Many couples contemplating marriage wonder if a Premarital, or Prenuptial, Agreement is something they should consider. A Premarital Agreement can be used in many situations, but most times, such an agreement is done in order to make sure that a particular asset, such as a business or a family piece of farm ground, is not disturbed should one of the partners die, or the parties get divorced. Another common situation in which a Premarital Agreement is used is when one or both of the partners has children from a previous relationship, and they wish to preserve assets which are to be left to their children.
Normally the law allows parties to make a valid Premarital Agreement with respect to any piece of their property, including the right to buy, sell, or transfer the property.
A premarital agreement can be used to dispose of the property upon separation, death, or divorce. It can be used to modify or eliminate maintenance, or what used to be called alimony. It can be used to make a will, trust, or other arrangement. Premarital agreements can accomplish many tasks when drawn properly.
However, there are also limitations on premarital agreement.
- To begin with, a valid Premarital Agreement must be in writing and signed by both of the partners. A claimed oral premarital agreement will not be allowed.
- It will not take effect unless the marriage occurs. Regardless of what the parties state in the agreement or how they behave prior to the marriage, the premarital agreement will not become effective until the marriage actually takes place. If there is no marriage, the agreement is invalid. After the marriage, it can only be amended or revoked by a written agreement signed by the parties. An oral revocation or modification will not be allowed.
- It is not enforceable if one of the parties signing the agreement did not do so voluntarily. A party cannot use coercion, threats, duress, or fraud to force the other party to sign a premarital agreement. The classic situation when this occurs is when one partner presents the other with a Premarital Agreement hours before the wedding, and states that the wedding will not take place unless the premarital agreement is signed. Such behavior makes any agreement signed under those circumstances invalid.
- It cannot be so one-sided as to be unconscionable, meaning that it cannot favor one party so much that it violates a sense of fair play. There does not have to be an equal distribution of assets in the agreement, but it cannot be so one sided so that one party has all of the assets and the other party is left destitute.
- It must provide a fair and reasonable disclosure of the property or financial obligations of each party. The parties can agree to waive such a disclosure, but only under certain circumstances.
- It cannot eliminate maintenance if to do so would lead to an unconscionable result. If eliminating maintenance creates an undue hardship in light of all the circumstances upon the other partner, the Judge may still require one partner to pay maintenance, no matter what the agreement says.
- A party must be allowed to review the document, preferably with a lawyer of their own choosing. Unless a partner is given the opportunity to review the document with an attorney of their choice, the agreement is much more likely to be considered to be made as a result of coercion or duress, and therefore invalid.
A premarital agreement that is properly drafted, appropriately reviewed by each party, and not so one-sided so as to be completely unfair, gives partners the chance to divide their property upon death or dissolution of the marriage. However, it must be properly drafted so as to withstand a challenge in a later court proceeding.
A poorly drafted Premarital Agreement can result in a legal battle over the validity of the agreement which will cost both partners a lot of money in legal fees and court costs.
Any future bride or groom that is thinking about a Premarital Agreement should contact a lawyer with experience in such matters to discuss the pros and cons of such an agreement, and the way such an agreement may be properly drafted. Our attorneys can help you put together an estate plan that meets the needs of everyone in your family. Contact us 24/7 at 855-522-5291.