Premarital Agreements | Divorce at Altitude Podcast – Ep. 2
A prenuptial agreement is a legal document many couples decide to sign before entering marriage. A typical prenup lays out what each party is bringing to the marriage and how assets, properties, and other financial claims will be distributed should the marriage fail.
In Episode 2 of Divorce at Altitude, Ryan Kalamaya and Amy Goscha discuss the history of prenuptial agreements and how dowries have evolved into modern prenups, and current trends of reasons why couples are getting them today. They talk about what the role of counsel is for each party and how important negotiation is to make sure the prenup cannot be disputed upon the dissolution of the marriage and reference how Eric Wolff’s divorce story could be different if they would have had a prenuptial agreement.
What’s in This Episode:
- Key requirements to Colorado premarital agreements
- Different reasons to obtain a prenup
- Role of counsel in representing each party
- Death coverage and spousal protection
- Checklist regarding financial disclosures and assets including trusts
- Importance of negotiation in prenuptial agreements
Make sure to follow us to continue the conversation on Facebook, LinkedIn, and Twitter.
Premarital Agreements | Divorce at Altitude Podcast – Ep. 2
Ryan Kalamaya
Welcome to the Divorce at Altitude podcast. I’m Ryan Kalamaya. And I’m joined by Amy. Amy, how you doing?
Amy Goscha
Good. How are you? So today’s the day after Valentine’s Day? What do we have on the plate for today?
Ryan Kalamaya
Well, we’ve got really romantic topic day after Valentine’s Day we’re talking about prenups. Are you excited?
Amy Goscha
Yeah. It’s really really a romantic topic for sure.
Ryan Kalamaya
Well, I think not only is it a romantic topic, and people can certainly disagree about that. I don’t think that there’s any disagreement that the history and the you know, the litigation and we’ve got a separate episode about attacking and defending premarital agreements because they do lend themselves to some juicy kind of gossip. You see celebrity you know from the Dixie Chicks to Barry Bonds, the baseball player to Dr. Dre, you know, these prenups or Trump you hear about these ironclad prenups and they are still challenged. They’re fascinating.
So the history of premarital agreements is interesting. The first documented Premarital Agreement comes from ancient Egypt approximately 3000 years ago. The custom of dowry in Europe is also a form of prenup and dates back to at least the ninth century. The prenups or premarital agreements that we’re talking about, genuinely derived from Europe, and specifically England, and they were targeted for second and third marriages, because partners wanted to protect the financial interests of their children specifically from their first you know, marriage and there was a desire to spell out who got the castle if the Lord pre deceased, the second or third wife. And that’s still generally a motivating factor for premarital agreements today, except, you know, maybe not the castle and the Lord part.
But when you look at the 20th century, and in the United States, there was a desire by wealthy families in the early 20th century to protect a daughter marrying a less affluent man. This was the predominant practice in the 1950s when Divorce Laws began to change across the US. And up until around 1970 premarital agreements that addressed issues relating to divorce were generally void against public policy, especially here in Colorado and the idea was that they encouraged divorce. So but before we get into that, and we could go on and on Amy, and we’ll talk about premarital agreements in depth, but can you tell us what exactly is a Premarital Agreement? And as we are recording here today, what are the requirements?
Amy Goscha
Sure. So in general, what a prenup is, is you enter it’s a contract that parties enter into prior to marriage where they set forth what the expectations are going to be during their marriage, as far as running their finances, you know how to pay for things upon divorce, or legal separation, how they’re going to divide property, as well as if there’s going to be any support to either, you know, soon to the ex spouse. And then also they can contract around death provisions, whether or not they’re going to provide for each other, you know, in a will and a trust, if they’re going to, you know, just have the laws as they’re set forth in the state of Colorado apply. So those are kind of in general the three areas that this agreement will cover.
