One of the most time-consuming and technically difficult parts of a divorce in Minnesota is the process of property division. One way to avoid some of this trouble is to decide many property division issues in advance, before the wedding, through a prenuptial agreement. For those who didn't execute a prenuptial agreement in time, there is the possibility of a postnuptial agreement. However, those hoping to rely on a prenuptial agreement or postnuptial agreement should be aware that courts are often strict about these matters, as a recent case shows. It's important to get these agreements right at the time they're signed, or they may not help later on.
Property division is the phase of a divorce in which the parties must list all their assets, divide them into separate and marital property, and then divide the marital property in a way that meets standards of fairness under Minnesota law. Separate property includes assets the individuals owned before the marriage, as well as a few categories of personal assets, such as certain inheritances. Pretty much everything else obtained during the marriage is marital property. This can include a lot of assets that people may think of as personal property, including retirement accounts from employers.
A recent case that went before a federal court involved a postnuptial agreement that was intended to keep a retirement account out of the marital property pile if the couple should divorce. In the agreement, the wife agreed that she intended that she would not benefit from her husband's retirement account. Later, the court ruled that this agreement did not constitute a legal waiver of her right as a spouse to be named as beneficiary. According to the court, all the wife agreed to was her intent to waive her right. Without further action, she hadn't actually waived it. A similar logic could apply to prenuptial agreements.
Prenuptial agreements can seem like a sure-fire way to avoid the hassles of property division, but they have to be properly prepared. It's important for Minnesota residents considering a prenuptial agreement to understand how these instruments work.
Source: Forbes, "Court Ruling: Postnup Does Not Waive Spousal Rights To 401(K)," Jeff Landers, Aug. 14, 2013