Prenuptual Agreements

A prenuptial or premarital agreement is a written contract that a couple enters into before they are married. The prenuptial agreement typically sets the “rules” for property division that apply when and if the marriage ends. However, a prenuptial agreement can address any subject, including payment of household expenses and bills, ownership of property acquired or location of the marital residence.

Necessity

Formerly utilized by persons of wealth and property, prenuptial agreements are becoming more common as marriages occur later in life, when careers have been established and significant assets have been accumulated. Additionally, prenuptial agreements may be vital in determining inheritance rights of children from a previous marriage. By entering into a prenuptial agreement, the couple is directing that property rights are determined by the contract rather than the usual rights afforded to a spouse under the law. Under the agreement, the less wealthy spouse may receive a significantly reduced distribution of property on divorce or death.

SIDEBAR: Spouses residing in a community property state have their assets divided equally on divorce. In other states, courts divide property based on equity and fairness. The prenuptial agreement supersedes laws concerning the division and distribution of property when the marriage terminates.

The prenuptial agreement generally protects the spouse with the greatest wealth on termination of the marriage. Property, cash, assets and family businesses owned by either or both of the spouses are protected against a claim by the other spouse if the marriage ends. The agreement directs the distribution of property when the marriage ends, either by death or divorce, along with the amount of support payments a spouse is entitled to receive. By entering into the prenuptial agreement, the couple is removing the court from the determination of how a couple’s property will be divided in a divorce, or in an estate matter should one spouse die. Some prenuptial agreements expire after a period of time. For instance, after 10 years of marriage the agreement may expire and the spouse’s legal rights will be determined under the law of the state where they reside.

Requirements

The requirements for a prenuptial agreement are the same as for any contract – it must be executed voluntarily, freely and knowingly. Moreover, laws require the agreement to be in writing. Parties should consult an attorney before signing a prenuptial agreement. Further, a party is required to have a reasonable opportunity to consider the ramifications of the agreement. For instance, an agreement presented to the bride on her wedding day does not give her reasonable time to speak with an attorney and will probably not be enforced.

Uniform Premarital Agreement Act (UPAA)

The Uniform Premarital Agreement Act (“UPAA”) is recognized by many states and simplifies the creation and requirements of prenuptial agreements. The Act:

  • defines a premarital agreement;
  • requires that the agreement be in writing and signed by both parties; and
  • makes the agreement effective upon marriage.

Under the UPAA, a premarital agreement is defined as “an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.”

SIDEBAR: The provisions of the UPAA do not apply to cohabitation or post-nuptial agreements.

Invalid prenuptial agreements

The UPAA sets out several circumstances that can occur during the process of executing a prenuptial agreement that can make the agreement invalid and unenforceable against one of the parties. An agreement will be invalid if the agreement:

  • is not executed voluntarily;
  • was unconscionable when it was executed;
  • was signed without a full financial disclosure or waiver of disclosure and the party did not have adequate knowledge of the other party’s finances; or
  • provided so little support that a spouse is eligible for welfare or public assistance when the marriage terminates.

Provisions included in a prenuptial agreement

The UPAA gives a long list of issues which should be addressed in a prenuptial agreement in order to fully resolve problems that arise when a marriage ends. The parties may agree:

  • to their rights as to each other’s property owned at the time of the marriage or acquired during it;
  • how each spouse controls their property, i.e., limits on their ability to buy, sell, transfer or mortgage the property;
  • to the disposition of the property when the marriage ends;
  • to an amount of spousal support or the elimination of spousal support;
  • to execute a will or trust to carry out the provision of the prenuptial agreement;
  • on rights in insurance proceeds and benefits;
  • on which state’s laws will apply to interpret and enforce the agreement; and
  • to any personal obligations one party has to another.

Can I refuse to sign a prenuptial agreement?

Yes. You will have to weigh the detriment of signing an agreement against the possibility that the marriage may not occur unless you do sign.

TIP: Agreements presented immediately prior to the marriage are generally found to have been signed under duress and are invalidated by the courts.

Do I have to disclose my net worth and income to my fiancé if we enter into a prenuptial agreement?

Yes. Both of you must disclose the value of the assets you own and your income as well as your debts for the agreement to be valid.

TIP: To avoid any confusion as to what assets are covered by the agreement, make a list of all your assets and debts and attach them to the prenuptial agreement as exhibits.

Should I have my own attorney review the agreement?

Yes. Your own attorney can walk you through the agreement and explain the consequences of entering into it.

TIP: If the bride, for example, is the one presenting the agreement, she should require her fiancé to consult an attorney. If he does not, he can later argue that he signed the agreement without knowing what it meant.

