Prenuptial Agreements

A prenuptial agreement is a contract made between two persons in contemplation of marriage. The contract goes into effect once the parties get married, but may not require any action or have any legal consequences until after they get divorced.

Prenuptial agreements are sometimes referred to as “antenuptial” agreements. Regardless of what they are called, their purpose is to establish ground rules for distribution of assets and payment of support when and if, the parties subsequently get divorced.

Prenuptial agreements are considered a useful premarital planning device for previously divorced parties endeavoring to secure assets for their children of a prior marriage. Particularly in cases involving substantial premarital assets, prenuptial contracts offer a decisive mechanism for ascertaining and protecting the assets subject to sharing and commingling during the marriage.

Unfortunately, prenuptial agreements are viewed with great skepticism by legal scholars and lawyers. They are frequently attacked in divorce proceedings. In some cases, parties are forced to sign prenuptial agreements without receiving a full disclosure of the other party’s assets. Many states now require that a full financial disclosure be made in order to validate a prenuptial agreement. Concealing assets or failing to give a party a fair and reasonable opportunity to examine the assets, has often been cited as grounds for invalidating an agreement.

Prenuptial agreements are also frequently challenged on the grounds of fraud, duress, and coercion. Thus, when a husband asks his wife to sign a prenuptial agreement only days before the marriage, it is impossible for her to rationally consider the possibility of canceling the wedding, the catering hall, the band and contacting more than one hundred guests to rescind the invitations. In such circumstances, a would-be wife might feel pressured to sign a prenuptial agreement, a decision she would later regret, and presumably attack as having been a product of duress or coercion.

Prenuptial agreements should never be signed until a party first obtains independent legal advice. A party should never consult a attorney recommended by his or her spouse, or paid for by the spouse. An attorney is “independent” only if the person hiring the attorney finds the attorney on her own, pays for the attorney on her own, and seeks independent advice from that attorney.

Many states have adopted a law known as the Uniform Premarital Agreement Act. The UPAA defines prenuptial agreements, requiring them to be in writing, signed by both parties, and enforceable without consideration. Parties are permitted to enter into contracts setting forth each of their rights and obligations, including their right to buy, sell, use, transfer, exchange, abandon, lease, consume, expand, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property.

The prenuptial agreement may also modify or eliminate spousal support or alimony. It may refer to the making of a will, a trust, or any other arrangement to carry out the parties’ financial wishes. It may also address the ownership rights, and the disposition of death benefits, from a life insurance policy.

A prenuptial agreement may indicate which state law governs the agreement and this may, in fact, become an important provision if the parties move from one state to another after the agreement is signed.

The UPAA includes a provision that prenuptial agreements may not adversely affect the right of a child to be supported. Generally, a prenuptial agreement is not enforceable under the Uniform Act if a party executed the agreement involuntarily, or if the agreement was unconscionable at the time enforcement was sought.

Likewise, an agreement may not be enforceable if the party did not consult with independent legal counsel or did not receive a full and fair disclosure of the earnings, property, and financial obligations of the other party.