Attorney, Abby Cettel, explains the ins and outs of premarital agreements, what they can (and cannot) accomplish, and when you should consider creating one. In this podcast, Steve and Abby answer the following:
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Disclaimer: Nothing in this communication is intended to provide legal advice nor does it constitute a client-attorney relationship, therefore you should not interpret the contents as such.
Welcome to Modern Family Matters, a podcast devoted to exploring family law topics that matter most to you. Covering a wide range of legal, personal, and family law matters, with expert analysis from skilled attorneys and professional guests, we hope that our podcast provides answers, clarity, and guidance towards a better tomorrow for you and your family. Here's your host, Steve Altishin.
Steve Altishin 0:02
Good morning, everyone. My name is Steve Altishin, I'm the Director of Partnerships here at Landerholm Family Law. And today I'm here with Abby Cettel. How you doing, Abby?
Abby Cettel 0:43
I'm well, thank you.
Steve Altishin 0:44
Well, good to hear. So today, Abby, let's talk about prenuptial agreements. You know what they are, what they can be, and maybe how they can be helpful in a particular situation. So let's just start right with the basics. What is a Premarital Agreement?
Abby Cettel 1:04
A Premarital Agreement is a contract between two people who intend to get married. It's a document tha'st signed before your marriage, and outlines both of your positions on the different rights that you will have as a married couple. It's technically a contract. And we have laws, statutes, in the state of Oregon that control these agreements. So it's, before marriage, a document reviewed, signed and drafted by both parties that lays out what you expect in case of a divorce.
Steve Altishin 1:44
So, a contract. I'm assuming then, there's no oral contract, an oral prenup kind of a thing?
Abby Cettel 1:53
Correct. This is a written document that both parties have had the opportunity to review, both parties have had the opportunity to have a counsel and attorney review for them if they so choose. It needs to be signed. It does not need to be notarized in our state, but it certainly doesn't hurt, especially if there's issues later on down the road. But that's correct. It's not an oral agreement. It's not a email back and forth. It is a piece of paper that is signed.
Steve Altishin 2:23
Got it. So that's before marriage. Is there asimilar thing that people can do after they get married?
Abby Cettel 2:33
Yes, there is something called a marital agreement, people might refer to it as a post nuptial agreement. There's a few different circumstances where this happens. Sometimes you're about to get married, and you mean to sign a prenuptial, or Premarital Agreement, but it just doesn't happen for the wedding. So then you're a couple months in and you think, oh God, we didn't do that. We meant to. We thought about it, but we never got around to signing it. At that point, the agreement becomes a post nuptial agreement. These also happen, you know, many years later on in the marriage. Quite frankly, I often see them after the parties have talked about separation and decided to stay together, but only on certain terms. And those terms become reflected in a document, which becomes a post nuptial agreement.
Steve Altishin 3:27
So we've talked a little bit about how they're created. What is in them? We've talked about, I think you mentioned, different kinds of obligations or rights. I mean, are there certain rights and obligations that are usually laid out in a prenup or can be amended or waived or anything like that?
Abby Cettel 3:52
Right. So in the state of Oregon, when you get married, all of your income, all of your assets, your houses, your cars, that all becomes a portion of your marital estate. And what both a Premarital Agreement and a Post Marital/post nuptial agreement can do is outline how each of those assets are going to be treated. So that includes spousal support, property, real property. If you have a collectible car, and that's something that if you get divorced, you're going to take with you, that could go in there as something that's going to be attributed to you. You can also decide how you're going to get divorced. You can outline if you want to pursue mediation before you actually go to attorneys and go to court, how one party will pay the others attorney fees--that's often in these agreements as well.
Steve Altishin 4:53
Are there things not allowed or that aren't enforceable that are put into premarital agreements? But you could have an agreement anyway. And are there are other kinds of agreements that you can do? Let's say you're not planning on getting married.
Abby Cettel 5:12
There are other agreements. They're not controlled under the same statutes. So if you wrote up a cohabitation agreement, for example, two people who want to live together and share their lives, but they do not intend on getting married. That is not enforceable in the court the same way that a marital agreement is. They don't have the statutory backup.
Steve Altishin 5:37
Right. So you mentioned the premarital, the marital. Sometimes you'll do it right off the bat, sometimes you'll do it years later. Just a quick question on that one. So when does it become effective? When does it actually start? Let's say we signed a Premarital Agreement eight months before the wedding. Am I subject to something up until the wedding day? Or how does that work?
Abby Cettel 6:08
It is at the time of marriage. So in these agreements, there's going to be, like with any contracts, an opening paragraph that talks about who's signing, why they're signing, where they are. The who, what, when and where of the contract. And in that, it will say-- well, any good Premarital Agreement is going to say-- the parties sign this agreement on the understanding that they intend to get married. This agreement is enforceable at the time of marriage. So because the intent is to deal with marriage and divorce, if you never get married, the contract is never enforceable.