As far as the key components to the Colorado Premarital Agreement, it a has to be in writing and signed by both parties. Second, it also has to be voluntary, meaning that one party can’t force the other party to contract to this and you have to sign it, you know, free and voluntary of your own will. The other key component is that each party needs to provide full and fair financial disclosures. And this is usually a schedule that’s attached or it is always a schedule should be a schedule attached to the prenup that discloses what each party is bringing into the marriage regarding assets and debts, and you cannot limit or waive child support. So issues related to children such as parenting time decision making, and child support for those children, you cannot contract around and as well as the agreement may not violate public policy. So those are the main components in Colorado to have a valid prenup agreement.
Ryan Kalamaya
So you can’t say in 10 years that one party is going to get you know, $10,000 in child support a month or that they’re going to release their right to child support or layout that you’re going to have an equal parenting time schedule or for the kids. Right?
Amy Goscha
Yes, that is correct. And I think that also, what would be interesting to talk about is you discussed, Ryan the history of prenups. Let’s talk a little bit about the, you know, the trends that we’re seeing now, and why prenups are becoming more widely accepted, you know, and actually a great thing to do before entering a marriage.
So I don’t know, you know, I’ll let you comment on this. But some of the trends that I’m seeing in my cases over the last few years are young couples are getting them, you know, it’s something that they’re they want, it’s something that a lot of times their parents are asking them to get if they come from, you know, a family that has significant wealth. I also think that people that I counsel, you know, they’re more aware of the divorce rate, and they are just more, I guess, practical about, you know, this marriage, you know, their hope is that the marriage will last for years, but it might not. And so they want a an agreement that provides for longevity throughout their marriage, and if it doesn’t work out, lays out a map for setting forth, you know, what they can expect upon divorce or death. Do you have any comments, right, or what are you seeing as far as trends related to freedom?
Ryan Kalamaya
Yeah, I think that that’s right, you know, looking at, you know, various articles. And, you know, my understanding or my observation is that generally younger people, they’ve seen their parents go through a divorce. I mean, you, Amy, you saw your parents go through divorce, right? Absolutely. Yes. And so I think people are a little bit more realistic, you know, there’s always this tension between, well, you’re not marrying me for my money versus “Well, why are we signing an agreement? If you know, we’re going into this, this wedding planning, and you’re not planning on getting a divorce?” And so there’s always this tension between love and money. And I think a lot of people are a little bit more comfortable younger people or people, you know, for second or third marriages? You know, that certainly is a trend.
One thing I think is I’ve certainly thought about is that, I mean, we’re recording this during COVID. During a pandemic, a lot of weddings were canceled in in 2020, because of the, you know, safety precautions and the societal restrictions. And so they’re getting kind of bumped up into 2021 2022. They’ve seen all these statistics, all these articles about the divorce rate spiking. So you know, as much as we kind of talked about, well, there’s going to be a rush to have divorces. What do you think of the kind of idea that we’re gonna see a rush of people wanting premarital agreements, because there’s going to be a cluster of weddings coming up in the summer for 2021, as things hopefully ease up from the pandemic?
Amy Goscha
Yes, absolutely. And I think also, you know, one of the things we’ll talk about is, I’ll call it the signing ceremony. It’s important that you know, that’s done a lot of times in person, you don’t have to do it in person. But we’ll talk about best practices. I think people as the COVID restrictions ease up I think they’re more willing to do that and person, you know, they’re ready to get married, and they are going to need to plan by completing their prenups. I know that a lot of clients that wanted to enter prenups put them on hold, so they’re going to be ready to start moving forward with those coming up here.
Ryan Kalamaya
And when as much as we talk about young couples, I think that there’s a general trend for people having kids later in life, and they’re also getting married later in life. So they’re coming to the marriage with more money. I mean, reportedly, Kardashian and Kanye West, their wedding was delayed because they were negotiating their Premarital Agreement. I mean, both of those people had significant assets coming into their marriage. And you know, now that it’s on the rocks, it looks like that was probably time spent or time well spent. But would you agree that more people are coming to the marriage with things that they want to protect?
