Marriage today is more complex than ever given the high rates of divorce, second marriages, blended families, and increasing globalization of couples. Anyone with significant property, an inheritance, a family business, or children from a prior marriage ought to consider a premarital agreement. Those entering a same sex marriage or civil union should also consider one. If the couple is multinational or goes global, there could be unintended changes to property ownership and tax consequences.
What additional considerations should a couple take into account in planning for their marriage and the premarital agreement? While different sources present different lists, in 2012 the following were the counties with the highest divorce rates:
- Czech Republic
- South Korea
More striking is the fact that in the United States, the rate of divorce for 1st marriages is approximately 50%, for 2nd marriages 60% and for 3rd marriages 70%. 1
A premarital agreement may be one way to address issues not just upon divorce or death, but upon a move to a new jurisdiction.
This paper will examine the premarital agreement (including the international premarital agreement) and postmarital agreement, what they seek to achieve, tax and other considerations including planning for same sex couples, common law marriages, and couples on the move.
The Premarital Agreement and the Postmarital Agreement
- Premarital Agreement: A premarital agreement (or prenuptial or ante-nuptial agreement) is a contract between a couple prior to marriage or a civil union that typically provides how property owned before or acquired during the marriage will be divided in case of divorce or at death and can provide for alimony or maintenance. The agreement can be as broad or as limited in scope as the couple desires, except certain jurisdictions, including the United States, do not allow a marital agreement to govern child support or child custody rights.
- Postmarital Agreement: A postmarital agreement seeks to achieve the same objectives as a premarital agreement, but it is entered into after the couple is married.
- International Premarital Agreement: There is no such thing as an “international premarital agreement” per se. If more than one jurisdiction is involved, a couple should consider the law of each such jurisdiction. These different jurisdictions may include: where the couple celebrates their marriage, their first marital abode, their nationality, their residence, their domicile, and the location of their assets. In some instances, any one of these factors could connect the couple to a particular jurisdiction thereby requiring the advisor to look to the law of that jurisdiction. Not all countries recognize premarital agreements so one must always consult local counsel. When a couple is married, their advisor should review the nationalities of the couple, their residence, and the location of their assets. The law of the country that will govern the dissolution of the marriage may affect the marital regime or the use of a pre or postmarital agreement. For instance, some countries do not consider pre and post-nuptial agreements to be valid, so some couples will be unable to vary their marital regimes.