Steve Altishin 6:47
Okay, flip side-- say we're at the altar. I'm suddenly going, Hey, hey, I don't want to do that prenup any more than I signed, and then you get married. Does it formally have to be unsigned? I mean, it is a contract after all.
Abby Cettel 7:09
Absolutely. Both parties need to then agree to modify or cancel, and then that needs to be written, too. Otherwise, you made that agreement, then you got married. You can't forget about it.
Steve Altishin 7:22
Oh, my God. So between the I Do's, you've got to kind of re-negotiate?
Abby Cettel 7:28
Right. And say you're at the church and you look at each other, and you think that I don't want to put rules on our relationship. I don't want to put rules on what we're going to do. Well, if you don't do the follow up work to make sure that that contract goes away, 15 years from now, when you get divorced, you're going to be the one crying about it.
Steve Altishin 7:51
Got it. Got it. So no email the night before then go get married.
Abby Cettel 7:57
Steve Altishin 7:58
So prenups and postnups. Is there much of a difference between them in just the legal sense of what they are?
Abby Cettel 8:08
This is one of those lawyer answers that I'm going to give you where I'm going to say: it depends.
Steve Altishin 8:15
That makes sense. I mean, kind of a weird analogy. It's easier to overturn a non-compete that you had to sign after you became employed.
Abby Cettel 9:04
Steve Altishin 9:05
One side's got more power going on at that point.
Abby Cettel 9:09
Exactly. And that's sort of why the courts do that. They assume that later on in the marriage, the parties aren't on equal footing. Typically, when you make a postnuptial agreement, it's, you know, 'I want these things to continue to stay in the marriage' as opposed to both parties choosing to enter into a marriage. So the burden becomes lower to overturn a postnuptial agreement.
Steve Altishin 9:37
So you talked briefly about things that were in a prenuptial agreement and what they can cover. Can they go past the monetary, the kind of rights that are built into a marriage? Can I have it written in that, you know, my spouse will do the cooking?
Abby Cettel 9:57
You cannot. That's not something that the court is ever going to enforce. You know, the beauty of these documents is you can put whatever you want in them. Can you enforce them later on down the road? No. Well, can you enforce things such, 'He's going to do the cooking, and I have to have'-- you hear stories in the news that celebrities will put in, 'He's gonna pay for my Botox every month for 10 years'. Is that enforceable? No.
Steve Altishin 10:28
Well, that's a good thing. Can you put things into a prenup that aren't strictly divorce related? I think I've heard of disposition of property on a will, or can you do other stuff?
Abby Cettel 10:47
Yes, you can talk about what to do in the event of one spouse's death. You know, I think we all have experienced losing a loved one. And there's a lot more to it than their bank account goes here, and this gets paid off, especially for persons who have children from other marriages. And you can outline exactly how you anticipate another child would be taken care of. You know, it's a concern for a lot of people. Will my child from my first marriage be given access to my estate in the same manner that my children from my second marriage will? Because there's a second wife, for example, who now is in control of that estate and making sure that it's going where it needs to go. So how do you provide for everyone in case of a death?
Steve Altishin 11:43
That makes sense. I mean, it's hard to say, 'Oh, we'll never get divorced', when it's two divorce people looking each other ready to get married. There's a little more common sense in there somewhere, right? We didn't talk about one huge divorce issue, and I'm wondering why. Child support, child custody, parenting time... can those things go in?
Abby Cettel 12:13
So, again, another lawyer answer...you can put in your expectations. And it's always good to talk about these things before you're getting married. Or if you're considering a change in your marriage, outlining these things in a conversation between the two of you does take some of the sting out of it in the end if you do end up getting divorced. But the court will not enforce agreements made about child custody, child support, those types of things. Because courts in Oregon and all over the country use something called the best interest standard to determine your child's parenting plan, custody, and we use a calculator for child support. But all of those things are dependent on what's going on in the child's life right then. There are so many things, as we all know, that can happen between a marriage date in one year, and 10 years down the road. And you've got this little kiddo. Maybe your Premarital Agreement says Oh, Mom will get custody of all children and dad will have every other weekend. Well, mom could have a lot of problems in those 10 years, and that might no longer be an appropriate award. So you can talk about your plans, but the court will not enforce them if it is not in the best interest of the kid.
Steve Altishin 13:34
That just conforms with the law. So the court will not enforce certain things. And that kind of leads to a question of, is there a clause in the law where--are they actually enforceable? Are they hard to enforce, are there reasons they won't enforce? You know, I know a lot of people talk about 'Well, after two or three years of marriage, they won't enforce it', or things like that. So are they generally enforced in court?