Amy Goscha
Yes, absolutely. And I think also you look at people who are getting, you know, second, third marriages later in life, their kids are grown, they have significant assets, you know, they’ve lived 40, 50, 60 years of their lives, and they want to protect those assets, and they want to transfer their wealth to their children. And so you’re seeing that as well. On a personal note, you know, my mom got remarried five years ago, and I advised her to get a prenup. And it was mainly because both her and her husband have children and they want their wealth to go to their children. So we’re also seeing you know, that trend as well as people getting married later in life and having more coming into marriage.
Ryan Kalamaya
Well, on our previous episode, we told the story about Eric Wolf’s pending divorce and how he was uncertain about what was going to happen to his business. And if any of our listeners missed that story, they can go back to episode one or kalamaya.law/eric-wolff-divorce to read the full version, but as a reminder, he asked himself, how will we split our property? What about my business? Can I protect it? As we discussed earlier, Amy, Eric didn’t think he’d be going through a divorce when he got married. Melanie, I never thought this would happen to me. But Amy, let’s say that we could go back in time and Eric called you about drafting a Premarital Agreement for him. You can’t address what happens with the kids or child support. We cover that previously. What were the considerations for you representing Eric, in a Premarital Agreement before his marriage to Melanie?
Amy Goscha
Absolutely. So my number one goal is to protect my clients’ assets and income. And how I do that is I need to make sure that I’ve provided full and fair disclosure to the other party as well as to their attorney, you know, if I’m representing the person who has more wealth, their financial picture might be a little more complicated. So I need to make sure that I’m providing the information regarding trusts regarding businesses, you know, we’ll get further into the disclosure piece. Another thing is, is I need to make sure that the agreement is a well negotiated agreement that is somewhat equitable for the lower earning, you know, soon to be spouse, you know, I don’t want the lower earning spouse to come in and try to attack this agreement down the road, as well as I want to make sure that both parties are, you know, represented by competent counsel. So you know, those are kind of the three main areas that I focus on when representing a well wealthier client.
Ryan Kalamaya
Now you in your kind of requirements for a valid Premarital Agreement in Colorado, you didn’t mention counsel, we’ll get into that a little bit more. But can you just give us a you know, the audience a little bit of a preview into the role of counsel for both parties in a Premarital Agreement negotiation?
Amy Goscha
Absolutely. So I think that were having counsel is super important is that when you’re looking at full and fair disclosure, you have an attorney who can explain what that means, what the agreement means, what, you know, financial information should be exchanged back and forth. Also, it’s very important when looking at the agreement for negotiation purposes, it should be a negotiated agreement, you know, not just one draft should be done, there should be a negotiation on both sides, which, you know, an attorney can help with, you know, as well as the sophistication of certain clients. You know, some clients are very highly sophisticated and understand, you know, financial distribution of, you know, what could happen upon divorce, but you really need someone who can counsel the client on what happens in divorce, if you had this agreement, and what happens in divorce, if you don’t have this agreement, what happens and death if you have this agreement, what happens in death when you don’t have that agreement. So that’s really where the role of the attorney comes in.
Ryan Kalamaya
And when you are talking with a client that has more money than the other than the other person? What about walking away from the agreement? How, how does that play into your advice for clients?
Amy Goscha
Um, I mean, as far as walking away from the agreement, I think that my client, I need to make sure that they have points that they can negotiate, and it’s not something that they’re willing to negotiate, then, you know, they possibly might need to walk away from the marriage. I know, that sounds kind of harsh, but, you know, it’s the reality is that, if they want their soon to be spouse to, you know, enter an agreement they have to be willing to provide something that is somewhat equitable upon divorce, and upon death.
Ryan Kalamaya
Let’s switch gears, Amy and focus on Melanie. So if we could go back in time and assume that Melanie doesn’t have as much money as Eric when they get married? What are the practical considerations for a Colorado attorney that represents Melanie in negotiating Premarital Agreement with Eric?