SIDEBAR: Consultation with an attorney is not a requirement unless required by the law in the state in which the parties live. The prenuptial agreement will be enforced if it is valid even though it was signed without talking to a lawyer.

We have a cohabitation agreement. Do we still need a prenuptial agreement?

Yes. Prenuptial agreements become effective when you marry; cohabitation agreements do not.

How long before the wedding do I have to sign the agreement?

You may sign the agreement at any time before you marry. However, a greater amount of time between signing the agreement and the actual wedding tends to show that the agreement was entered into voluntarily after considering the ramifications.

My spouse demanded that I sign a prenuptial agreement the night before our wedding. All of our friends and family had already arrived, and I felt that I had to sign it. Is the agreement still enforceable?

Possibly not. Because you were presented with the prenuptial agreement immediately prior to the wedding, you can argue that you were pressured to sign the agreement and that it is not valid.

My husband told me that I would get certain property and cash payments if we divorced. Do I have a valid prenuptial agreement?

No. Laws generally require a prenuptial agreement to be in writing and signed by both of the parties.

My prenuptial agreement states that I am entitled to no support if I divorce my husband. Is this valid?

Yes. However, a judge will not look favorably on the agreement and may decide that the provision denying support is unconscionable, especially if you have no other means of support.

SIDEBAR: “Unconscionable” means unreasonable or morally unacceptable. Contracts that are found to be unconscionable are not valid and cannot be enforced.

My fiancé presented me with a prenuptial agreement with “phased-in” support provisions. What does this mean?

Phased-in support or distribution of property provides that the longer the marriage lasts, the more money or property a spouse is entitled to receive. For instance, if a marriage ends before 1 year, the agreement may not give you a share in any property. As each year passes, your share increases until at 10 years of marriage you get 50% of the property your fiancé owns.

TIP: Phased-in increases can also be based on increases in a spouse’s income, assets or property.

Can a prenuptial agreement limit child support payments?

No. Child support payments are based on legal guidelines.

Does the prenuptial agreement cover property and assets my husband and I acquire during marriage in a community property state?

Yes. Your prenuptial agreement will supersede laws that would normally divide marital property between the spouses. In your case, the agreement will be enforced rather than state law.

Can we modify our prenuptial agreement during the course of our marriage?

Yes. In fact, if circumstances change, the agreement should be modified. For instance, if one of you has suffered a financial setback, the support payments provided for in the agreement may need to be reduced.

SIDEBAR: Both parties must agree to and sign off on any amendments or modifications to the agreement. For example, one spouse cannot unilaterally decide to decrease the support payments provided for in the agreement. Modifications and amendments to the prenuptial agreement must be in writing to be enforceable.

Revocation

If both parties consent, a prenuptial agreement may be cancelled or revoked at any time. Without mutual consent, the agreement continues to exist and can be enforced when the marriage terminates.

TIP: The agreement should contain a provision requiring any change, including revocation, to be in writing and signed by both parties.

SIDEBAR: The UPAA requires a signed, written agreement if there is any amendment or revocation of a premarital agreement after marriage.

During the year we were married, my now-deceased husband told me that he wanted to terminate our prenuptial agreement. Did his statement to me terminate the agreement?

No. Your husband must have put his wish to terminate the agreement in writing in order for it to be effective. His oral statement to you doesn’t change the agreement and it can be enforced against you.

Our prenuptial agreement states that all of our property is separate, including income we earn during the marriage. By depositing all our money in one account, have we revoked the agreement?

No. Although you have commingled property that is separate under the terms of the agreement, the agreement itself is still in full force. The two of you have simply made a choice to share your income with each other.

SIDEBAR: It is possible to abandon the prenuptial agreement by acting in a way that is inconsistent with its terms. However, the abandonment must be clear and decisive. For example, if the agreement provides that the husband’s cattle ranch and any income from it remains his separate property but the wife consistently contributes her income to make mortgage payments on it, the husband has abandoned his right to keep the ranch separate property.

Does our separation agreement agreed upon during our divorce revoke the prenuptial agreement we signed before marriage?

Yes. When the separation agreement sets out the property each of you will receive, the support to be paid and other spousal rights that become issues when a marriage ends, it has been substituted for the prenuptial agreement.

TIP: To incorporate the terms of a prenuptial agreement into a separation agreement, the separation agreement should clearly refer to the provisions of the “prenup” the parties wish to include.

My husband, who insisted on a prenuptial agreement before we were married, tore it up. Has it been revoked?

The agreement is revoked only if both of you intended it to be revoked at the time it was torn up.