Abby Cettel 14:16
Premarital agreements, yes, are generally enforced in court with the exception of long term marriages. So I'll back up a little bit. Premarital contracts, for example, when I'm filing a divorce for a premarital contract, most of our divorce petitions say there needs to be spousal support, equal division of the house and equal division of all other assets. When I'm filing a case that involves a prenup, I just say each of these items need to be devised as the prenup states. And then it's a very simple process. We file a simple judgment that says the Premarital Agreement controls and outlines exactly what to do with each item. And that works really well for marriages of, like you said, two to five years. When you start getting into longer term marriages, there's a chance that the court will choose not to enforce a Premarital Agreement because the circumstances of the parties have changed so significantly. We get married when we're 20 years old, we don't have two pennies to rub together, and I invent the computer. And now I've got a billion dollars, and my Premarital Agreement says that my husband gets nothing, I retain all of my own bank accounts, I retain all of the retirement that I make. That is not fair. And the court will not enforce something that unfair. Or, you know, maybe you didn't invent computers, but you have a drywall company or something like that.
Steve Altishin 15:58
Well, that makes sense. I mean, it kind of sounds like a hybrid between contract law and Family Law, Divorce Law.
Abby Cettel 16:09
Steve Altishin 16:10
That's kind of the guts of the way they work on a legal aspect-- how you do them, how how they enforce/get enforced. Which then leads to kind of the overarching question of, who should get a prenup? I mean, who do they work best for? I'm assuming that it's just not something everybody should do because it's there.
Abby Cettel 16:41
As an attorney, my answer is always everyone should get a prenup. Because, you know, like we touched on before, there are other aspects of your life that you can determine and make easier for yourself through a prenup. Even if you don't have any money--no house, no big bank accounts, no investment accounts or something like that--what you can decide is how you're going to deal with each other in case of a divorce. We all know getting married is expensive, right? So say you have a wedding and you spent $10,000 on your wedding, you had a great time. What people don't realize is that getting divorced is two or three times more expensive than getting married. Because you're both having your own party, you've both got attorneys, or even if you don't have attorneys, it's a stressful time that you're devoting a lot of your free time to figuring out, or paying for a mediator, paying for appraisals on property. Divorce is expensive. And if you decide together, early on, that you're going to use a mediator and avoid the court as much as possible to get that done, it's better for everyone. It opens up a really honest conversation between engaged people to talk about how you're going to deal with something really hard. It also lets everyone know, on the day of marriage, here are my debts. And here are my assets. I think often people get into marriages and don't realize, 'Oh, my spouse's $17,000 in credit card debt. Is that now mine because we're married?' Well, if you had that conversation before you got married, you could have talked about how that was going to get paid off. It's hard. Nobody's saying it's easy to talk about finances and divorce when you're planning a wedding or just after your marriage-- however or whenever you decide to do it. But those reasons are why I suggest that everyone gets one, because it at least starts really hard conversations and you can look at it from a non-emotional stance.
Steve Altishin 18:58
So you don't necessarily then have to decide, you know, spouse A gets this and spouse B gets that? You could have something that just talks about mediation arbitration, or the process of how you're going to work things out, as opposed to trying to do the actual numbers?
Abby Cettel 19:17
Right. So as an example, I'm recently engaged-- very excited, can't wait to get married. Right? Well we're young people, our assets aren't huge. We make similar livings. We don't have any intent of discussing spousal support or how things will be devised. But as an example, I own real property. We do not live in that house together. We've never lived in that house together. And it has a certain amount of equity that I've earned over the past 10 years, right? Well, I didn't know my fiance when I first bought that property and started earning that equity. So we will likely take a look at what that property is worth, in cash to me today, so that later on down the road if we're fighting over, 'Well, at the time we got married, her house was worth X dollars, or Y dollars', we'll have a piece of paper that says, 'No, this is exactly what it was worth at the time you got married', so that we're no longer fighting over historical values of items.
Steve Altishin 20:30
That makes great sense. I mean, whether it's a ring, or a painting, or a house, I think, since Oregon courts can divide, ultimately, how they want to in a divorce, you're not saying that they can't make a division, but you're at least getting values sent to that doesn't have to be fought over.
Abby Cettel 20:55
Right. When you're in a divorce, the term premarital value starts to get thrown around a lot. And it's a lot better if you have a piece of paper that you both sign that says, 'This is what it is.' We also become nasty people when we get divorced. And you know, you might ask your partner today, 'You understand that that house is mine. Right? And that equity is something that I earned?' And today it's, 'Oh, of course, that's yours, you earned that, that's your money.' I can guarantee you the story will be different in 10 years when you get divorced.
Steve Altishin 21:34
So, disclosure...you talked about disclosure and why that's important. Can it also torpedo a prenup if someone doesn't disclose?