Amy Goscha
Sure, so when I’m representing the party with lost wealth, I’m really looking to negotiate a somewhat equitable agreement to make sure that they’re protected in various circumstances, you know, a lot of people that come to me and that I’m representing her and the, you know, I’m getting married, I’m super happy not thinking about, well, what is their life going to be like, if they’re giving up their job to be a stay at home parent, you know, what happens? 10 years down the road, if you end up getting divorced, like are you going to have a house that you can, you know, live in to provide, you know, a standard of living for your children.
So it’s really about protecting the less wealthy spouse in certain scenarios to make sure there’s somewhat fairness in the agreement, and also just talking to the client about, you know, there are circumstances that they need to be prepared to walk away there have been even recently, you know, had a client who, you know, the other side would not agree, essentially, it was a waiver of everything, a waiver of spousal maintenance, that waiver of you know, any kind of property whatsoever, no agreements to turn, you know, to convert property into marital property. So, my advice to her Was this is probably something that you need to walk away from.
Ryan Kalamaya
And I think part of your role would you agree is when you’re dealing with maybe a less wealthy client explaining to them what would happen if they were to get married and there was no agreement, like what the default would be under Colorado law? And how this contract is changing that default law?
Amy Goscha
Yes, exactly. And that’s one of the things when we get into best practices that I do is I send every client including the client that earns less, here’s what the law is in Colorado, on dissolution of marriage without an agreement. And here’s what can happen with the agreement. And a lot of times, they’ll send the client a letter very detailed that says, Okay, so here’s the Colorado law. Here’s what this agreement is doing that’s different than what you would get just under Colorado law. Now,
Ryan Kalamaya
You mentioned kind of what you do. And we have another episode coming in terms of attacking and defending and in part, you know, your best practices are guided by some of the litigation that we’ve dealt with in challenging or defending premarital agreements, right?
Amy Goscha
Correct. Yes. And I think I’ll just touch on some of those other best practices. And you know, I was talking about the the law packet that I send to everyone. And what also is important is to have checklists, we have checklists regarding what financial disclosure documents we need to get from our client, what financial disclosure documents we need to get from the opposing counsel, we send a letter to our client about what what does it mean to have full and fair disclosure? You know, I schedule a meeting to go over the financial disclosures of the other party, I scheduled a meeting to go over the draft of the Premarital Agreement and what it means and suggested revisions to it. Also, if the client accepts terms against what I’m advising, I provide a written letter to the client and I make them sign it. So they are acknowledging you know, that they’re deciding to move forward against my advice, you know, that they understand, you know, what my advice is to them.
Ryan Kalamaya
Now, these checklists, you know, we use practice management software, and we have kind of a series of tasks. Why do you use a checklist? Like, why not just go off of memory,
Amy Goscha
Because I mean, we’re human and, and humans are fallible to air. And so we want to make sure that in every case that we’re handling, we’re doing every single step. So checklists are imperative to make sure that nothing is missed.
Ryan Kalamaya
Yeah, my wife, her father, my father in law is a pilot, and, you know, I’ve gone up and flown with them. And, you know, he’s been doing it for 30, 40, you know, years, but he’s got a checklist, and it’s like, pilots, you know, like what we say, and within our firm, you know, it’s, there’s a reason that pilots have a checklist, and that’s if you don’t check every single box, you could die. And for us, you know, it may not be, you know, living and dying, but it certainly is a factor in the malpractice, you know, claim. Can you talk a little bit about, you know, malpractice claims and other attorneys and selecting an attorney for the the other side and independent counsel, because those are certainly issues that many people I think, are surprised when they hear us talk about, you know, malpractice. Why do we even mention that?
Amy Goscha
We mentioned that, because I think a lot of times, and this even dovetails into estate planning in Colorado, we have, you know, we have forms. And so I think a lot of general practitioners might say, well, I can just, you know, this is an easy form, you know, I can fill this form out, you know, and Ryan, you and I have been on the other side of that where those prenups are contested in court. And so, you know, that’s a huge malpractice issue. And so it is important when when you’re doing these these types of agreements, that you know, how to draft them, you know, the ins and outs of them, and what can be litigated, you know, an example would be the choice of law provision, there’s just certain things that you need to make sure are clear in the agreement, you know, and there’s certain provisions that are highly litigated if they’re not clear. So it is important that you do know exactly what you’re doing when you’re drafting these agreements.
