A prenuptial agreement, also dubbed 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 before a marriage or civil union. This agreement establishes each spouse’s property and financial rights if they choose to disband their marriage.
Although it may seem unromantic to prepare for a divorce before you are even married, with more than half of all marriages in America ending in divorce, it’s wise to consider a prenuptial agreement.
Prenuptial agreements are often used by parties entering their second or third marriages wherein the parties to the contract have substantial assets they want to guard in a divorce.
What Are the Basics of a Prenuptial Agreement?
While most states have their own rules regarding the requirements or basics of a prenuptial agreement, a few standard basics should be present for the contract to be deemed enforceable.
These requirements include the following:
- The Agreement must be fair and voluntary.
- Full disclosure of each party to the agreement’s 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 (in most states, it 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 numerous reasons why a prenuptial agreement would be deemed null and unenforceable. If a prenuptial agreement is deemed unenforceable, the parties’ assets will be split 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: Both parties must sign a prenuptial agreement to the marriage or civil union. If a prenuptial agreement is not signed before the parties enter the marriage, the contract may be unenforceable against either spouse. Also, some states require each party to be represented by separate lawyers and have a statutory timeframe to review the agreement before 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 happen.
- Insufficient Time: Just as proper execution is needed, most states require a statutory timeframe for the parties to review the contract before signing. For instance, 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: Further, 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 breaks the law. Nevertheless, it is likely that when reviewing the prenuptial agreement, the court will 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 details about BOTH parties’ income, assets, liabilities, and debts to the agreement.
- Unconscionability: A prenuptial agreement that is unconscionable will not be enforced. Unconscionability is generally 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 unconscionable.
What Should Be Included in a Prenuptial Agreement
Depending on the parties’ financial and personal situations when they enter into the agreements, there are a variety of matters to consider and provide for in the prenuptial agreement they enter into.
Parties should consider the following issues before 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 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 the distribution of a family heirloom. The contract can stipulate that a family heirloom, family business, or even a future inheritance remain in your birth family. Your spouse has no right to it in a divorce.
Who Needs a Prenuptial Agreement?
Anyone who is getting married may want to enter into a prenuptial agreement. Traditionally, those entering into their second or third marriages with substantial assets and wealth are often considered 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 the marriage is known as community property or marital property. State law may determine how the property you owned before marriage will be distributed.
In most states, a spouse usually has the right to do the following:
- Share equal ownership of property acquired during the marriage.
- Incur debts during the 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 disdainful, 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 resolve their affairs and assets in 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 immediately contact a family law attorney. 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 personal. However, an attorney may help you evaluate your options and concerns before entering the marriage.
Do I Need a Lawyer?
If you are planning to get married, you should consider consulting with a family 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 lawyer can help you draft the document.