Writing the Property Settlement - Make Sure You Cover Everything

Ah, forgetting to ask all the questions worries me. The problem of the unasked question has a tendency of coming back to haunt - if not to bite. For those of you thinking of doing your own divorce (or legal separation) agreements, I give you this paragraph from WOLSHIRE v. WOLSHIRE, 905 NE 2d 1051 (Ind Court of Appeals 2009) and suggest that you think long on it:

We reach the same conclusion with regard to the trial court's division of Husband's future military retirement benefits. Generally, a spouse's military retirement benefits are a marital asset subject to division. See, e.g., Griffin v. Griffin, 872 N.E.2d 653 (Ind.Ct.App.2007). Here, however, the parties entered an agreement that made no mention of Husband's benefits. When asked about this omission during the final hearing, Wife stated, "It simply did not come up as we were putting together this agreement. It was an oversight." (Tr. p. 20). As noted above, a trial court reviewing a settlement agreement "should concern itself only with fraud, duress, and other imperfections of consent, or with manifest inequities, particularly those deriving from great disparities in bargaining power." Pond, 700 N.E.2d at 1136. A mere oversight does not rise to this level. We instruct the trial court, on remand, to remove the provision concerning Husband's military retirement benefits from the decree of dissolution.

Indiana Legal Separation Becoming a Divorce Case With a Post-Nuptial Agreement

And a good example why to hire a lawyer. Such is Beaman v. Beaman, 844 NE 2d 525 (Ind: Court of Appeals 2006).

First, the case demonstrates - to me - why few legal separation case are filed or go on for very long. Notice how easily the parties slipped from a separation case a dissolution case (and see what I wrote here).

Now about why this case explains why hiring a lawyer is a Good Idea:

At the outset, we address the tangled procedural irregularities in this case. As recited above, Eric filed the petition for dissolution in this case, Ramona filed a cross-petition two weeks later, the trial court summarily entered a dissolution decree just ten days after that without a hearing, and Eric effectively filed a motion to reconsider one week later. We conclude the trial court acted too hastily in entering the dissolution decree. Indiana Code Section 31-15-2-13 permits a trial court to enter a summary dissolution decree without a hearing "[a]t least sixty (60) days after a petition is filed in an action for dissolution of marriage" if both parties have filed a written and signed waiver of final hearing, and filed either a written settlement agreement or a statement that there are no contested issues in the case.[1]

Granted, the parties in this case had filed a purported written "waiver of final hearing" when they jointly petitioned for legal separation. However, there was no dissolution action pending at that time and, therefore, there was no dissolution hearing to be waived. Eric's subsequent petition for dissolution, which was not joined by Ramona, did not contain a written waiver of a final hearing. It does not appear that the pre-dissolution proceeding "waiver of final hearing" should necessarily have been deemed a waiver of a dissolution final hearing, especially where Eric's dissolution petition made no mention of that waiver and did not request summary dissolution.

Procedurally, the parties make a complete mess of the case - which means they increased their stress and probably did not have the outcome that they thought was coming to them.

As part of their legal separation, there was a property settlement agreement. Dealing with the property settlement agreement became the big question.

Turning to the merits, our first guidepost in this case is Pond v. Pond, 700 N.E.2d 1130 (Ind.1998). There, the Indiana Supreme Court discussed the difference between "reconciliation agreements" and "dissolution settlements." Id. 530 at 1132. The former are agreements (referred to as prenuptial, premarital, or antenuptial agreements) entered into in contemplation of marriage or its continuance and that generally must be enforced as written in the event of dissolution. Id. The latter are agreements entered into as a consequence of dissolution proceedings (post-nuptial agreements); they are governed by the Indiana Dissolution of Marriage Act ("the Act"), and their acceptance or rejection is within the trial court's discretion.[2] Id.

The Court of Appeals treated the agreement created as part of the legal separation case as a post-nuptial divorce agreement.