Ryan Kalamaya
Yeah, I mean, I think it’s telling that there are a number of very respected divorce lawyers in Colorado that will not do premarital agreements drafting and it’s because there was a well known, I mean, there’s been several well known claims against very good attorneys that didn’t do exactly everything that they needed to do and there was a significant claim against them. And so a lot of people in the divorce lawyer, Colorado divorce lawyer world decided the cost benefit just wasn’t worth it because the fees related to it just didn’t justify the amount of exposure because usually when you’re dealing with a Premarital Agreement, it means that there’s someone that is looking to protect a fair amount of money and if it doesn’t go right, you know, and Amy, you and I have seen this where people were just kind of shooting from the hip. And there was a significant malpractice claim against these lawyers that, you know, they meant, well, they just were unfamiliar. They just thought it was just a normal, contractual negotiation.
Amy Goscha
Yeah. And I still see that, you know, like, there was an agreement recently where I received the draft and the financial disclosure, and on the financial disclosure, it said, essentially a trust interest. And so I went back to the opposing counsel and said, You know, I really need a summary of what this trust is, what it owns who the beneficiaries are, who the trustee is, what type of, you know, like power does the trustee have to essentially, like the power of appointment? You know, I mean, it just gets so complicated and come to find out, the trust was worth the corpus like that just assets in the corpus of the trust were like, 15 to $20 million.
Ryan Kalamaya
So Amy, do you given your experience? Do you pick the other lawyer for the other side? Or how does that work? And who pays for the other attorney?
Amy Goscha
Best case scenario, No, I do not pick the attorney for the other side. I have had circumstances where the other party does not know of any lawyers. And so you know, I will say, you know, here’s a list of possible lawyers, but it’s your choice, you need to go interview them, you know, best case scenario, I want the other party to pick their own lawyer. There are circumstances where the wealthier client will pay the attorneys fees for the other party. However, that’s, you know, the best case scenario is they pay their own attorneys fees.
Ryan Kalamaya
Yeah, well, and we’ll get into this with kind of challenging, but the kind of rationale, just to give a preview is that there has been claims that the other party was their attorney was a straw man, and that it was just a rubber stamp deal. And they challenged the, you know, the fact that they had a particular attorney or that you know, that they couldn’t afford an attorney. I think it’s a fair observation that generally speaking, if there is a fair, two attorneys representing two people, it is very difficult to set aside and challenge that not necessarily challenge it, but that, you know, to successfully challenge that. What about joint representation? You know, Amy, can you represent the husband and wife in a negotiation on their one Premarital Agreement?
Amy Goscha
No, that’s completely not. Okay. And not legal. Can’t jointly represent people like you do an estate planning.
Ryan Kalamaya
Yeah, I think there’s a there’s a case I’m aware of in West Virginia, and which that was one of the reasons that the court set aside was because the lawyer purported to represent both the husband and wife and the West Virginia court said, that was not how it should have been. So let’s talk about financial disclosures, you know, what goes into a proper financial disclosure? And why do you do that?
Amy Goscha
So what goes into a proper financial disclosure is essentially, I mean, in my agreements, I have, I have an Excel spreadsheet that lists the description of the asset, the estimated value of the asset, how I came to that estimate, or how my client came to that estimate, I back up, you know, I paper it with, you know, a recent statement, possibly, you know, like, if it’s the value of a house, maybe there’s a recent appraisal, if I’m dealing, you know, I want to specifically talk about, you know, trust. So with trusts, I attach a separate agenda item that’s separate from the financial disclosure. And it’s essentially a description a summary of the trust I put on it, you know, the name of the trust the owner of the trust who the trustee is, is it revocable? Is it irrevocable, who the beneficiaries are the assets in the corpus of the trust that, you know, identifying them what the value is, upon distribution? You know, what my client would get, essentially, under different scenarios? And also, what power does the trustee have to make distributions? So I don’t necessarily, in every scenario asked for a copy of the trust, sometimes I do. But I normally see that if you provide a very detailed description of the trust, what’s in the trust and what the client is going to get and the value of that, that that is sufficient.
