When are Prenuptial Agreements Valid?

When are Prenuptial Agreements Valid?

| Jul 27, 2020 | Uncategorized

What is a prenuptial agreement, and what impact does it have? When will a court enforce a prenuptial agreement? Prenuptial agreements (also sometimes called a “prenup” or an antenuptial agreement) are a type of contract entered into between two people before they get married. These agreements often address the treatment of future earnings, maintenance (aka alimony), and how assets are to be divided between two people in the event of a divorce. It will govern the court’s decision regarding the aspects that are addressed in it, so long as the court finds it is valid and enforceable. If an agreement is not valid, courts will follow the general statutory rules for dividing assets and awarding maintenance, and the ultimate result might be quite different. The court will evaluate a number of factors to determine whether the agreement is valid and enforceable.

Because a prenuptial agreement is a type of contract, it is limited in the same way that many other contracts are limited, with a few interesting twists unique to family law. A prenuptial agreement is either enforceable- meaning a court will apply the terms of the agreement when the parties get divorced- or it is not. In other words, a court will not selectively enforce part and reject part of a prenuptial agreement.

Prenuptial agreements must be entered into freely, fairly, willingly, understandingly, in good faith and with full disclosure. When evaluating an agreement, a court will look at the circumstances at play when the agreement was signed. In particular, the court will look at five factors: (1) whether both parties had independent lawyers; (2) whether there was an adequate amount of time between the initial presentation of the agreement and the wedding date to allow for discussion and revision of the agreement; (3) disclosure of the spouses’ assets and their values; (4) disclosure of the prospective spouses’ legal rights; and (5) relatively equal bargaining positions between each spouse in terms of age, sophistication, education, employment, and experience.

Each factor depends on the individual situation at issue. For example, parties must fully disclose the property they hold and the legal rights that will be affected by entering into the agreement. In order to make an informed decision, a party needs to know enough about the other potential spouse’s property to be able to decide whether he or she wants to enter the agreement. If some facts regarding assets were not disclosed, the agreement may not be valid. However, the exact specificity required to constitute full disclosure of assets and liabilities is dependent upon the particular circumstances of each case. In one Missouri case, a wife knew that her husband owned certain types of property, including real estate, but there was no indication she knew the extent of the husband’s holdings, whether the real estate was encumbered, and if so, the equity in it, or other specific information regarding it. As a result, the court decided the prenuptial agreement was not valid.

In addition to the factors listed above, courts will consider whether an agreement is unconscionable-meaning that it is strongly and manifestly unequal to one of the parties. There are two aspects to unconscionability: procedural unconscionability, which deals with the formalities of making the contract, and substantive unconscionability, which deals with the substance of the contract. Courts will look at both in evaluating prenuptial agreements.

Because of the potential for a court to determine that a prenuptial agreement is invalid and unenforceable, it is important to seek the advice of an attorney in advance of your proposed marriage regarding the drafting and execution of a prenuptial agreement. Conversely, if you signed a prenuptial agreement, a court may determine the agreement is not valid and you may be able to retain your statutory rights regarding the division of marital property and an award of maintenance. If you have questions regarding a prenuptial agreement, contact Kimberly J.Z. Guthrie. Ms. Guthrie has represented numerous clients in a wide variety of family law matters and has experience drafting prenuptial agreements, counseling clients regarding the enforceability and validity of prenuptial agreements, and litigating dissolution matters where the validity of a prenuptial agreement was at issue.