Building A Strong Prenuptial Agreement In Kentucky: Your Legal Checklist

In this article, you will discover:

• Financial disclosures required for a prenuptial agreement in Kentucky
• How a Kentucky prenuptial agreement can protect your property rights in a divorce
• Whether retirement accounts and inheritances are protected in a Kentucky prenuptial agreement

What Financial Disclosures Are Required When Creating A Prenuptial Agreement In Kentucky?

The standard in Kentucky for prenuptial agreements is full disclosure. A prenuptial agreement must be knowing and voluntary, meaning both parties must understand what they’re agreeing to and voluntarily agree to it.

You need to be clear: If you have property that under Kentucky Law is not considered marital property, or you think is not considered marital property, that needs to be identified. Anything that is or could be considered marital assets also needs to be identified.

In essence, if someone has financial assets or property claims, the best practice is to disclose all of them. This practice will prevent any claims that the other party didn’t know about them or that, if they had been aware, they would not have signed the agreement.

Which Specific Debts Should Be Listed In A Kentucky Prenuptial Agreement?

Debts are a little bit different. Best practice is to put everything out there. Be clear on what the expected conduct, rights, and obligations are. If there are debts, there’s no reason not to address who will be responsible.

For example, suppose the parties expect that upon the dissolution, some portions of the assets will be used to cover some portion of the liabilities. In that case, this should be included in the agreement.

How Can A Kentucky Prenuptial Agreement Protect Your Property Rights During Divorce?

A prenuptial agreement protects you going into, during, and coming out of the marriage. The best time to make that agreement is when the parties are aligned and working together.

If you wait until a divorce to decide who gets what, there can be a lot of animosity. This person, whom you viewed as an aligned partner a few years prior, is now at odds with you. For that reason, a prenuptial agreement can help you avoid expensive litigation by:

Protecting What Was Yours Before The Marriage

A prenuptial agreement protects everything you’ve acquired prior to the marriage. That’s crucial, especially if it’s your first marriage, a marriage later in life, you’ve been married before or you received an inheritance. If you built a business before you married, you’ll want to agree whether the growth or income of the business is marital property or non-marital property.

Clarifying Expectations And Obligations During the Marriage

A prenuptial agreement also makes clear what the expectations are during the marriage. An appropriately crafted agreement will protect both parties.

For example, the agreement can protect you if you are giving up your independent rights to focus on the marriage. It accomplishes this by ensuring there’s an equalization mechanism for you.

Suppose you’re a younger couple and there’s an expectation you’ll have kids. If you agree to be a stay-at-home parent, you will be out of the workforce for several years. That choice can affect your earning capability and retirement. You’ll want to address how you’ll make that equitable.

Clarifying Expectations And Obligations After the Marriage

While a prenuptial agreement sets expectations and obligations before and during the marriage, it can also set expectations and limit obligations and liability for leaving the marriage.

For example, in Kentucky, a spouse who cannot support themselves, or cannot maintain the same standard of living to which they had grown accustomed, can make a claim for spousal support.

Kentucky doesn’t acknowledge an absolute right to receive spousal support, but you can make a claim. In the event spousal support is granted by the court, you can decide in the agreement what that will look like and what the duration will be.

Attorney Tim Hendrix is a skilled lawyer based in Bowling Green, KY, who has helped clients like you navigate the intricacies of family law. With years of experience, he is prepared to assist you with every aspect of creating a clear and precise prenuptial or postnuptial agreement so that your rights, property and interests are protected in divorce.

Still have questions? Ready to get started? Contact Tim Hendrix, Attorney at Law, PLLC, today to schedule an initial consultation.

Are Retirement Accounts And Family Inheritances Safeguarded In Kentucky Prenuptial Agreements?

Safeguarding Inheritance

Inheritance is generally not considered marital property. Suppose your parents passed and left an inheritance to you individually. As long as you hold that inheritance separate, that is not considered marital property.

You do not necessarily need a prenuptial agreement to protect an inheritance held separately. Kentucky Law will assume that that is non-marital.

If your parents left the inheritance to you and your spouse jointly, that might belong to both of you, but through a mechanism other than marital property.

Commingling An Inheritance With Marital Property

Suppose, however, you commingle your inheritance with marital property. That can happen with married couples. For example, maybe you bought a house for several hundred thousand dollars, and the expectation is that it will take 30 years to pay off the mortgage.

You may choose to take your $100,000 inheritance and apply it to the mortgage. That money doesn’t necessarily become marital property just because you’ve done that, but now you’ve commingled it. Depending on whether you sell the house and when, it can be difficult for a judge to decide what portion of the house’s value is marital and what is non-marital from that inheritance.

Updating Your Prenuptial Agreement

Even if you have a prenuptial agreement, you don’t know what you’re going to get, when you’re going to get it, or what you’re going to do with it. Those decisions could be many years down the road from when you entered the prenuptial agreement.

For that reason, you should update your agreement now to reflect any new developments and the anticipated outcome. In that way, it will be safer to commingle marital and non-marital assets.

