The Ultimate Guide to Prenuptial Agreements
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What Is a Prenuptial Agreement?
A prenuptial agreement, also called a premarital agreement, is a legal step taken before couples proceed with their marriage plans. Similar to a cohabitation agreement, a prenuptial agreement is a contract entered into prior to a marriage or civil union. This type of contract establishes the property and financial rights of each spouse in the event they decide to dissolve their marriage.
Although it may seem unromantic to plan for a divorce before you are even married, with more than half of all marriages in America ending in divorce, it’s wise to at least consider a prenuptial agreement.
Prenuptial agreements are often utilized by parties entering their second or third marriages wherein the parties to the contract have significant assets they want to protect in the event of a divorce.
What Are the Basics of a Prenuptial Agreement?
While most states have their own rules regarding the requirements and/or basics of a prenuptial agreement, there are a few standard basics that should be present for the agreement to be deemed enforceable.
These requirements include the following:
- The Agreement must be fair and voluntary.
- Full disclosure of each party to the agreements assets, liabilities, and debts must be disclosed.
- Waivers of retirement cannot be made in a premarital agreement.
- Child support cannot be binding under a premarital agreement (and in most states cannot be waived in a premarital agreement either).
- Alimony can be handled under a premarital agreement.
- One attorney should not handle both parties, unless both parties sign a conflict waiver.
- The requisite time frame for review from each state must be met.
What Makes a Prenuptial Agreement Invalid?
There are many reasons why a prenuptial agreement would be deemed invalid and unenforceable. In the event a prenuptial agreement is deemed unenforceable, the parties’ assets will be divided according to the dissolution of marriage laws within the respective state where the parties reside. The following issues will possibly invalidate a prenuptial agreement:
- Not Properly Executed. A prenuptial agreement is required to be signed by both parties to the marriage, or civil union. If a prenuptial agreement is not signed prior to the parties entering into the marriage, the agreement may be held unenforceable as against either spouse. Additionally, some states require each party to be represented by separate counsel and have a statutory timeframe to review the agreement prior to signing it. The reasoning for this is that it may be construed that a party was unduly pressured to sign the agreement under the threat that the marriage might otherwise not occur.
- Insufficient Time. Just as proper execution is required, most stated require a statutory timeframe for the parties to review the contract before signing. For example, in California, the party against whom enforcement of the agreement is sought must have seven days from the date they were presented with the agreement to the date of signing the agreement for the agreement to be valid.
- Invalid Provisions. Additionally, most prenuptial agreements cannot be for an invalid purpose. An example of an invalid purpose includes if a party includes a clause in the agreement where child support obligations are waived if the marriage ends in divorce. Additional invalid provisions include sexual provisions (in some states) and any other provision that violates the law. However, it is likely that when reviewing the prenuptial agreement the court will likely not invalidate the entire agreement, but strike the invalid provisions within the agreement.
- False or Incomplete Information. A premarital agreement requires absolute full disclosure by both parties. Full disclosure includes information about income, assets, liabilities, and debts of BOTH parties to the agreement.
- Unconscionability. A prenuptial agreement that is unconscionable will not be enforced. Unconscionability is typically found where a premarital agreement states that one spouse receives all the property and the other gets all the debts. If the court finds unequal bargaining power resulting in substantial and grossly unfair results, the court will likely strike the prenuptial agreement as being unconscionable. Depending on the
What Should Be Included in a Prenuptial Agreement
Depending on the parties’ financial and personal situations at the time they enter into the agreements, there are a variety of issues to consider and provide for in the prenuptial agreement they enter into.
The following issues should be considered by parties prior to entering into a prenuptial agreement:
- Type of property. Parties should distinguish between separate and marital property, or community property, depending on your state. Prenuptial agreements should include provisions that determine how property will be divided in the event of a divorce.
- Debts. A prenuptial agreement can protect one spouse from the debts of another. Parties may limit their debt liability in a prenuptial agreement.
- Children. A prenuptial agreement may also provide for children from a prior marriage or relationship. This includes the distribution of property in the event of a divorce.
- Property. A prenuptial agreement will also provide for distribution of a family heirloom. It can be stipulated within the agreement that a family heirloom, family business, or even a future inheritance remain in your birth family with your spouse having no right to it in the event of a divorce.
Who Needs a Prenuptial Agreement?
Anyone who is getting married may want to enter into a prenuptial agreement. As stated above, traditionally, those entering into their second or third marriages and who have substantial assets and wealth often consider a prenuptial agreement.
What Happens If You Don’t Make a Prenuptial Agreement
If you don’t make a prenuptial agreement, your state’s laws will determine how property will be distributed in the event of a divorce. Depending on your state, property acquired during marriage is known as community property or marital property. State law may determine how property will be distributed that you owned prior to marriage.
In most states, a spouse usually has the right to do the following:
- Share equal ownership of property acquired during marriage.
- Incur debts during marriage.
- Share in the management and control of any marital or community property including the right to sell or give it away.
A prenuptial agreement can make for clean distributions of property in the event of divorce. As many divorces can become contemptuous, a prenuptial agreement can eliminate any arguments between the parties as all issues were already determined per the agreement.
What Is a Postnuptial Agreement?
A postnuptial agreement is an agreement entered into after parties have already married. A postnuptial agreement acts in the same manner as a prenuptial agreement and determines how the couples will settle their affairs and asserts in the event of a separation or divorce.
Can You Contest a Prenuptial Agreement?
If you have signed a prenuptial agreement and are now in the midst of a divorce, you should contact a family law attorney immediately. The family law attorney can review the prenuptial agreement signed and determine whether it is enforceable. If enforceable, the attorney can aid in protecting your rights and assets as you navigate through the difficult road ahead.
If you are trying to determine whether or not you need a prenuptial agreement, the choice is a personal one. However, an attorney may help you to evaluate your options and concerns prior to entering the marriage.
Do I Need a Lawyer?
If you are planning to get married, you should consider consulting with a family law attorney. Your attorney can help you understand if a prenuptial agreement is right for you and your future spouse. If you decide to create a prenup, your attorney can help you draft the document.
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Last Modified: 12-08-2015 03:25 PM PST
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