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Premarital agreements theoretically should make property settlements simpler and more predictable. Having said that, I will tell you that the two largest divorce cases (in terms of professional fees) that I ever worked on involved premarital agreements.
A poorly drafted premarital agreement can often complicate a property settlement and add a greater degree of uncertainty than would exist without an agreement.
A premarital agreement is essentially a financial contract just like any other partnership agreement and should be drafted with an understanding of the client's financial situation including:
Use concise accounting terminology.
Ambiguous terms lead to multiple interpretations of agreements.
Define accounting terminology in the agreement.
Defining major terms in the agreement is essential. Be specific when possible. Broader terms and principals of accounting should be defined as "in accordance with Generally Accepted Accounting Principals" or as defined in a specific Internal Revenue Code section.
Use examples in the agreement.
This accomplishes two goals. First, by testing a comprehensive sample set of facts against the draft agreement, we see if the agreement produces the desired result. Second, during the divorce proceedings the examples will be invaluable in demonstrating and clarifying the parties' intent as evidenced by the agreement.
Set up a system to monitor the agreement.
Most business people would not conduct a joint venture without an accounting system to monitor results. The same should be true in monitoring a premarital agreement.
In the final analysis, accountants and attorneys who team up to draft premarital agreements will be much more effective in the event that they meet again to prepare for trial.
Colorado is one of the few states that recognize common law marriages.
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