Our review of Pond and the record in this case leads us to the clear conclusion that the agreement between Eric and Ramona that they signed on November 24, 2004, was a post-nuptial, not antenuptial, agreement. Although no dissolution action was pending at the time, the agreement was filed contemporaneously with a request for legal separation. Additionally, although the agreement provides that the parties would not necessarily commence dissolution proceedings, there is nothing in the record to suggest that the parties entered into this agreement for purposes of maintaining their marriage. To the contrary, the agreement itself reflects that the parties had already divided up much of their personal property, including their vehicles, prior to their separation. There is nothing in the record to suggest that the parties actually attempted any reconciliation following the signing of this agreement; instead, Eric, in fact, did file a petition for dissolution just three months later. The facts here are very similar to Pond, and we reach the same conclusion: the parties' agreement is governed by the Act. As such, the trial court had the discretion, under Indiana Code Section 31-15-2-17, to accept or reject the agreement. See Pond, 700 N.E.2d at 1132.

I suggest that any legal separation agreement be written with the probability that it will become a post-nuptial agreement in a divorce.

A Brief History of Prenuptial and Postnuptial Agreements - Indiana and Elsewhere

Thank Google Scholar for this post. While doing some research I ran across Lifting the Veil of Ignorance: Personalizing the Marriage Contract, 73 Ind. L.J. 453 (1998). I suggest anyone having any opinions on our current family law system to give this a careful reading - some history, some statistics that might not be commonly known. Also, the writers avoid the usual dry as dust, insomnia inducing writing of most academics.

In all of that, the writers give a history of marital agreements and why few entered into prenuptial or post-nuptial agreements (on the way to proposing some interestingly unique ideas for reform).

Back in 1996, the Indiana Supreme Court handed down Rider v. Rider, 669 NE 2d 160, that gave this history of prenuptial agreements:

Antenuptial agreements are legal contracts which are entered into prior to marriage which attempt to settle the interest each spouse has in property of the other, both during the marriage and upon its termination. This court has long held antenuptial agreements to be valid contracts, as long as they are entered into freely and without fraud, duress, or misrepresentation, and are not unconscionable. See Mallow v. Eastes, 179 Ind. 267, 100 N.E. 836 (1913); Kennedy v. Kennedy, 150 Ind. 636, 50 N.E. 756 (1898); and McNutt, v. McNutt, 116 Ind. 545, 19 N.E. 115 (1888). These early cases drew a distinction between agreements which took effect upon the death of a spouse as opposed to those which took effect upon dissolution of the marriage. Those antenuptial agreements which involved application upon the death of a spouse were "favored by the law as promoting domestic happiness and adjusting property questions which would otherwise often be the source of fruitful litigation." Buffington v. Buffington, 151 Ind. 200, 51 N.E. 328, 329 (1898). However, the courts took a rather dim view of antenuptial agreements which limited the legal obligation of support upon dissolution of the marriage. Watson v. Watson, 37 Ind.App. 548, 77 N.E. 355 (1906).

Since these turn of the century cases, the number of subsequent marriages in our society has increased substantially. See In re Marriage of Boren, 475 N.E.2d 690, 693 (Ind. 1985). Individuals, especially those who have children from previous marriages, may wish to protect their property interests upon entering into a marriage. Id. at 694. In Boren, we concluded that policy reasons no longer compel us to find antenuptial agreements which take effect upon divorce to be void per se. Further, we held that the same traditional contract tests which apply to antenuptial agreements which take effect upon the death of a spouse also apply to antenuptial agreements pertaining to the dissolution of marriage. Id. Boren was the last time we addressed the issue of the validity of antenuptial agreements.

Since Boren, our Court of Appeals has had several occasions to address this issue. The leading case is Justus v. Justus, 581 N.E.2d 1265 (Ind.Ct.App.1991), trans. denied. In Justus, the Court of Appeals was presented with a situation where the couple entered into an antenuptial agreement freely, without fraud, duress, or misrepresentation. However, during the course of the marriage there was a change in circumstances, and the trial court would not enforce the agreement in its entirety. The Court of Appeals noted that

[a]s a general rule, a contract is unconscionable if there was a gross disparity in bargaining power which led the party with the lesser bargaining power to sign a contract unwillingly or unaware of its terms and the contract is one that no sensible person, not under delusion, duress or distress would accept. The doctrine of unconscionability necessarily looks to the time of execution.

Id. at 1272 (citations omitted).