Postnuptial Agreements

Even if you don’t make a prenuptial agreement, married parties can make a postnuptial agreement. It’s never too late if you both know what you want to do.

In the mortgage scenario above, even if there’s no premarital agreement, the best course would be to form a postnuptial agreement to specify the expected result of using the inheritance, non-marital funds, to pay off what was otherwise a marital asset (the home, making it now a hybrid asset.

Safeguarding Retirement Accounts

Regarding retirement accounts, to the degree you accrue retirement income prior to marriage, those accounts don’t convert to marital property just by virtue of you marrying.

However, they might become a hybrid asset. A hybrid asset is one where some portion has been funded or obtained through non-marital funds or non-marital property, and some portion has been funded or obtained through marital contributions.

Prenuptial agreements are well-suited to setting expectations and protections on hybrid assets. Suppose you worked a job five years prior to your marriage, during which time you were funding your retirement account. If you continue to work and fund your account over the next five years during your marriage, some portion of that account will be a marital asset, and some portion will be non-marital.

If you and your spouse are angry and not cooperating, a judge will have to decide how to divide that account. A prenuptial agreement can avoid that situation by setting the expectation. It can be as simple as assessing the account’s value at the time of marriage and devising a formula to ensure that it’s always protected.

Can You Include Future Spousal Support Terms In A Kentucky Prenuptial Agreement?

You can set up whatever post-divorce or post-dissolution terms you feel are necessary. You can specify the amount, duration, and precedent clauses. For example, if you and your spouse are both pursuing careers, decide to have children, and one of you must step out of the workforce for some years to raise these children, you can agree on an equalization payment.

In this scenario, you can specify the duration of the payment and perhaps a step-down where you specify an amount for two years, step down to 75% for the next two years, and then to 50% for the next two years.

Kentucky law encourages parties to cooperate. Whatever you’ve clearly agreed to, Kentucky courts will assume that the parties know best and honor that agreement.

Attorney Tim Hendrix is a skilled lawyer based in Bowling Green, KY, who has helped clients like you navigate the intricacies of family law. With years of experience, he is prepared to assist you with every aspect of creating a clear and precise prenuptial or postnuptial agreement so that your rights, property and interests are protected in divorce.

Still have questions? Ready to get started? Contact Tim Hendrix, Attorney at Law, PLLC, today to schedule an initial consultation.

Why Should You Hire A Kentucky Family Law Attorney To Draft Your Prenuptial Agreement?

The best practice is for each party to have an attorney for a number of reasons:

1. Ensuring The Agreement Is Binding

For an agreement or contract to be binding, it must be entered into knowingly and voluntarily. Unfortunately, legal documents can be difficult to understand. They can contain terms you may not understand, or the terms may have a specific meaning in a legal context that you wouldn’t expect.

If you don’t understand what you’re entering into, the court might not recognize the agreement. A skilled family law attorney can ensure you fully understand what you’re agreeing to.

Both parties having an attorney is also relevant to the voluntary requirement of contracts. Your attorney will know how to protect you from signing any agreement that doesn’t serve your interests.

The final consideration to alleviate issues is the time between when you are presented with the agreement and when the marriage occurs. While it’s not enough in Kentucky to thwart a prenuptial agreement, issues arise when a prenuptial agreement is presented days before the marriage or when the other party feels they didn’t have time to review it and hire an attorney.

A prenup is supposed to be an agreement between the parties, something they both believe in. As such, there’s no reason to wait till the last minute to spring it on your partner.

2. Ensuring The Agreement Is Clear And Precise

If you’re entering a prenuptial agreement, you want to ensure you’re protected. If no one can understand the agreement, it may not be worth anything. While you may have a specific idea of what needs to happen and how that’s supposed to look, you need an attorney who knows how to make your rights and interests clear in the agreement.

Suppose after entering into the agreement, you and your spouse disagree about its meaning or obligations. In that case, you will have to look to a third party, a judge, mediator or arbitrator, to interpret what was intended. The more clear and legally precise you can make the language, the clearer it will be to the legal professional who might have to interpret it to decide any disputes.

Often, people want something specific in the agreement, but they don’t understand that it may necessitate secondary obligations. While that’s not necessarily a problem, you need to be clear about these secondary issues. A family law attorney will ensure all contingencies have been thought out and provided for. That also includes proper recourse if your primary goal isn’t feasible.

Even if you have a well-written prenuptial agreement, it can still be challenged. An attorney possesses the requisite experience because they’ve seen enough divorces and the issues that arise. They are best able to ensure your goals have been achieved and protected, and that you know what to expect.

3. Making Agreements After Marriage

Just because you’re well into a marriage and didn’t enter into a prenuptial agreement doesn’t mean you can’t still decide to enter into some form of agreement. Suppose there’s a breakdown in a marriage where the parties go so far as to file for divorce, but halfway through the divorce, they decide to reconcile.

Sometimes, to protect themselves going forward, they’ll want a postnuptial agreement. Even after you’ve married, you can still enter into an agreement if both parties think it’s beneficial.

Still Have Questions? Ready To Get Started?

For more information on prenuptial agreements in Kentucky, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (270) 679-0777 today.