What Indiana law says about prenups

FARM MANAGEMENT
Indiana Prairie Farmer
www.FarmProgress.com – January 2012
51
What Indiana law says about prenups
Editor’s note: This is the second of
three articles on the pros and cons
of prenuptial agreements as they
relate to farm operations.
What you should include
in a prenup(tial agreement)
W
By SUSAN HAYHURST
T
HE state of Indiana views
marriage as a contractual
agreement. Therefore, there
are rules governing distribution
of assets if the couple divorces or
one spouse dies.
“These rules will prevail
unless there is a valid prenuptial
agreement specifying an alternative asset distribution scheme
preferred by the couple,” says
Angela Gloy, a Purdue University
Extension ag economist.
Depending upon how the
property is titled, husband and
wife may have equal ownership
shares. “Generally, assets are divided pursuant to Indiana’s 50/50
presumption,” says Andrew
Bloch, an attorney who deals with
ag law, Carmel. “When the divorce
is filed, the marital pot closes.
Every asset and debt on the
date of filing are fair game for
the court to consider. If there
are assets that are not contemplated at the time of the prenuptial agreement, the courts will
Key Points
■ Indiana laws govern the
dissolution of a marriage.
■ A prenuptial agreement takes
precedence.
■ The courts prefer not to break
up an operating farm if possible.
use Indiana law to divide those
remaining assets.”
However, Bloch says most
courts try to prevent a family farm
from being dismantled through
a divorce, but unless one party
rebuts the equal split assumption,
the court may have no choice.
“Prenuptial agreements can
be an important, albeit it touchy,
subject, but farm families should
seriously consider them to protect the family farming operation,” Bloch says.
Hayhurst writes from Terre
Haute.
WHEN YOU’RE FACE TO FACE WITH NATURE,
HAT you put in a prenuptial agreement is up to you and
your partner. It can cover anything from land to livestock,
Angela Gloy notes. She’s a Purdue Extension ag economist.
Here are items Gloy and Andrew Bloch, an ag attorney,
suggest considering if you’re working with an attorney to put
together an effective prenuptial agreement.
Full disclosure. “A prenuptial agreement requires full disclosure of all assets and liabilities by both parties coming into a
marriage,” Gloy says. “This includes all ownership stakes in the
family farm business.”
A prenup usually makes the most sense when one party
coming into a marriage has considerably more assets than the
other, she continues. The party with an interest in a farm
business may show considerably greater assets than the other
party.
Financial responsibilities. A prenuptial agreement can show
a plan for meeting the financial responsibilities of the marriage.
For example, a spouse working off the farm may wish that only a
portion of their income be available for farm business expenses.
Asset distribution. A prenuptial agreement can spell out asset
distribution in advance for farm asset ownership interests. This
avoids uncertainty if there is a divorce, or if one spouse dies.
Attorneys for both parties. It’s essential that both parties consult with an attorney before entering the agreement, says Bloch.
It’s essential for the attorney and both parties in the agreement,
he insists. “It is vital that people understand the contract they
are entering into, and what potential rights they are giving up.”
Possible addenda. Some clients include an exhaustive list
of cattle or machinery, Bloch says. “Knowing what to put in a
prenup and what the client needs is dependent on the client’s
situation,” he concludes.
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