While a marriage contract is not required to fairly distribute assets or liabilities, Wisconsin law states that it must be fair to both parties at the time of signing and at the time of divorce. If one of the parties occurs something unpredictable before the final divorce and the division of property after the marriage agreement is no longer fair, it cannot be respected. [i] www.family.findlaw.com, “pre-marriage agreements” When drafting an agreement, it is important to recognize that there are two types of state laws that govern divorce – a fair distribution practiced by 41 states and common ownership practiced in some variants of 9 states. An agreement written in a state of Community property cannot be intended to govern what happens in a fair distribution state and vice versa. It may be necessary to retain lawyers in both states to cover the eventual case where the parties may be living in a state other than the one in which they were married. Often, people have more than one house in different states or they move a lot because of their work, so it is important to take this into account when developing. A marriage agreement can also limit liability and protect one partner from potential creditors of the other partner. [ix] While no one wants to consider divorce even before they get married, marital agreements (or pre-marital agreements) must set certain conditions in the event that the marriage ends. For example, a person with an established family business may attempt to protect those assets from the other party in the event of a divorce.
However, there are some restrictions on what can be included in a conjugal agreement. Since marital agreements deal with money and finance, it is important for each party to have an open and honest conversation about debts and assets before entering into a marital agreement. Parties should address issues such as current ownership and debt, current and predictable expenses, financial institution accounts, retirement plans, invoices, financial objectives, business ownership and credit ratings. [vii] Without a prenup, creditors can exercise their marital property while only one spouse is the debtor. To avoid this, limit your debt liability in a marital agreement.