Ryan Kalamaya
So when you’re going through this, what kind of problems are you anticipating?
Amy Goscha
So I’m definitely anticipating future inheritance. You know, what to disclose what not to disclose if there’s business assets? Has there been a recent appraisal, you know, what loans does the business have? Is there enough? keyman insurance? Is there an application is there a divorce of another Owner, I’m also looking at hard to value assets, you know, and how do I disclose that? You know, an example of that might be like a timeshare, you know, those are hard to value. So what, you know, what am I going to do? What am I going to disclose? And how are we going to value expected changes whether or not to disclose those or not? And also, more is better. I guess the main message is, is that more disclosure is better than less because an agreement can be invalidated for failure to disclose.
Ryan Kalamaya
Yeah, and I think that the law has is catching up with these best practices, you know, before 2013, when they when the Colorado legislature updated the law on what was necessary for Premarital Agreement, it used to be that you didn’t have to disclose, you know, necessarily income or the values for a particular asset. And now we’ve got to disclose or in order for there to be a valid agreement, you’ve got to disclose income and put an actual number amount there for a particular asset.
Amy Goscha
Exactly. And I mean, it’s just my practice, where I always disclose at least the last three years of tax returns the most recent, you know, bank statements, mortgage statements, and then even on the asset disclosure, I list what is the adjusted gross income of the party for the last three years?
Ryan Kalamaya
All right now, negotiation. So you get your disclosures, what happens when you start negotiating? What what things are you mindful of?
Amy Goscha
So if I’m reviewing a prenup than another attorney has drafted, you know, it needs to be valid, it needs to be a negotiated agreement. So for instance, if I’m representing the party that has lost money, and I receive an agreement that essentially waives every single right, I am looking to negotiate that my client gets some kind of lump sum money payout upon divorce, or is getting some type of spousal alimony, depending on how many years they’re married, that, you know, my client is getting a certain percentage of income, or that there’s agreements to essentially convert property, separate property to marital property, or, you know, a cash payout. So those are the types of things that I’m, you know, that I’m looking for. And usually we have agreement, you know, drafts of the agreement that go back and forth, and it’s a best practice to save every single one of those versions, you know, the more versions that go back and forth, you know, to prove that it was more of a negotiated agreement.
Ryan Kalamaya
Right. And the idea is that, because there’s, you know, these examples from other cases in which, you know, someone is presented with sign on the dotted line, you know, this is a take it or leave it, it lends itself to a claim of duress or, you know, involuntary signing or coercion. And so, Is that why you’re so keen on an actual negotiation?
Amy Goscha
Yeah, the essence of negotiation is that actual negotiation, there has to be bargaining between parties, and that can be shown through the various drafts that are going back and forth. And so that shows and proves the voluntariness of each party, being able to enter into the agreement not under duress.
Ryan Kalamaya
Okay. So from your perspective, when you’re negotiating the terms what what’s the starting point?
Amy Goscha
I mean, the starting point is always title controls. So we look at that and we look at how to transfer title you know, we we work out carve outs you know, I was explaining how to convert maybe a separate residence that’s titled in the higher earners name or the wealthier spouses name that gets transferred into, you know, joint title that then converts it to marital property, you’re also looking at, essentially the parties sharing the fruits of their labor and keep, you know, premarital and inheritable gifts and assets separate that whatever is purchased during or acquired during the marriage. You know, titling does matter because usually the prenup is set up where if it’s a separate asset in someone’s name that remains separate. And if it’s jointly titled, you know, that might be subject to division, you know, equally upon dissolution of marriage.
