guard the inheritance of biological children. Forexample, a post-nuptial agreement may mandate that a mother’s assets pass directly to her biological children, not the her step children, or a husband can limit the total amount his wifewould receive from his business assets in case of divorce. Post-nuptial agreements may also be used by couples to protect one spouse from any financial obligations from a judgment against theother spouse or his or her business.

Are post-nuptial agreements enforceable in Georgia?

Georgia has a public policy which favors the enforcement of pre-marital or post-nuptial agreements. However, a court must analyze the agreement according to the three criteria listed below beforethe agreement may be enforced:
1) Was the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts?
2) Is the agreement unconscionable?
3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable?
See Blige v. Blige, 283 Ga. 65 (2008); Mallen v. Mallen, 280 Ga. 43 (2005); Gravley v. Gravley, 278 Ga. 897 (2005); Sanders v. Colwell, 248 Ga. 376 (1981).

Ways to Bring up the topic of a post-nuptial agreement with your spouse

If you believe that entering into a post-nuptial agreement with your spouse is necessary or may be beneficial for financial planning purposes, the following suggestions may be helpful isdiscussing this topic with your spouse:
Make it about “us”, not just about “you”. Initiating a conversation about a post-nuptial agreement may not be the most pleasant task; however, ensuring that yourspouse understands that the prospect of a post-nuptial agreement is something that can be of benefit to you both may ease any tension caused by the conversation.
Use changes in circumstances to your advantage. If you or your spouse have recently received a big bonus, new job, or an inheritance, that may be the prefect event to trigger aconversation about a post-nuptial agreement.
Suggest it as an update to your pre-nuptial agreement. If you signed a pre-marital agreement, suggest that you and your spouse review it together to determine if it still seemsfair and reasonable to both of you.
Discuss it while discussing other financial-planning essentials. Creating a will or engaging in estate or financial planning provide a nice segue into a discussion regardingpost-nuptial agreements. Remember these agreements may be used as highly effective financial planning tools to protect your children’s inheritances or family businesses.
Have your attorney or family planner bring it up: A neutral adviser may ease the tension or emotional response that may arise out of a discussion concerning a post-nuptialagreement.

By A. Latrese Martin, Associate Attorney, Meriwether & Tharp, LLC

DIscussing Prenuptial Agreements with Your Future Spouse

Thursday, November 1st, 2007

Engagement and marriage is an exciting time for both parties in a relationship. However, one topic that relates to impending nuptials, the prenuptial agreement, is a topic that is delicate andoften tricky to talk about. One never knows how their future spouse will respond. Will he or she agree that one is necessary? Or, will he or she be totally hostile to the idea? One thing is forsure, if you feel that a prenuptial agreement will be in your or your future spouse’s best interest, it is definitely wise to talk about it, early on. However, the big question is: How do youbring it up? Two recent articles addressed this issue: How (and Why) to Bring-up a Pre-Nup and Love and Money: How to Bring up a Prenup.

Why?

One question that many individuals think about when considering marriage is: Why do I need a prenuptial agreement? Also, this is likely to be one of the first questions your future spouse willask when you bring up the topic. Fortunately, this question is relatively easy to answer. The primary purpose of prenuptial agreements (otherwise known as premarital or antenuptial agreements) isto determine the division of separate and marital property upon divorce. Some common reasons to obtain a premarital agreement are to protect premarital assets or property (property that isobtained by one spouse prior to the marriage, to ensure that any children from prior marriages or relationships are properly cared for in the event of one spouse’s death or divorce, to avoidlengthy and expensive property disputes in the event of a divorce, and to limit each spouses liability for the other spouses debt.

When?

Speaking with your future spouse about the possibility of a premarital agreement is something that should be done early on. Ideally, it should be done prior to or shortly after the engagement.Hopefully, this will ensure that both you and your partner will have a clear mind, and will not feel pressured by the prospect of an upcoming wedding date. In fact, one thing that you shouldnever do is spring a proposed premarital agreement on your future spouse at the last minute. The reasons not to do so are abundant:

1. Springing a premarital agreement on your future spouse may cause him or her to baulk at the idea of signing it. This in turn may postpone any weeding plans the two of you have previously made.

