Failure to Disclose Assets and Prenuptial Agreements

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 What Is a Prenuptial Agreement?

A prenuptial agreement is an agreement, or contract, entered into before marriage. It is usually made to resolve support and property division matters if the marriage ends in divorce or by the death of one of the spouses.

Prenuptial agreements are occasionally referred to as antenuptial agreements or “prenups.”

What Are Some Standard Features of a Prenuptial Agreement?

Prenuptial agreements usually have some standard clauses to ensure peace of mind for both parties:

  • Property Separation: To protect separate property.
  • Financial Separation: To protect themselves from the other spouse’s debt.
  • Alimony: To determine the level of support owed to a spouse both in divorce and death
  • Division of Responsibilities: To specify the responsibilities of each spouse after the vows are exchanged.
  • Child Inheritance: If one of the spouses were in a previous marriage, these terms would ensure that the children can keep a portion of the estate rather than go straight to the other spouse.
  • Forum selection: To determine which jurisdiction will govern any dispute before the wedding. Forum selection may also resolve how the dispute is settled; negotiation is preferable to a trial if the goal is to get to the aisle.
  • Choice of law clauses: To determine what laws govern any dispute before the wedding. Forum selection clauses determine the location and form of dispute resolution, while the choice of law clauses determine the couple’s rules.
  • Sunset provisions: Since prenuptial agreements are contracts for pre-marriage agreements, it might be necessary for the agreement to state when the contract will end.

What Is Independent Legal Counsel?

Prenuptial agreements are usually signed when both spouses already have significant financial assets. If one spouse is wealthier, the affluent spouse could disadvantage the spouse who doesn’t have as much cash pre-marriage. Nevertheless, people cannot take advantage of their spouse post-marriage because each spouse must be honest with their partner.

States often mandate both spouses to retain independent legal counsel. To retain legal counsel means hiring a lawyer to look over the prenuptial agreement and inform the client about the potential effects of signing it.

For the lawyers to be independent, the attorneys cannot have a conflict of interest. This rule will deter one lawyer from representing both spouses because the spouses will conflict in the event of a divorce. As a result, independent legal counsel means both spouses must retain a lawyer who can examine the prenuptial agreement. Although one spouse can pay for the other spouse’s attorney, the payee’s attorney must represent and back the payee’s interests and not the paying spouse.

If both parties do not have attorneys briefing them about the prenuptial agreement, the agreement may be revoked by a court later on.

Are Prenuptial Agreements Enforceable?

Prenuptial agreements are typically enforceable. Although the laws regulating prenuptials differ from state to state, there are standard rules.

They are only enforceable if it is fair at the time of enforcement. Some states need certified copies of your marriage certificate.

You can have the judge overseeing your divorce make a formal order to restore your former name. No agreement can promote divorce. They must be in writing. They cannot include child support responsibilities. Attorney representation is usually mandated for both parties.

What Can’t a Prenuptial Agreement Enforce?

Although a prenuptial agreement can help structure and resolve any conflicts which may emerge before and after the wedding, contract law can’t be used for unlawful purposes.
Prenuptial agreements can’t be used to evade the law.

Prenuptial agreements cannot be used to limit or end child support or child visitation rights. The spouse with child support or child custody must still pay support or permit their ex-spouse to visit the children.

The agreement also can’t be utilized to promote divorce. This can occur when the agreement disproportionally gives one spouse too much property or alimony in the event of a divorce or breakup. Since the objective of a contract is to promote a legal promise, an agreement that encourages one party to the contract to disregard that promise cannot be enforced.

Finally, prenuptial agreements cannot be used to break public laws. For instance, prenuptials cannot be used to limit the right of free exercise of religion. Although spouses are free to squabble over which church, temple, or synagogue to attend, spouses cannot utilize the courts to resolve those disputes.

How Do I Terminate a Prenuptial Agreement?

Prenuptial agreements generally contain a sunset clause that causes the agreement to expire when a particular event transpires, such as the end of the wedding, the possession of the marriage certificate, the culmination of the honeymoon, or just by a specific date.

There are a few options if you are looking to end a prenuptial agreement before a breakup.

Prenuptial agreements are just contracts and, like all contracts, are subject to specific rules:

  • Duress: Both parties must freely consent to the agreement. If a party is forced into the contract, the contract will not be valid.
  • Non-complete disclosure: Both parties must give full disclosure as to their assets. Failure to do so will threaten the legality of the contract. The agreement is considered “unfair” to one party; the agreement strips one party of rights and assets.

Does the Use of a Prenuptial Agreement Mean a Lack of Trust?

Prenuptial agreements are not a sign of trust or lack thereof. If anything, prenuptial agreements are a sign of clarity. The agreements provide open communication between the soon-to-be newlyweds, which is an excellent habit to cultivate no matter what phase of the couple’s relationship.

Contrary to popular notions, prenuptial agreements tend to strengthen relationships rather than ruin those relationships. Older couples also use them to guarantee their kids have access to their respective estates.

What Is the Effect of Failing to Reveal Assets on a Prenuptial Agreement?

If you or your spouse failed to reveal assets, your prenuptial agreement might be invalid. That means it will be put aside and not implemented by a court.

To establish that a prenuptial agreement should be null for a failure to disclose assets, you will have to prove:

  1. A confidential relationship existed between you and your partner,
  2. The relationship gave rise to a duty to fully and fairly disclose each of your assets, and
  3. One of you breached the duty to disclose.

What Acts Equal a Breached Duty to Disclose Assets?

Acts that qualify for a failure to disclose assets and can nullify a prenuptial agreement include:

  • Failing to make any disclosure whatsoever
  • Understating assets
  • Failing to describe the nature or value of assets

Are There Any Defenses?

There are several defenses if one individual is trying to nullify a prenuptial contract because of a failure to disclose. They can include:

  • No confidential relationship existed,
  • Full and fair disclosure of assets was made,
  • The individual contesting the prenuptial contract had independent knowledge of the other individual’s assets,
  • The prenuptial contract contains a way to deal with similar quarrels,
  • The prenuptial arrangement was ratified by the individual now challenging it,
  • The challenge was not timely, or
  • Either party abandoned the prenuptial agreement.

Do I Need a Family Lawyer?

If you or your former spouse is trying to nullify a prenuptial agreement because one of you failed to reveal some of your assets, it is highly recommended that you contact a family attorney. They will be able to explain the issues and help protect your rights entirely.

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