Ryan Kalamaya
Yeah, and one of the most common questions that we get, which we’ll address in a separate episode is does title matter? And generally, in a normal divorce, it generally doesn’t matter if it’s acquired if something was acquired after the marriage. It’s presumed to be marital property, but the Premarital Agreement when you say title controls, are you suggesting that most of the time you’re stating in the Premarital Agreement that you’re changing that that presumption under the law, and instead you’re defining property, as you know, the title really does control?
Amy Goscha
Correct, and that’s very different than dissolution of marriage law in Colorado.
Ryan Kalamaya
With that in mind, Amy, what specific terms would you be looking at in Colorado Premarital Agreement between Melanie and Eric, if you represent Melanie. In our story, Eric wonders what’s going to happen to the house? It’s one of the most common questions that we get from clients beginning a divorce, how could that issue play out with Eric and Melanie in negotiating a Premarital Agreement?
Amy Goscha
I think that especially if I’m representing the spouse who is not as affluent, if they’re gonna have kids, I want to make sure that there’s a house that upon divorce that the client will have in order to have a certain standard of living for the children. So it’s not very different than when the children are with the more affluent spouse. So that can include paying off a mortgage or converting, you know, separate property, you know, real estate to marital property, also survivor benefits. So we haven’t really talked a lot about the death benefits, but to make sure that I’m making the wealthier spouse agree to leave X amount to the last wealthy spouse, there can also be, you know, life insurance policy requirement to be taken out. So those are the types of things that I’m looking at to negotiate for the spouse that’s not as wealthy.
Ryan Kalamaya
You know, when I mentioned the history of premarital agreements, I mentioned, you know, children from, you know, a first marriage, how does the kind of death provisions and in Colorado relate to what oftentimes are the desires in a Premarital Agreement with respect to the, you know, the spouse, and children?
Amy Goscha
So a lot of times, like if, from a first marriage, if you have children from a first marriage, you’re gonna want your essentially assets to go to them. However, in Colorado, depending on how long you’re married, the second spouse, you know, has certain benefits. It’s called an elective share. And so under Colorado law, depending on if you’re married X number of years, they can get up to 50% of, you know, your estate upon death. And so it’s really important to understand what are all the dynamics and also to set forth within a Premarital Agreement, you know, what your client wants upon death. You know, I think I think the best practice a lot of times is to waive their rights and to say that the estate planning documents control, however, to put some type of provision in there that says, you know, especially if you’re representing the lower earning spouse, that the higher earning spouse has to leave x amount, you know, and estate planning, you know, documents for them.
Ryan Kalamaya
Yeah, this is something we somewhat touch on in separation agreements, actually, during a divorce when two people that have children they can provide for their children and have an agreement, which, you know, we’ll touch on at some point in the future. Why don’t you talk about a little bit on waiver of spousal maintenance and some other waivers that normally appear in a Premarital Agreement?
Amy Goscha
Yeah, so under Colorado law on, you know, in Colorado, if you’re married three years, you can qualify for spousal maintenance. We have an advisory guideline that goes up to a certain amount. And so a lot of the premarital agreements, you’ll see a waiver of the right to spousal maintenance upon dissolution of marriage or legal separation. And what I’m looking for is if I’m representing the spouse who earns more money, I’m looking for that waiver for the lower earning spouse to waive their their right to spousal maintenance. The caveat, though, is that, and I know you’ll we’ll be talking about this in another subsequent episode is that the courts do look at this waiver at the time of enforcement. So it’s not ironclad.
A lot of times when I’m negotiating spousal maintenance and prenup agreements, I’m first providing the client with what does it look like under Colorado law under certain scenarios, what you know, what would the spousal maintenance look like? As well as you know, if I’m negotiating either I’m going to put a schedule in there about percentage of income and define what income is and tie that to the number of years that the parties are married, or I’m going to negotiate some type of property payout, you know, and both parties will do a mutual waiver of spousal maintenance.
Ryan Kalamaya
And what about waiver of attorneys fees?
