frozen eggs, student loans, and other weird reasons to get a marriage contract


Love & Money is a new MarketWatch series that examines the impact our relationship with money has on our relationships with loved ones, friends and family.

For many, the idea of ​​a prenuptial agreement – essentially a contract to settle the division of property in the event of a divorce – is reserved for celebrities or other ultra-wealthy fiancés who want to protect their money or that of their family.

Even married couples without large trusts or real estate probably have something valuable they want to protect.

The reality is that even the bride and groom without large trusts or real estate probably have something valuable they want to protect. And they’re taking more and more steps to get there. More than 60% of respondents to a 2016 survey of the American Academy of Matrimonial Lawyers said they saw an increase in the total number of clients seeking marriage contracts in the three years preceding the survey.

Divorce laws can vary widely from state to state, and they can change over the course of a marriage. For example, some states, known as communal property states, divide the property in divorce cases equally between the two parties on the assumption that all assets acquired during the marriage belong to both parties.

In states that operate by equitable distribution, courts may consider which spouse acquired the property during the marriage, among other factors, by dividing the property fairly (but not necessarily equally).

While many couples use a marriage contract to protect them beyond the laws of their state, one reason for the agreement might be to ensure that if you divorce, the legal landscape is the same as when you got married. If you like your state’s law as it is written, you can use a marriage contract to “lock it down,” said Alyssa Rower, a New York-based family and marriage lawyer.

Below are some other unexpected reasons why couples might consider a marriage contract:

Your spouse’s student loans

In the vast majority of cases, marriage does not affect the status of your student loans – they are in the name of the borrower and will remain in the event of marriage and subsequent divorce.

But if a couple are planning to tackle one partner’s student loans together, the other spouse may want to consider whether they want to be compensated for that divorce help, said Kelly Frawley, a partner focused on matrimonial and family law at the firm Kasowitz, Benson Torres. It’s something the spouse helping with the loans can write into a prenuptial agreement, she said.

The partner can even specify that if the money from the marriage – and not just their own separate assets – is used for loans, they should be given some kind of credit, said Emily Pollock, also a partner in the same company. “You always have to think about where that money could have gone,” like saving for a house or retirement, for example, she said.

Your favorite pet

Dogs and cats can be one of the most valuable and yet the most difficult assets to value in a marriage, which is why couples may want to hatch their pet’s future in the event of a divorce.

A pet sitting agreement, with visits and other arrangements you could put in place for children, is unlikely to be enforced by the courts, Pollock says. “There is case law that says the courts will not spend any resources to establish an access schedule for a pet,” she said.

Nonetheless, it may be wise for a couple to draft an agreement on how they plan to determine pet ownership in the event of a divorce. Will the pet go to a partner, will it be shared by the partners, or will it follow the children? These are issues that can be discussed in a marriage contract, Pollock said.

You have frozen your eggs or sperm

Advances in reproductive technology in recent years have meant that partners are increasingly marrying another type of asset: frozen eggs or sperm. And couples need to think about how they want to resolve this issue in the event of a divorce, said Colleen Quinn, an attorney based in Richmond, Va., Who specializes in adoption law and assisted reproductive technologies.

Couples can designate in advance whether the sperm or eggs will be considered separate property in the event of a divorce, Quinn said.

Of course, not all situations are this straightforward, Quinn said. In some cases – particularly, but not always, with same-sex couples – partners plan to create embryos with the egg or sperm of one of the partners and reproductive material from a donor, which may create unexpected complications in divorce. .

Advances in reproductive technology in recent years have meant that partners are increasingly marrying another type of asset: frozen eggs or sperm.

“I have often encountered this, where they will separate and the only woman who has used her eggs will want to transfer the embryo with sperm from a donor and the clinic will refuse to do so without the approval of the ex-wife. “Quinn said.

To avoid this scenario, couples can write in a marriage contract that any embryos created with a partner’s egg or sperm with donor reproductive material return to that spouse in the event of divorce – as long as that partner buys with it. him their money separated, Quinn said. . She added that this partner should also be the only name on the purchase contract and on the cryobank’s freezing contract.

“The problems arise when they bought the sperm with the money from the joint marriage or they are both on the purchase document,” she said.

A difficult issue to resolve in advance in a marriage contract: ownership of an embryo created during marriage with reproductive material from both partners, Quinn said. That’s why it’s important for spouses to sign an “embryo disposal agreement” when they create the embryo to decide who it might belong to in the event of a divorce, she said. This document must be separate from the contract provided by the clinic.

Couples or individuals will rarely receive this type of legal advice when engaging in fertility treatments, unless they seek it, Quinn said, and even then, lawyers are not always informed. details. “This is all part of the evolution of our medical technology and it is the law that must follow,” she said.

You have a business interest

Entrepreneurs can get married with a stake in their business, which they should address in any prenuptial agreement, Rower said.

“Maybe you don’t have the money, but you have a lot of potential on the road. It’s something you can’t protect without a prenuptial agreement, ”she said. “If you have something that is difficult to assess, it could be a tricky issue in any divorce.”

Without some sort of agreement, in the event of a divorce, the couple will hire experts to determine the value of the business, and then “you will fight over what percentage” a spouse gets, Rower said. In these cases, often the partner who brought the business into marriage does not have the cash at that time to buy out his ex-husband or wife.

This is why it is important to determine in advance whether the business interests will be matrimonial or separate property in the event of a divorce, she said.

Even if neither party has a business interest at the time they enter into the marriage, they may want to protect any future business.

Gabriel Kaplan, a New York-based financial planner, said he met a client who raised seed money for his business and the investors asked the client to get a marriage contract to protect his stake. in the company against his spouse.

Even though neither party has a business interest at the time they enter into the marriage, they may want to protect any future business or specify that the spouses would (or not get) a stake in any business started during the marriage, Shannon said. McLay, the founder of Financial Gym, a financial consulting firm.

“I had no idea I was going to start a business when I got married,” she said. But that’s exactly what happened. And then she divorced. McLay knew she wanted to recognize her ex-husband’s role in building the business. So they created a separate LLC for her business which her ex-husband partially owns.

“All of my retirement assets went into building this business,” she said. “When we got divorced, those assets would have been his if they had always existed. In fairness to him, I have half of his retirement assets. For me, that’s how I thought it. .

The earning potential of either partner may change

If either partner is considering taking a step back from their marriage career to raise children or accompany their partner on a move that will boost their spouse’s career – and hurt theirs – the couple may want to – be addressed in the marriage contract, say experts.

“This person is unlikely to be able to re-enter the workforce and get the kind of income they might otherwise get,” said Chris Chen, certified financial planner at Insight Financial Strategies in Waltham, Mass.

To compensate, the couple may want to spell out in a marriage contract how that spouse’s expenses will be covered during the marriage and in the event of a divorce, Frawley said. Sometimes the spouse who interrupts his career may receive an annual salary during the marriage and / or in the event of a divorce.


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