Fox Family Lawyers
Cynthia Moseley Fox
Attorney at Law
7751 Carondelet Avenue,
Suite 700
Clayton, Missouri 63105
(St. Louis)
314.727.4880

Pre-Nuptial Agreements Preserve Your Separate Property In The Event of a Divorce

The young woman on the telephone seemed nervous and a bit self-conscious: “Do you really think I need a pre-nuptial agreement? I feel uncomfortable talking to my fiancé about how we’ll divide things up should we ever divorce, before we’re even married. It seems so cold and unromantic.”

 

I understood completely. Negotiating the terms of a divorce that you hope will never come, in the midst of your engagement, rarely helps the romance, and in some cases can become downright contentious. But, in many circumstances including this young lady’s, it is very much the right thing to do.

 

As the only child of a wealthy family, she had substantial assets of her own even though she was not yet thirty. And, she stood to inherit considerably more when her parents passed away. Her family had urged her to see me.

 

Her parents’ advice was grounded in the concern that without the protections of a pre-nuptial agreement (also called an antenuptial agreement), there would be a good possibility that over time the cash and other assets that she brought into her marriage could become “marital property” and subject to the typical 50/50 division by the court in a divorce. Since her prospective husband, although a very fine young man, had relatively little in savings or other property, an equal division of the marital property, particularly in a short-term marriage, could significantly degrade their daughter’s financial position.

 

But, couldn’t she protect her separate property by keeping it only in her own name? You may be wondering that and so was the smartly dressed, attentive young woman when she visited me a few days later. My answer now, as then, is that such a strategy may seem sound at the outset, but can be undermined later on as the assets are sold and the proceeds are co-mingled in a joint account, or assets are refinanced and then titled jointly, or as both parties are made co-owners for estate planning purposes.

 

Without a pre-nuptial agreement, each spouse has to be scrupulous in maintaining separate accounts and recording the amount and source of funds for every transaction that results in a jointly owned asset, like a home, or non-titled property, like the furnishings inside. Without records or a valid pre-nuptial agreement indicating to the contrary, the divorce judge is likely to find such property as marital and divide it equally.

 

In this particular case, my advice was an agreement directing that all separate property, whether brought into the marriage or acquired subsequently, which became marital property was to be repaid out of the marital estate to its original owners in the entirety, before any further division of the marital property was to occur. Any marital property that remained was then to be divided equally, while all separate property at the time of the divorce would be awarded to its separate owner.

 

With this approach, the young lady and her parents were reasonably assured that whatever she brought into the marriage, or acquired by gift or inheritance, would be returned to her should the marriage fall apart. Even so, I advised my client that good record keeping, and a cautious, well-documented approach when co-mingling separate assets, were still advisable for someone seeking to preserve what they brought into the marriage should that union fail.

 

So, what happened to my young client? I wish I could tell you, but shortly after our meeting, she and her beloved eloped without ever completing the agreement! Ahhh, to be young and so in love! Next week: Pre-nuptial agreements that preserve your property for your children after your death.