However, the analysis did not stop there. The Justus court continued with a discussion of cases from other jurisdictions, focusing primarily on Newman v. Newman, 653 P.2d 728 (Colo.1982). In Newman, the Supreme Court of Colorado applied the above general contract analysis for property division, but would not do so for maintenance. For the latter, the Newman court found that such provisions may become voidable as unconscionable due to circumstances existing at the time of dissolution. 653 P.2d at 734-35.

163 In Justus, the Court of Appeals noted that we, in Boren, had cited approvingly to Newman. Further, the Justus court found that where enforcement of an antenuptial agreement would leave a spouse in the position where he would be unable to support himself, the state's interest in not having the spouse become a public charge outweighs the parties' freedom to contract. Justus, 581 N.E.2d at 1273. Therefore, the Justus court agreed that a court may look to circumstances at the time of dissolution to determine unconscionability of an antenuptial agreement.[2]

***

We are asked in this particular case to examine an antenuptial agreement which was not unconscionable when made, but due to a 164 change in circumstances would operate to create a financial hardship for one spouse. We note that in 1995 Indiana joined the growing list of states which have adopted the UPAA. Indiana's version of the UPAA reads in relevant part:

If a provision of a premarital agreement modifies or eliminates spousal maintenance and the modification or elimination causes one (1) party to the agreement extreme hardship under circumstances not reasonably foreseeable at the time of the execution of the agreement, a court, notwithstanding the terms of the agreement, may require the other party to provide spousal maintenance to the extent necessary to avoid extreme hardship.

I.C. § 31-7-2.5-8(b). The Indiana statute did not take effect until July 1, 1995, and is therefore not applicable to this case. Still, the adoption of the UPAA provides useful guidance regarding the question of unconscionability, and supports the trend of applying traditional contract law unless the agreement is unconscionable at time of dissolution.

And there we have a brief history of prenuptial law in Indiana.

What Happens to My Business if I get Divorced?

That is the question posed by Divorce Articles and Advice in the blog post, Does divorce mean my ex can get a hold of half my business?.

I think the English answer is not so different from the Indiana answer:

REALITY: It is very rare indeed for a business to be sold just because of a divorce and the relevance of business is often that it produces the income to provide for any children. If the business can afford a lump sum and your ex-wife needs the financial support, you may have to take out funds for that purpose. Normally though, the main relevance of a business, apart from producing the income, is that its rough value goes into the pot when calculating the overall assets.

Here, the spouse's interest in the business would be generally part of the marital pot, but then things can get complicated. Let me list the complications:

1. Whether the business is solely owned by the spouse or if there are co-owners.
2. Whether the business is a Limited Liability Company and what are the terms of the operating agreement.
3. Whether the business is a corporation and what are the terms of the corporation's by-laws.
4. How to value the business.
5. Was there a prenuptial or post-nuptial agreement?

And these are only the obvious complications.

Suggestion for any business owner facing even the possibility of divorce - get yourself to a lawyer.

For Those Unable to Afford a Divorce

As usual you will find good advice from Dick Price and Divorce and Family Law in Tarrant County, Texas Blog in If You Need to Wait Because You Can't Afford to Divorce... (sorry, if it has taken me a bit of time getting this published):

For people choosing to wait, here are some other options:

1. Get a post-nuptial agreement. Many people are familiar to some extent with pre-nuptial agreements. I have written about them before. A post-nup is like a pre-nup, only later. Texas law allows a married couple to sign a partition agreement to divide their assets and liabilities. It can also provide for how present and future income will be managed. While it is not cheap, a post-nuptial partition agreement is probably much less expensive than a divorce and it will accomplish about the same thing as a divorce as far as property division. An attorney would be needed for each side. I would suggest using Collaborative Law to work out the agreement on the best possible terms for both parties, so you would be best served by contacting Collaborative lawyers.

2. Do financial planning. This is a less dramatic step than doing a partition agreement. The couple could meet with a financial planner to brainstorm ideas to find the best way to manage their finances during the downturn and into the future. A lot of the stress people are experiencing is from uncertainty about survival now and in the future. Getting qualified help to plan a strategy may resolve the concerns and leave the parties in a better frame of mind. A certified divorce financial planner or a regular financial planner can probably help you with this.