Amy Goscha
So waiver of attorneys fees as well, you usually see a provision that says the prevailing party meaning that each party has to pay for their own attorneys fees, you know, upon a dissolution of marriage or legal separation, and if either party tries to essentially invalidate the prenup that the party who loses has to pay each party’s attorneys fees. And the caveat with that, again is that this waiver can be looked at by the court at time of enforcement
Ryan Kalamaya
What does choice of law mean, and why is that something that you address with premarital agreements?
Amy Goscha
Yeah, so I carved out here choice of law provisions because these are provisions that can be can complicate litigation or can be litigated. So every prenup usually has a verb does have a provision that says what laws apply. So if you’re getting married in Colorado, I’m going to have a choice of law provision that says that Colorado law applies. And it gets complicated because if parties move, they might have a prenup that says that Colorado law applies, you know, so you can see that can get kind of more complicated. And the whole point is to establish a Nexus in recitals with the state of the law. And I think it’s important to also include that, that the agreement is enforced as the law changes. In 2018 in Colorado, we had we’re spousal maintenance was taxable to the party that received it, and tax deductible to the party paying it, you know, that that changed in 2018, where that was not tax deductible or taxable as income. And so it’s important that these agreements, they have to essentially, they have to be able to be interpreted clearly throughout the years. So it’s important that your choice of law provision is specific. And it is important to be aware that choice of law may not be upheld on fundamental public policy grounds.
Ryan Kalamaya
Okay, so you got the agreement. It’s been negotiated. We’re all good. How do you get it signed? And what are things you’re looking out for?
Amy Goscha
Sure. So the last part, we have a negotiated agreement, everyone agrees on the terms now it’s time to sign the agreement. My general rule is I don’t have parties sign agreements less than 30 days before the wedding date at the signing, I prefer for each party’s counsel to be present. It’s also really important that each party initials each page, and that they’re bound together. And it’s important to also include the financial disclosures exhibit to the prenup to make sure that, you know, it’s present, each party has reviewed it understands it, I do for original copies, or for original documents. So one goes to each attorney one goes to each party. And recently, and you know, in recent years, I started filming these, I do think it’s the best practice to film the signing. So it’s very clear as to what questions are asked, you know, what pages were present. And so I think, you know, that’s probably the best way to wrap up, you know, signing the agreement.
Ryan Kalamaya
You know, again, we’ve kind of been previewing, or foreshadowing, you know, another segment on attacking and defending, but most of these little highlights that you have about initialing pages, having originals go to multiple parties and filming there the result of learning from other people that have not done those and have had agreements successfully challenged. And, you know, any, you weighed out a lot of these kind of unique things regarding the signing of an agreement. Why do you have these particularities in your checklist of things to do for premarital agreements,
Amy Goscha
Because of all things that you Ryan and I have seen that, you know, people have done wrong, right. And so it’s something that we want to make sure is done in every single agreement and had mentioned that, you know, even some highly sophisticated Divorce Attorneys won’t do premarital agreements. And they’re kind of an area for, I guess, vulnerability for malpractice. So you have to do every single one of these best practices to make sure that you know, it’s a negotiated, financially disclosed agreement that’s going to be enforceable, and your clients not going to come back and point the finger at you, you know that you did it wrong.
Ryan Kalamaya
Well, Amy, I think that’s a good place to end. And you know, if anyone has any questions about premarital agreements, you know, whether they be a potential client or another attorney, where should they should they send you an email? Should they give you a call? What what’s your preference?
Amy Goscha
Yeah, either it’s fine. So that, you know, they can call me on my direct line, which is 970-306-6178. Or you can email me at amy@kalamaya.law .
Ryan Kalamaya
Hey everyone. This is Ryan again, thank you for joining us on Divorce at Altitude. If you found our tips, insight or discussion helpful, please tell a friend about this podcast for shownotes additional resources or links mentioned on today’s episode, visit www.divorceataltitude.com. Follow us on Apple podcasts, Spotify or wherever you Listen in. Many of our episodes are also posted on YouTube. You can also find Amy and me at 970-315-2365 or kalamaya.law
Transcribed by https://otter.ai