SIDEBAR: Physically destroying a prenuptial agreement is a positive act of revocation. For instance, tossing the agreement into the fire is inconsistent with wanting the agreement to continue to be in force.

Enforcement

Courts routinely enforce prenuptial agreements if the parties executed the agreement voluntarily and knowingly. Just like any other contract, the agreement is presumed to be legally executed and valid unless proved otherwise. The agreement may be unfair and unreasonable as to one party, but it will be enforced unless fraud, duress or undue influence is shown.

SIDEBAR: The agreement is likely to not be enforced if it is so unfair as to make one spouse destitute.

Can the prenuptial agreement be enforced against me if I did not talk to a lawyer before signing it?

Yes. Hiring an attorney to review the agreement is not necessary (although highly recommended). The agreement will be enforced if a reasonably intelligent adult could understand the terms of the agreement and had an opportunity to consult with a lawyer.

SIDEBAR: For example, if one of the couple has the agreement several weeks or days before signing, she has had the opportunity to talk with an attorney. The person’s choice to forego legal advice will not make the agreement unenforceable against her.

TIP: Choosing to purposefully forego consulting with an attorney in order to argue later that the prenuptial agreement cannot be enforced against you will not work in your favor.

Is the prenuptial agreement I signed on our wedding day enforceable?

Not if it was the first time you saw or heard of it. In that case, you did not have an opportunity to consult with an attorney. Further, you were placed in a position where you signed the agreement unknowingly, involuntarily and under duress.

An attorney advised me before I signed our prenuptial agreement. Can I still challenge the agreement in court?

Yes. If you executed the agreement under duress, the agreement may not be enforceable against you. For example, if your attorney advised you to make some changes to the agreement and on the day of the wedding your husband refused and threatened to cancel the wedding, you can argue that you signed under duress.

TIP: Courts routinely enforce agreements signed immediately prior to the wedding where the person is educated, experienced and reasonably intelligent yet failed to take their attorney’s advice.

SIDEBAR: A prenuptial agreement will not be enforced if the attorney for one of the parties was not acting in his client’s best interest. For instance, if the attorney failed to fully explain the agreement, especially where the provisions are heavily tilted toward the husband’s interest, the court may not enforce it.

When I signed my prenuptial agreement, I was employed, and I agreed to a certain amount of support payments. Now that I am out of work due to a disability do I still have to pay that amount?

No. An agreement will not be enforced where the circumstances of one or both of the parties have drastically changed.

I signed a prenuptial agreement in which I waived support payments because my wife’s financial statement showed no assets even though she owned valuable stocks. Can my agreement to forego support payments be enforced?

No. Your wife misrepresented and concealed her true financial situation. The agreement will not be enforced against you.

SIDEBAR: Misrepresentation and concealment of relevant facts (fraud) concerning one of the party’s finances is a major reason courts refuse to enforce a prenuptial agreement.

I signed a prenuptial agreement when we married 10 years ago. Now that we are divorcing, I have discovered that my wife concealed her true financial worth. Can I allege fraud to make the agreement unenforceable?

Probably not. The agreement is a contract, and certain allegations must be brought within a specified time to successfully challenge it.

TIP: Statutes of limitations apply to prenuptial agreements. Thus, allegations that fraud, duress or undue influence were present at the time you entered into a prenuptial agreement must be brought within a certain time period. For example, in a state with a 6-year statute of limitations on fraud actions based on a contract, a husband cannot complain of fraud 10 years after the marriage occurred. However, many states have adopted laws that begin the time period for making allegations of fraud, etc. when the parties separate, rather than beginning it on the date they were married.

We have been married for 10 years and have two small children. Is our prenuptial agreement giving me $100 support per month for a year enforceable now that we are getting divorced?

No. Not only have the circumstances changed (you now have two children), the agreement is unconscionable. The court will not enforce an agreement, i.e., include it as part of the divorce decree, if it is grossly unfair and unequal.

TIP: There is no statute of limitations on alleging unconscionability.

My husband was unfaithful and filed for divorce. Do I still have to pay him the $10,000 that I agreed to in our prenuptial agreement?

Yes. Typically, infidelity does not change the circumstances so as to make the prenuptial agreement unenforceable.

Can a prenuptial agreement be enforced after it expires?

No. However, the agreement can be extended so that it will not expire.

TIP: The extension must be in writing, dated and signed by both parties.

My ex-husband refuses to pay me the money owed under our prenuptial agreement. What can I do to enforce the agreement?

You can sue your husband for breach of contract. By refusing to make the payment as required by the terms of the agreement, you husband has violated the contract (your prenuptial agreement).