3. Take steps to enhance your marriage. Getting counseling is a common suggestion, but it makes sense. If you feel like you can't afford a divorce, but one or both of you is miserable in the relationship, then maybe you should try to make the relationship more bearable. Sometimes a marriage retreat can be helpful. There may be some groups around that you could join. Or, you could go to individual and couples counseling. Things around the house might really improve if you and your spouse follow through with counseling. Even if your marriage doesn't survive, at least the divorce later on might be more civilized. First, contact a marriage and family therapist and give it a try.

Prenuptial Agreements, Post-Nuptial Agreements and Estate Planning

Some good sense and good advice from The Wall Street Journal on using post-nuptial and prenuptial agreements as estate planning tools.

The Right Steps

A lack of frankness can have dire consequences -- ranging from the litigious (children from a first marriage sue for a portion of the estate) to the emotional (the estate sows division among family members) to the practical (the estate doesn't provide for a partner or child as intended). Estate planners say it's essential for heads of blended families to communicate openly and honestly about each spouse's priorities. A trusted financial adviser or other counselor may help facilitate those conversations.

***

Prenuptial agreements often are criticized for fostering mistrust and paranoia between couples. But for parents entering a second or third marriage, a prenup can be an efficient way to specify which assets are considered marital property and which are not -- thus offering a way to protect the rights of each spouse's existing children.

***

Couples who already have blended their families might consider establishing a postnuptial agreement, which can cover much of the same ground. "Some retirement plans require a spouse's consent in order to give the plan's assets to anyone but that spouse," adds Mr. Chasen. "A postnuptial agreement is a great place to provide that consent in a manner that is legally enforceable."

In either situation, each party should hire an attorney to represent his or her interests, and to ensure that the agreement will be enforceable in the case of divorce or death. "All a pre- or postnuptial agreement means in this situation is that you want to make sure your children from a prior marriage are protected," says Mr. Chasen. "It absolutely does not mean you distrust your spouse."

Remember, if you want more information about retaining me for a case, please give me a call at 765-641-7906.

Post-Nuptial Agreements - Something Big Out of Connecticut

Indiana favors using agreements in a divorce which are a bit different from a post-nuptial (also called an antenuptial agreement). We have one case (WordPerfect format) that explains the difference between a post-nuptial agreement and a divorce settlement agreement. Which makes Connecticut Law Tribune's Legal Swordplay In Divorce Court a bit interesting:

"The key to his hoped-for quickie divorce is an unusual 2005 post-nuptial agreement that set the terms for any split between David and Marie Douglas-David, a Swedish countess and former Wall Street stock analyst. The document was not totally pessimistic; it mentioned the possibility of the couple having children. But if things did go sour, the agreement said, Marie would simply take some $43 million in UTC stock and other property instead of duking it out in court.

In New York, David said, he would merely have had to produce the document and that would have been the end to all this. Bang. On the barrelhead. Next case.

But in Connecticut, things have turned out to be not-so-simple. While the public has fixated on the couple’s lavish spending habits, Douglas-David’s demands for a much bigger share of her estranged husband’s fortune, and accusations of extra-marital affairs, the legal community has been drawn in by some of the subtle strategies of the case, which is scheduled to resume in July."

The Pond case has this to say about post-nuptial agreements:

...Although this Court has never directly addressed the question, the Court of Appeals has done so. In Flansburg, the parties attempted reconciliation after the wife filed a petition for dissolution. 581 N.E.2d 430. The parties then signed a post-nuptial agreement, and she dismissed the petition. The marriage continued for three more years, and she again filed a petition for dissolution. Finding the “reconciliation” agreement to be something of a hybrid between an antenuptial agreement and a dissolution settlement agreement, the Court of Appeals noted:

While the property settlement labeled a “Post Nuptial Agreement” was negotiated by the parties well into their marriage, it primarily concerned the distribution of property interests acquired prior to the marriage. Just as marriage is, in and of itself, valued and respected by the law as adequate consideration to support an antenuptial agreement, the extension of a marriage that would have otherwise been dissolved but for the execution of an agreement to reconcile has been deemed adequate consideration.