Abby Cettel 21:47
Absolutely. As with any contract, if you are not providing all of the details--especially because these contracts are about your finances, your marital estate, what's in it, how is it going to be devised--if you have an account sitting in another bank that you've never told your spouse about, and they made certain agreements because they thought neither of you had any money, and then come to find out, you've got a million dollars sitting somewhere, the courts gonna say that's not an enforceable agreement, because both parties did not have full knowledge of the circumstances when they made it.
Steve Altishin 22:27
You know, you go to parties, you talk with friends, and sometimes that subject comes up with prenups. And a lot of people kind of poopoo that, and they turn around and say, 'Well, that just means you don't trust each other'. Well, is that true?
Abby Cettel 22:45
In my opinion? Absolutely not. That means that you trust each other enough to have a very honest conversation about finances and expectations in your marriage-- conversations that everyone should be having, but often they're not going on. And in the end, if you start the conversation, and you choose not to sign that Premarital Agreement, or even draft it, at least you're discussing what exists and what your expectations are for the future.
Steve Altishin 23:17
That kind of leads to another sort of thing people think, and a lot of it is because of the celebrity botox thing. And it's that they're just protecting wealthy people, or especially the ones with the most assets. That's all they're good for, it's a poor person protecting the rich person. But that's not really true, is that?
Abby Cettel 23:42
Absolutely not. These agreements exist to protect everyone. When you have this conversation before your marriage, you might both be professionals earning a lot of money every year. Five years down the road, you have a child and one of you becomes a stay at home parent. Well, if your agreement states that no party will ever get spousal support and everybody keeps what's their own, but now you have one party who hasn't worked in five years, it's gonna protect that person in the future as well. Our lives change. We need to think about everything that could happen. And yeah, it could protect a rich person who goes into a marriage and to say this $20 million I had will stay my $20 million no matter what we do, but it will equally protect that other person if it's drafted correctly, and you're not influenced into signing it for any reason. It also gives the other person clear expectations for how they're going to be supported at divorce.
Steve Altishin 24:52
And that leads obviously to that it's a contract, and I'm sure you can get Zoom or other online copy, but it's a contract, and it's got a lot of legal stuff. So seeing a lawyer is pretty important.
Abby Cettel 25:11
Absolutely. A $400 check to an attorney to review your prenuptial agreement or postnuptial agreement could save you 10s of 1000s of dollars later on down the road, should you end up in a divorce situation.
Steve Altishin 25:28
And, again, like I said, not just divorce, it's got to do with if you pass, or any of those situations where, again, you're protecting both parties. We hit this again, but people who don't have assets-- neither of them do. I mean, you know, it's a couple of church mice getting married. There's still a reason that they can consider signing a prenup, isn't that right?
Abby Cettel 26:02
Yeah, absolutely. And again, good prenups talk about what to do in case of death, it talks about children from previous relationships, it could talk about any other big life decisions that you might have to make down the road. There's all kinds of things that it can cover that, again, I'll say you can put anything you want into these agreements, not all of them are super enforceable, not all of them are going to be something that you are going to court for later. But they might just be good discussions that you have about your plans for the future.
Steve Altishin 26:38
And you can modify these can't you?
Abby Cettel 26:40
You can. If it's a prenuptial agreement, and you're doing a modification after you're married, it sort of morphs into a marital agreement. But the courts are going to look at that and say, 'Look, these people saw their circumstances change, they saw that their earlier agreement was no longer fair, and they adapted it.' That's going to make it even more enforceable then just a plain marital agreement.
Steve Altishin 27:06
Yeah. Wow. That's a lot of information. It's all really helpful. And I see we're coming to our end of our 30 minutes. But if there was any thing--you're sitting there in front of a client, and you're talking about whether or not to get one--is there any unique sort of thing you would say to them? You know, if they're considering it, but not sure.
Abby Cettel 27:36
I would say to them, what is your concern? Is your concern that you're not going to get married because your partner won't sign this Premarital Agreement? Well, what's in it that they don't want to sign it? What's in it that they think isn't fair, because that's going to speak highly against this person, and you need to decide for you if their insecurity in an agreement-- if they agree to marry you, but they don't agree to support you equally, that's concerning. These agreements should never be unfair, they should provide for both parties equally. And as a person who bills a lot of money every day on divorces, I wish that everyone would sit down and talk about these things, and write them down and sign them before they get married.
Steve Altishin 28:30
Like you said, it's negotiating between people who are probably more reasonable and open to negotiation then afterwards. Well, wow, this was great. This was really cool, terrific information. Thank you, Abby, this was just very, very helpful to people. And again, I've just gotta add, it's always wise to consultant an attorney. Make sure that you do not just have something but have something that is long lasting and works. So, thanks. Just thanks again for joining us Abby. And everyone else, thank you for joining us as well. Any questions that anyone might have, please feel free to post them on Facebook. You can also shoot me, [email protected], any questions you have. And so until next time, everyone, stay safe. Have a great day. See ya next time.
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