2. Waiting until the last minute will not give your future spouse an appropriate amount of time to review the document and make any necessary changes. It is important for both you and your spouseto be independently represented. This means that you and your spouse should each have your own attorney. Being represented by your own attorney will ensure that you both are satisfied with theagreement you are entering.

3. Failing to ensure that your future spouse has adequately reviewed the agreement, totally understands his or her rights, and does not feel pressured into signing the agreement may lead to theagreement being dishonored by a court. See Blige v. Blige, 283 Ga.65(2008) and Mallen v. Mallen, 280 Ga. 43(2005) (discussing theenforceability of premarital agreements in Georgia).

Where?

Although this may not initially come to mind, another issue that deserves consideration is where you should speak to you partner about entering into a premarital agreement. Location is key. Youshould chose somewhere private, and where both you and your future spouse feels comfortable and at ease. Discussing the topic of premarital agreements is already likely to be a contentious issue;there is no reason why your surroundings should be an added source of stress.

How?

As with any other discussion you would have with your partner, be open, honest, and direct. Discuss any concerns or issues you may have, and invite your partner to do the same. Frame thediscussion in such a way to make your partner feel included. Try to assure your partner that entering into a premarital agreement is an endeavor that you two are entering into together, not justsomething that you are pushing him or her into. Answer all of your future spouse’s questions, and try to put their concerns to rest if at all possible.

Below are some sample discussion starters that may help you start your conversation:

“I believe that marriage is a fifty-fifty proposition, and I’m concerned about giving up my job to become a full-time stay at home spouse. Can we establish a principle of 50-50 sharing atthe outset?”

“Let’s talk about our future, what we both want, our lifestyles, our present and future finances. I want to make sure all our money issues are addressed and resolved in an agreement.Then we won’t have them hanging over us when we get married.”

“One thing I have to consider before I get married is my parents’ business. I need to be confident that the business will remain in the family in the event the unthinkable occurs.”

The Family Law attorneys at Meriwether & Tharp, LLC realize that discussing entering into a premarital agreement with your future spouse may not bethe most pleasant task. However, once you and your partner have agreed to form one, we here at Meriwether & Tharp will be more than glad to help you and your partner draft the agreement thatbest serves your needs.

By A. Latrese Martin, Associate Attorney, Meriwether & Tharp, LLC

Our team of Atlanta divorce professionals gets big win from Georgia Supreme Court regarding enforcement of Premarital Agreement

Monday, October 1st, 2007

On September 10, 2012, our Atlanta Divorce firm was pleased to find that we won a significant Georgia Supreme Court Case. The case of Fox v. Fox, Georgia Supreme Court Case Number S12A0672, was an interlocutoryappeal, meaning that the Georgia Supreme Court took the case up before the trial court entered a final order. At issue in this case was whether the Court would enforce a “Premarital Agreement”that the parties signed prior to their marriage during their now pending divorce case. Atlanta Divorce Attorneys Patrick L. Meriwether and Melissa A. Tracy represented the party, in this case thehusband, who did not want the agreement enforced.

At the trial court level, Attorneys Meriwether and Tracy were successful in convincing the court that the Agreement should not be enforced. The Wife’s counsel then requested and was granted theright to petition the Georgia Supreme Court to take up the case. Ultimately, the Georgia Supreme Court affirmed the trial court’s decision, holding that the “Premarital Agreement” was a contractin contemplation of marriage (and not divorce) and, as such, it was not properly attested by two witnesses as required by Georgia law.

This case should be a lesson to anyone considering a prenuptial agreement prior to marriage. The parties to the case did not seek the assistance of attorneys when creating the Agreement inquestion. Although not all prenuptial agreements will fail for the lack of following the strict two-witness requirement, a skilled family law attorney can ensure that your agreement is notsubject to any pitfalls if it ever needs to be enforced during a divorce. If you are thinking about a prenuptial agreement, our team of Atlanta family lawattorneys can help guide you through the process and ensure that your agreement complies with the law.