Id. at 433-34 (citations omitted) (emphasis added). The Court of Appeals upheld the trial court’s findings of fact regarding consideration, including its finding that the dissolution action was dismissed after the signing of the agreement, and concluded that there was “no reason to treat [a] reconciliation agreement any differently than an antenuptial agreement.” Id. at 434.

Back to Connecticut, and what appears to be an interesting argument:

In court papers, Dranginis had urged the judge to protect David’s “substantive right to the benefit of his bargain and, as New York law requires, enforce the Wife’s waiver” of her right to a divorce trial and equitable distribution in a Connecticut court.

***

Still, Beslow, a one time marathon runner with daily training in divorce litigation, exasperated Dranginis with endless objections to her questions, many of which were upheld. But David’s team made its main point: the countess is a fully-competent woman who signed a fair deal, aided by some of New York and Connecticut’s top matrimonial lawyers. The couple have no children together, whose rights might be affected. If any marital agreement deserved enforcement, Dranginis contended, this is the one.

***

Beslow is trying to make a case that the post-nup, under the circumstances it was signed, was inherently coercive and has to be voided. Beslow said David gave his wife the option of signing the agreement or facing a divorce, at a time when Douglas-David wanted the marriage to survive and wanted to have children.

This argument appears not so different from arguments used to set aside a prenuptial agreement: unequal bargaining power.

The Connecticut article does discuss a Connecticut case that bears on this argument:

Lawyers on both sides agree that Connecticut has no case law for guidance about post-nuptial agreements. The case law in New York is thin, Beslow said in an interview. He said he’s only found one case nationwide, a 1999 New Jersey Appellate Division decision, Pacelli v. Pacelli, that’s on point. It’s not legal authority, just a legal concept.

***

In the New Jersey case, Francesca Pacelli, against her lawyer’s advice, signed a post-nuptial agreement in 1986 when her developer husband’s net worth was increasing toward $14 million. The trial court found the agreement valid, and not signed under coercive conditions. The appellate court reversed, explaining that a mid-marriage agreement is distinctly different from a pre-nup or a settlement signed once both parties are resigned to a divorce.

Pond lacks the coercive argument but ends (after a long discussion of the facts about the forming of the agreement) with this:

We find that the parties’ agreement is not a reconciliation agreement and should not be treated as an antenuptial agreement as in Flansburg. To the contrary, the agreement clearly falls within the ambit of section 10 of the Dissolution of Marriage Act. This agreement was formed between the parties to a marriage, and its substance was directed at the amicable settlement of “disputes that have arisen or may arise . . . attendant upon the dissolution of their marriage.” Ind. Code § 31-1-11.5-10. The agreement was signed after the husband had commenced proceedings pursuant to the Act. The trial court did not err in construing the parties’ agreement in accordance with the Act.

Coercion could be a good argument under the right set of facts for an Indiana antenuptual agreement.

I strongly urge anyone contemplating this kind of agreement to get a lawyer. I think the greatest weakness of the Connecticut case (as reported) is that both parties hired what sounds like the best legal counsel possible.

Think About It: What Goes into a Prenuptial or Cohabitation Agreement

Deborah Moskovitch has written a book on divorce and is blogging on divorces with her The Smart Divorce® Weblog.

Her The thinking behind a prenuptial or co-habitation agreement beigns with:

"I am currently researching a book entitled Get It Right This Time and Move On: The Conversation You Need to Have. This is a revolutionary book covering the number of issues facing people going through not only another divorce, but offers ways to assess another significant relationship. It also guides people on their way to a smart relationship the next time, and moving on with the rest of their lives intact. While researching this book, I found that there seems to be a clear consensus on the importance of prenuptial/co-habitation and cohabitation agreements which need to be included in the mix."

I cannot disagree with either the sentiments or opinions of this paragraph (just click the link below to see my archives on cohabitation, post-nuptial or prenuptial agreements and you will see repeat both the sentiments and opinions in this paragraph):

Both type of agreements – prenuptial and cohabitation - are on the rise. Despite this increase, many family law lawyers feel that not enough of their clients are requesting these agreements. On the client side, there needs to be greater education about what these agreements are for. Furthermore, people are afraid to discuss their thoughts behind these agreements with a potential partner as a result of potential conflict and/or undermining their relationship.

