Premarital agreements are agreements between potential spouses made when they are contemplating getting married. The agreement is a contract between the couples that outlines how terms and conditions of certain subject matter in case of a divorce. In Oregon, a prenuptial agreement must be in writing. Although the agreement is a contract, state law does not require that the agreement needs consideration to be enforceable. Under contract law, consideration is the bargained-for exchange of value between parties in a contract. Generally, in a contract parties to a contract give something of value to get something of value. However, Oregon law does not require such an exchange for a prospective spouses to create a legally binding prenuptial agreement.
Prospective spouses may bring their individual and separate property into the marriage. The property that each spouse acquired before marriage is considered their separate property which is most cases remains their separate property if the couple decides to get a divorce. During the marriage, spouses may acquire additional property such as, marital home, vehicles, retirement benefits, and after-marriage income. Under Oregon law, property acquired during the marriage, whether held separately or jointly by spouse, is considered marital property. Some property acquired during the marriage may still be considered separate property, if a spouse received it as a gift to that spouse only, by inheritance, or through a will. The legal concept of transmutation can also change the character of separate property acquired before or during the marriage to marital property if marital funds are used or commingled with the separate property.
Even those most married couples do not get married with the plan of getting a divorce, some marriages may end in divorce. Knowing that divorce is a possibility, prospective spouses may want to take certain precautions to protect their property and other assets to prevent them from losing or having to share their property in a divorce. Asset protection is a method people use to protect their tangible and intangible property from the reach of creditors and, in a divorce, the other spouse.
Prospective spouses usually sign a prenuptial agreement to protect their assets. Also known as a prenup, it is a civil contract between prospective spouses in anticipation of marriage. Such agreements outline the terms and conditions between the couple for their premarital property, marital property, estate planning, and divorce. However, prenuptial agreements are not the only option for a prospective or current spouses to protect their assets. Other alternatives include postnuptial agreements, marital settlement agreements, or avoiding the change of separate property to marital property.
A couple who does not have prenuptial agreement may decide to protect their assets after marriage by entering into a postnuptial agreement. Like a prenup, a postnuptial agreement contains provisions regarding how to handle certain issues in the event of a divorce. Although the post-nup contemplates a divorce is not created with the intention of the spouses to divorce. Instead, it is a civil contract that in which the spouse resolves issues to avoid disputes during the divorce.
When married couples decide to divorce but did not enter into a prenuptial or postnuptial agreement, they may not want to leave the resolution of certain divorce issues to the discretion or decision of the court. In such cases, the spouse may enter into a marital settlement agreement. The written agreement is between spouses who are contemplating an imminent divorce. Like a prenup or post-nup, a marital settlement agreement resolves issue that arise during a dissolution of the marriage. However, it differs from a prenup or post-nup because it is written with the intention of getting a divorce.
In an Oregon dissolution of marriage, spouses must file with court as well as submit to each other a form that list of their assets and debts. The assets and debts listed on the form contains separate and marital property. Separate property is property acquired by a spouse before marriage or during the marriage by gift, inheritance, or will. Marital property is property acquired during the marriage whether held separately or jointly by spouses. The property designated as marital property is distributed between the spouses. Separate property is not a part of the equitable distribution and remains separately-held by the spouse who owns of the property. Without a prenup, post-nup, or marital settlement agreement, the designation and distribution of spouses’ property is determined by state law. This may affect a spouse’s separate property during a divorce.
A spouse’s separate property can become marital property through the commingling of marital funds. Therefore, a spouse can protect his assets with a prenuptial agreement by keeping separate property separate. The spouse should not use marital funds or involve marital financial affairs with separate property. The commingling of separate property and marital assets changes the separate property to marital property, which becomes a part of the equitable distribution of marital property.