By Melissa Tracy, Associate Attorney, Meriwether & Tharp, LLC

The continuing saga of enforcing a pre-nuptial agreement in Georgia

Friday, June 1st, 2007

In the past, Georgia courts held that prenuptial agreements made in contemplation of divorce were invalid on the ground that they were contrary to public policy. Thankfully, this is no longer the case. See Scherer v. Scherer, 249 Ga. 635 (1982) overruling Reynolds v. Reynolds, 217 Ga. 234 (1961). Today, prenuptial agreements made in contemplation of divorce are regularly enforced by courts across the state. Though agreements in contemplation of divorce do not necessarily violate public policy, the distinction between agreements made in contemplation of divorce and agreements made in contemplation of marriage has continued.

Several recent cases have attempted to distinguish agreements made in contemplation of marriage from agreements made in contemplation of divorce. The former require attestation by two (2)witnesses under O.C.G.A. § 19-3-63, while the latter do not.

In Dove v. Dove, 285 Ga. 647, 647 (2009), the Court held that a prenuptial agreement settling alimony issues was a contract made in contemplation of divorce and only required the signature of one (1) witness. However, in Sullivan v. Sullivan, 268 Ga. 53 (2009), where an agreement set out property rights, defining each party’s respective estates without defining alimony or division of property in the event of divorce, the agreement was considered one made in contemplation of marriage and required the attestation of two (2) witnesses.

While O.C.G.A. § 19-3-63 requires that contracts made in contemplation of marriage must be attested to by at least two witnesses, this statute does not apply to prenuptial agreements made in contemplation of divorce. Lawrence v. Lawrence, 286 Ga. 309 (2009). In Lawrence, the trial court upheld a prenuptial agreement that was only witnessed by one person. The Wife appealed, claiming that O.C.G.A. § 19-3-63 required the signatures of two witnesses. The Supreme Court of Georgia affirmed the trial court’s decision and stated that an agreement that contemplates that the marriage may end by divorce or dissolution, rather than only death, is an agreement that is made in contemplation of divorce, not marriage. Lawrence at 311-312.

By Connor Alexander, Law Clerk, Meriwether & Tharp, LLC

Enforceability of a prenuptial agreement in Georgia

Friday, June 1st, 2007

In Georgia, for a prenuptial agreement to be deemed enforceable it must pass a three-part test set forth in Scherer v. Scherer, 249 Ga. 635 (1982). This three-part test, as restated in Blige v. Blige, 283 Ga. 65, 67 (2008), reads as follows:

“[T]he party seeking enforcement bears the burden of proof to demonstrate that: (1) the antenuptial agreement was not the result of fraud, duress, mistake, misrepresentation, or nondisclosure of material facts; (2) the agreement is not unconscionable; and (3) taking into account all relevant facts and circumstances, including changes beyond the parties’ contemplation when the agreement was executed, enforcement of the antenuptial agreement would be neither unfair nor unreasonable.”

The party seeking to enforce the pre-nupt carries the burden of demonstrating the above mentioned factors.

Under Adams v. Adams, 278 Ga. 521 (2004), to satisfy the first prong of the Scherer test, the enforcing party must show “a full and fair disclosure of the assets of the partiesprior to the execution of the [antenuptial] agreement.” Courts have held that a failure to disclose yearly income may amount to the nondisclosure of a material fact. To avoid such problems courts have endorsed financial statements and statements of income as “the most effective method[s] of satisfying the . . . disclosure obligation in most circumstances.” Blige at 69, n.12.

Satisfying the second and third prongs of the Scherer test requires that the party seeking to enforce the pre-nup demonstrate that the agreement is not clearly unconscionable and that its enforcement would not be unfair.

By Connor Alexander, Law Clerk, Meriwether & Tharp, LLC