Summing up, she makes this point which I think everyone emphasizes as why a prenuptial, post-nuptial or cohabitation is a good idea:

Considerations:

Prenuptial co-habitation agreements are an excellent way to protect assets in the event of separation/divorce. However, the important conversations a couple needs to have when agreeing to craft the agreement could actually go a long way to ensuring they are on the same page and hopefully avoid the all out war, which too often results.

I do suggest checking out The Smart Divorce® Weblog. Although Deborah Moskovitch is not a lawyer. This might get more of you paying attention to this idea of getting an agreement.

Cohabitation Agreements - Define carefully

This applies to more than cohabitiation agreements. The following from Elliot Schlissel's New York Law Blog, Defining “Cohabitation” in Your Separation Agreement applies to prenuptiaon and post-nuptial agreements:

"I understand what the Court of Appeals said better than I understand the two lower courts. When you read the context, i.e. that they had to “cohabit” for substantially 60 days straight, it just doesn’t sound like the agreement is saying she literally has to have intimate relations with some guy (almost) every day for 60 days! Barring some kind of big brother surveillance with bugs and secret cameras inside her house, it seems absurd to me to suggest that this is what the separation agreement required that he prove in order to cut off her support payments!"

***

When I initially read the wording of their separation agreement, the context seemed to indicate that “living together” and “sharing a residence” was the termination trigger, not actual proof of intimate relations.

Bottom line, as Thomas Swartz pointed out, you need a very good attorneyto draft your separation agreement very very carefully and not leave terms, within that agreement, ambiguous.

Alternative to Divorce: A Post-Nuptial Agreement

I read The New Jersey Family Law Blog's If you want to divorce but cannot afford to due to the depressed housing market, then a post-nuptial agreement may be worth considering with some interest. The post suggests post-nuptial agreements as an alternative to divorce. Well, sort of:

"If the economic crisis has put strains on your marriage such that a divorce is likely at some point in the future then consider a post-nuptial agreement while you ride out the current economic crisis. This agreement would allow you to work out the financial terms of any future divorce and at the same time focus the parties on constructive ways of handling money and assets until then.

However, some people will still want to divorce and while money is something that can always be replaced, time cannot. For those that decide to cut their losses and go ahead with a divorce, think carefully about the financial aspects but don't let that deter you if that is what you want to do. Attorneys, financial planners and other professionals are available to offer advice and counsel."

You can find other articles here on post-nuptial agreements by following the link below this post to the post-nuptial agreement archive. Yes, I do this work. I have not had an opportunity to do so outside of a divorce being filed (we call these an uncontested divorce - and I also have articles on the subject on this blog). I may need to rethink what I wrote here about legal separation.

The article has me thinking if we will not see more legal separations if the economy continues its unraveling. I may need to rethink what I wrote in Indiana Alternatives to Divorce: Legal Separation.

Cohabitation Ambiguous?

Never underestimate the ability to make an argument that is imaginative. Success turns the imaginative into brilliance while failure may leave the advocate looking ... well... flaky. Which is what I thought of the Graev case and its description at Adams Drafting blog.

Who knows what ambiguity lurks in the heart of contracts? Well, reader Steven Sholk has an inkling, because he’s the one who told me about Graev v. Graev, 2008 N.Y. LEXIS 3252 (N.Y. Oct. 21, 2008), a case that involves the meaning of the word cohabitation.

As part of their divorce settlement agreement, Mr. Graev agreed to pay Mrs. Graev spousal support payments until the earlier of August 10, 2009, and occurrence of one of various “termination events,” including “[t]he cohabitation of the Wife with an unrelated adult for a period of sixty (60) substantially consecutive days.” The contract didn’t define cohabitation.

***

Mr. Graev appealed again, and the Court of Appeals (the highest New York appellate court) reversed and remitted the case to the lower court for further proceedings. The Court of Appeals held that the word cohabitation as used in the separation agreement doesn’t have a plain meaning, and that without extrinsic evidence as to the parties’ intent a court would have no way to assess what particular factors inherent in the dictionary meanings or caselaw discussions of cohabitation the parties had meant to embrace or emphasize.

Which is what makes the practice of law fun.

