5 Things to Know About Mid-nuptial Agreements
Most people understand prenuptial agreements—the agreement that is signed before people get married. Many do not know that after marriage, it is not too late to establish how finances would be handled if the married couple is faced with separation or divorce.
An agreement prepared after marriage, and not part of divorce proceedings, is often called a Mid-nuptial Agreement.
Mid-nuptial agreements may be prepared and signed at any time after marriage. A Mid-nuptial Agreement may also be used to revise or revoke a prenuptial agreement that was prepared at a different time in the married couple’s lives.
1. Not just for millionaires
A Mid-nuptial Agreement is not just for millionaires. A Mid-nuptial Agreement can be a helpful document prepared as part of a new business transaction or investment, estate planning, family business succession planning, or other changes in life during the marriage.
2. There is more than one type of Mid-nuptial Agreement
Spouses often believe that Mid-nuptial Agreements (and Prenuptial Agreements) are used to exclude a spouse from a business and the value of the business in a divorce. While those types of agreements do exist, there are other alternatives.
For example, if one spouse desires to exclude the other spouse from a business if the parties divorce, possibly there is real estate, retirement, or other assets the non-business owner spouse would receive if divorce would occur.
Also, the parties may use the Mid-nuptial Agreement as a tool to make the risk of a divorce less expensive and less time consuming if a divorce would occur. A significant expense in divorce is arguing about how to value each asset. A Mid-nuptial Agreement may identify a roadmap for how assets are valued, distributed, and the possible structure of a buyout if the valuations require additional consideration.
3. May be used to protect the non-business owner spouse
A Mid-nuptial Agreement may also be used to protect the non-business owner or investor spouse. If a business or investment is highly leveraged or risky, the non-business owner spouse may use a Mid-nuptial Agreement as protection if a divorce would occur.
4. Cannot force a spouse to sign a mid-nuptial agreement
Both parties must agree to the Mid-nuptial Agreement. One party cannot force the other to sign.
5. Child Support and Child Custody Are Subject to Change
A party should be careful about including a term regarding child support and child custody in a Mid-nuptial Agreement. Even if the parties agree to include a term about child support or child custody in a Mid-nuptial Agreement, pursuant to 23 Pa.C.S. 3105, a term regarding child support, visitation or custody shall be subject to modification upon a showing of changed circumstances.