An Introduction to Prenups
A premarital agreement (also known as a prenuptial or antenuptial agreement) is a written contract between two people who are contemplating marriage. The contract is made prior to the marriage to establish the terms by which, should the marriage ever disappointantly end in divorce, the parties’ interests in real and/or personal property will be allocated to each of them and the means by which ongoing obligations such as alimony and child support shall be determined following termination of the marriage, either by divorce or death .
Parties to a premarital agreement may wish to enter into such agreement because it can provide a means of determining potentially contentious issues ahead of time and avoiding litigation over those topics in the event the marriage does not proceed as expected. In addition, if one or both parties to a marriage own real or personal property prior to the marriage, it can protect that property from being divided upon divorce or death of either party. For example, many professional practices are owned by one spouse prior to the marriage and may be protected under a prenuptial agreement from being divided up in the event of a divorce.
Duration and the Partnership Act
The legal framework governing the duration of prenuptial agreements is complex and varies significantly among states. Generally, the terms of prenuptial agreements are adhered to for as long as they are not modified or set aside by state law. However, some states include time requirements that dictate when an agreement will become effective. Massachusetts, for example, requires that prior to marriage the parties execute a marriage contract before a notary public and that the contract be recorded at the Registry of Deeds 20 days before marriage in order for the contract to be effective. LaFlamme v. LaFlamme, 364 Mass. 222 (Mass. 1973).
Some states, like California, require that alimony (spousal support) obligations continue in effect until the agreement is "incorporated, merged or subjected to a court order," which can occur via a number of different scenarios. Specifically, California refers to "incorporation" as an agreement or order that reflects the agreement. In re Marriage of Heikes, 102 Cal. App. 4th 288, 289, 125 Cal. Rptr. 2d 538 (2002). Furthermore, for the agreement to be "merged" it must be incorporated by reference in the judgment of dissolution. Id. And, lastly, in order for spousal support obligations to become subject to a court order, a judgment can address the parties’ marital economic issues if it "reflects the actual agreement of the parties regarding a provision of the prenuptial agreement." Id. The court determines whether the prenuptial provisions contained in the judgment "spells out the actual agreement of the parties" by determining whether the parties agreed to a certain support formula, time period, and/or specified state ("ABC States"). Id.
Regardless, California courts will generally hold that a marital agreement will be enforceable upon proper execution unless the agreement was "fundamentally unfair" when the parties entered into the agreement or the court determines that enforcement will be unfair due to changes in the circumstances of the parties. Id. (Quoting 12 Witkin, Summary of Cal. Law, Contracts Sec. 869 (10th ed. 2005)). California courts will apply the same standards to marital agreements as they would for any contract. Id. (Citing 6 Witkin, Summary of Cal. Law, Marriage Sec. 174 (10th ed. 2005). Furthermore, the burden of proof is on the party seeking to avoid enforcement of the marital agreement, Andreason v. Andreason, 59 Cal. App. 4th 868, 875, 69 Cal. Rptr. 2d 106 (1997), and the agreement will be enforced unless the court finds that it is invalid due to fraud, undue influence, material misrepresentation, unconscionability, or the absence of consideration. Id. (citing 6 Witkin, Summary of Cal. Law, Marriage Sec. 174 (10th ed. 2005).
Situations Affecting Durability
Various circumstances may affect the validity of a prenuptial agreement both at the time of execution and in the future. In the event of divorce, an argument might be made that an agreement is invalid if entered into under duress or with absence of voluntariness. Consideration must also be given to varying life circumstances that may affect the enforceability of a prenuptial agreement over time, e.g., changes in the financial status of either party or a major change of circumstance not contemplated at the time of the execution of the agreement, such as unforeseen illness, accidents or death. While prenuptial agreements are generally recognized as contracts, the terms of these premarital contracts must be conscionable. Therefore, the circumstances surrounding each agreement will be considered by the courts of each state.
Common Conditions and Time Constraints
A typical prenuptial agreement includes various clauses such as defining the separate property and marital property of each spouse, how these properties will be divided in the future, terms related to alimony and spousal support, the responsibilities of both spouses during the marriage, and debt management.
In the event that a spouse wishes to have the agreement terminate after a certain period of time , this is possible. A sunset clause allows the parties to determine a period of years in which the prenuptial agreement will expire and the couple can remain free from any obligations in the event of a divorce. For example: the prenuptial agreement provides that any divorce actions or division of property under this agreement would terminate in the event of a divorce after 3 years of marriage. However, if a divorce were filed within that time, the terms of the prenuptial would apply.
Revocation and Variation Options
As with almost all legal contracts, prenuptial or premarital agreements can be contested by the courts under certain circumstances. Cohabitation agreements may not receive the same level of scrutiny as prenuptial agreements during a divorce but can be challenged or modified in other legal venues.
Issues that may raise the validity of a prenuptial agreement include unconscionability due to an extreme disparity in income, assets and debt between the parties involved that put one spouse at a terrible disadvantage, fraud or misinformation. In addition, if full financial disclosure was not made by one or both parties making an incoherent contract even more so, or a party signed the agreement out of coercion or duress, the agreement may be invalidated.
An attorney with a specialty in family law can advise if, and how, a prenuptial agreement can be challenged, amended or invalidated. Typically, these agreements are only ever questioned during the separation or divorce of the parties involved. Aspects that may be contested in a prenuptial agreement at the time of or after a divorce would include the length of a marriage that the partner would be entitled to any money due to alimony or spousal support. If the prenuptial agreement does not specify a time frame, the courts may throw it out entirely and issue awards at its discretion.
If it is decided that a prenuptial agreement is valid and enforceable, some laws permit the modification of existing contracts. The new contract must address any estate planning or child support issues that were not addressed in the original and must be in writing. Both parties must have full knowledge of the current financial information available to make an informed decision. These changes should be done with the counsel of an experienced attorney.
If the agreement is to be modified, changes must be made in the same manner and in good faith as the initial prenuptial agreement was executed.
Conclusion – Lasting Effect and Security
In order to ensure that your prenuptial agreement continues to provide the protection you had in mind, periodic review and update of the agreement is essential. The financial situations of individuals and the state of the law change over time and your agreement should change with them. A provision in your prenuptial agreement calling for periodic review is common, but it is up to you to make sure that it is followed. If your living circumstances change, have a child, or if your financial status changes in some other way, a review is in order. Also when there is a significant change in the law, a review is warranted . In the unfortunate event that the prenuptial agreement should come into play, drafting an agreement that is clear and unambiguous will help to meet your goal of enforceability. If you keep records of the anticipated financial situation of each party in forming the contract, you could minimize future problems. Although these may not prevent a court from being involved, they can prevent unforeseen disputes and delay in signing off on your divorce settlement. While the parties may hope never to have to put their prenuptial agreement into practice, when circumstances require it, they can be thankful that they planned ahead.