Checklist for How Divorce Might Affect Your Business

From Startups comes a pretty good article on divorce and business, How does divorce affect your business?:

"A cynic might say “stay single”. However, only a real miser would prefer such a cold and unromantic view. If you are not married but have built up a valuable business, you could consider a Pre-Nuptial Agreement to protect your wealth should the marriage not last.

Whilst not enshrined as binding in law, courts are certainly highly likely to take them into account in distributing assets in a divorce providing each party was properly advised, gave full disclosure, did not apply pressure and understood the nature of the agreement.

Whether your fiancée will appreciate a pre-nuptial agreement will have to be left to your judgment. Although given the cost and heartache that hostile divorces involve, a well thought out agreement that both people see as fair should avoid subsequent heartache should your marriage end."

***

To consider checklist:

• Can the business be operated without the involvement of both parties?
  
• If only one party is involved, can the other be confident that the business will be run in an open and honest manner?
  
• Can a “clean break” be funded either immediately or on a safe and secure deferred basis?
  
• How will the staff react to the divorce?
  
• Has an independent and commercially realistic view of how to resolve the business issues been obtained?

Divorce greatly impacts a business (and I wrote about in this post here). Be ready for it - whether you are part of the business or married to the one who is part of the business.

Prenuptial Agreements or Post-Nuptial Agreement?

Reading the following in Prenuptial Agreements from the Mississippi Family Law Blog raised this question for me:

"The line between marital and non-marital property can get blurred though if it increases in value during the marriage. Should that increased value be considered marital property? The original owner sometimes risks losing his or her pre-marital property in the divorce. The line is further blurred when you mix pre-marital property with marital property during a marriage or use pre-marital property, such as a home, for your new family’s use. A prenuptial agreement can fix this situation."

Of course, the difference lies in when you ask the question. Before marriage means a prenuptial agreement and a marriage requires a post-nuptial agreement. That is too easy. The sharp point comes in when where new assets arrive or an old asset increases in value.

Consider this: you get married and your business takes off in a big way or Uncle Joe leaves you a big pile of cash. That is when a post-nuptial agreement has a use.

Love and Money

The BaltAmour blog from The Baltimore Sun makes good points in Of love and money - Tales of love, like, and everything in between:

The stories of other women in Anderson's piece (which was linked to via U.S. News) not only illustrate the strain that finances can put on a break-up decision, but also show a bit about the inner workings of some women's minds. She talks about at least two women who are staying with their current boyfriend because, even though the spark isn't there, those men still provide stability:

“I really couldn’t afford to live alone even if I wanted to,” she says. In the end, staying with Jordan was the obvious choice. “We have the best time together,” she says. “He’s artistic, smart, funny. And he’s also stable. He has seen me at my worst, when I’m moody and crying. I just don’t know if Michael would be able to handle that.”

"Anderson and others' stories also serve up a financial moral: Always be prepared. Whether it's a prenuptial agreement or a separate account for your own emergencies. Sure, it can be an emotional mine field, but if you can negotiate money and love, you're already a step ahead."

All good reasons to be thinking of whether the final result is a a cohabitation agreement, a prenuptial agreement or a post-nuptial agreement.

How to protect assets from a spouse in a divorce?

You need a prenuptial agreement or a post-nuptial agreement. Indiana law makes these agreements the only way to protect a spouse's assets from the other spouse. Anything else results in a more expensive divorce - the additional cost coming from having to track down the hidden assets.

If you are an Indiana resident wanting a prenuptial or post-nuptial agreement, please give me a call.

How to avoid liability for a spouse's debts?

Is there a way other than divorce to be free of spouse's future debts? That questions assumes that marriage by itself creates liability for a spouse's debts. That has not been the case in Indiana (except for a narrow exception for necessities) for many, many decades.

The second best way to avoid liability for a spouse's debts is to not cosign any loans or credit
cards.

The best way requires a prenuptial agreement (if not yet married) or a post-nuptial agreement (if already married).

If you are an Indiana resident wanting a prenuptial or post-nuptial agreement, please give me a call.

Islamic Marriages, Dowry and Texas Law

A bit off the beaten path, this post comes from the Houston Courts & Cases Blog's Texas Family Code & Islamic Marriage. I am not so sure that Indiana would not reach the same result but I am very much inclined to agree with what I read below of the dissent. If not a pre-nuptial agreement then why not a post-nuptial agreement?

