Reasons Your Prenuptial Agreement May Need an Update

 Posted on February 03, 2018 in Prenuptial Agreements

Creating a prenuptial agreement is helpful in settling financial issues that will come up during a divorce. The agreement lays out a plan for how premarital properties will be treated and what level of spousal maintenance will be provided. However, spouses should consider it a living document that may need to be updated. Financial circumstances in the marriage can change in ways that make the agreement obsolete or unfair to one party. It will be easier for both parties to renegotiate the prenuptial agreement while still married than during the divorce.

Spousal Maintenance

Parties in a prenuptial agreement may choose to establish the value and duration of spousal support payments after divorce, especially when one party has a significantly greater income than the other. However, the balance of financial power can change in a marriage:

• The paying party may lose his or her job or see a decrease in income; or
• The recipient party may find a new, well-paying job or inherit a great sum of money from a relative.

If the recipient party has become more financially independent, it may be inappropriate and unnecessary for him or her to receive the same spousal maintenance as in the agreement.

Losing the Alimony Deduction

A recent change in federal tax law has created a new reason to revisit spousal maintenance plans in prenuptial agreements. For all divorce agreements created after 2018, the paying party will no longer be allowed to deduct his or her spousal support payments from his or her federal taxes. The recipient party will also no longer pay taxes on the payments. Parties may want to change their spousal maintenance agreement if the payer was expecting that tax deduction.

Dividing Marital Property

A prenuptial agreement can define non-marital properties that will not need to be divided during a divorce. Most properties obtained after a marriage are considered marital properties that must be equitably divided between the spouses. Some marital properties have greater importance and value to one spouse than the other, such as business interests. Rather than worrying about fighting over those properties during a divorce, the spouses can clearly state in the agreement that ownership of the property will go to one spouse, with the other receiving compensation.

Reviewing a Prenuptial Agreement

Even without a change in financial circumstances, it is important to re-examine your prenuptial agreement to make sure it still complies with Illinois’ divorce laws. A DuPage County family law attorney at Calabrese Associates, PC, can review your prenuptial agreement and help you make revisions. To schedule a consultation, call 630-393-3111.

Source:

http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&ChapterID=59