"...In this case of an arranged marriage gone awry, the court of appeals reverses judgment on an agreement for the husband to pay the wife $50,000, made pursuant to Islamic custom, holding that the parties were already married when the deal was made, which means that it could not be enforced as a premarital agreement, the legal theory upon which the trial court had relied in making the award. The judgment, including the property division, is reversed and remanded to the trial. One panel member, former Harris County divorce court judge Eva Guzman, wrote separately, criticising the majority for going out of its way to suggest that the trial court consider another - valid - theory to uphold the award of the money in dispute to the wife."

By the way, the blog excerpts the court's opinion at length for those wanting more detail.

For those wanting a bit more about Islam and women, I did find Women in Islam.

Another Postnuptial Agreement Article

This time from CNN.com. I think the article fits in with other articles I have posted about here and here.

A postnuptial or mediated agreement can help save a couple's relationship -- if that's their goal.

"In cases where couples want to stay married, it can apply very efficiently," says Cambridge, Massachusetts, attorney John A. Fiske. "If they don't want to stay married, it's hopeless."

The Boston couple, who had been married 30 years, fell in the former camp. Fiske helped them put into writing a mutually acceptable financial plan. They agreed to transfer their house into the wife's name, both to address her fear of losing the asset and to insulate it from the husband's business debts, and to split the mortgage and other household expenses.

That was 18 months ago, and they credit the post-nuptial agreement with helping them become a mutually supportive couple again.

I have yet to see a post-nuptial agreement where the parties were not in the midst of a divorce or were contemplating a divorce but I can see its benefits. Like prenuptial agreements, I doubt that the general public will use the opportunity presented by a post-nuptial agreement.

Thinking of a Business with Your Significant Other?

Then take a look at 'Co-preneurs' brave work-life challenges from The Boston Globe.

I have to say this so true:

"Staying married is hard enough these days. Could you stay in business with your spouse, too? In a new twist on the traditional mom and pop shop, millions of couples are running businesses together, from bakeries to software consulting, and clothing lines. 'Co-preneurs' prize the intense togetherness that others might find suffocating, and the idea of finding a business partner they can fully trust."

While the article concentrates more on the relationship and business aspects, I still think anyone thinking along these lines needs to first consider one of the following legal documents: pre-nuptial agreement, post-nuptial agreement or a cohabitation agreement. Which one depends on the particular relationship.

After choosing that agreement, you need to consider what type of business entity you and your significant other will want for the business.

Remember, that this office can help you create all the documents you need if you are in Indiana and thinking of starting a business with your significant other.

Post-Nuptial Agreements

The New Jersey Family Law blog picks up on the New York Times' article I wrote on here. Post-Nuptial Agreements in New Jersey. Interestingly, New Jersey has the same standards for a post-nuptial agreement as Indiana:

1) There needs to be full disclosure by the parties.
2) Each party must have independent representation by his/her own lawyer.
3) There needs to exist the absence of coercion or duress.
4) The terms must be fair and equitable.

I do not think I can add anything to the explanations given of these requirements, so I won't. Go and read the New Jersey post.

The New York Divorce Report comments on the New Jersey article in Post Nuptial Agreements Popularity Continues, and I think adds something important to this conversation:

While all agreements are subject to attack and there is no certainty that any agreement will be upheld, New York courts encourage parties in a matrimonial setting, to put their affairs in order by written agreement. The terms of a valid martial agreement will be enforced and there is a heavy burden on the party attacking the agreement to show why it should be set aside.

Substitute "Indiana" for "New York" and that paragraph applies here.

One other item came to my attention this past week. CNNMoney.com published

The checklist: What to do before you launch. This article deals with the starting of a business after marriage. Something I have written about in Got a business and no prenuptial agreement? and Who else cares about your marriage?.

- Draw up a post-nuptial agreement. It may sound as unpleasant as a prenup, but this pre-business contract protects the spouses not only in case of divorce but also from lawsuits and other unforeseen circumstances (debilitating injury, death) that could wipe out family assets. By dividing their personal wealth, couples will also ensure a smooth transfer of ownership should it be necessary.