Ruth hadn’t wanted to sign a prenuptial agreement when marrying her second husband after a prior divorce. But like most others who sign prenups, she’d had no real choice. Her second husband wouldn’t have married her if she refused to sign. It was that simple. Ruth had read the prenuptial agreement before signing. Indeed, she did as the prenup suggested, which was to consult her own attorney about it. The attorney, naturally, had warned her that the prenup could significantly limit her rights in a divorce, just as the document recited. Yet she’d signed it anyway. At that moment, what was she going to do? But now, with her second husband broaching the subject of divorce, it looked like she might have to pay for it.

Prevalence

A prenuptial agreement can significantly affect rights and responsibilities in a divorce. If you have a prenuptial agreement, then read this chapter. If you don’t, then skip this chapter unless you want to learn how prenups work. Ordinarily, it might make sense to begin a guide on divorce with a discussion of prenuptial agreements. But relatively few couples enter into prenuptial agreements before marrying. It used to be only a tiny fraction, although it may now be up to around 15%. Yet even if you signed a prenuptial agreement, it might have little effect on several of the subjects already discussed above, such as protective orders, avoiding divorce, needing attorney representation, filing for divorce, interim orders, and child custody and support. But now let’s take a look together at prenuptial agreements.

Definition

A prenuptial agreement is a contract that the spouses enter into before marrying, addressing their respective rights and responsibilities in the event of a divorce, especially as to a division of property and debts, and the payment of spousal support. People sometimes refer to a prenuptial agreement as a prenup for short. Prenuptial agreements can also go by antenuptial agreements, the two phrases meaning the same thing. Pre- or ante- both refer to before, while nuptial refers to the marriage. See, for example, the antenuptial agreement among the forms at the end of this guide. An antenuptial agreement or prenup is thus an agreement before marriage made between the marrying parties.

Purposes

Prenuptial agreements have the primary purpose of protecting the spouse who has the significantly greater income and property. That spouse may have the concern that the other spouse isn’t marrying for love in the long term but for money in the short term, indeed for striking it rich in divorce. Perhaps that’s putting it too plainly. Prenups have more-positive purposes, such as to protect the inheritable interests of the rich spouse’s children from a prior marriage. Rather than seeing a good chunk of their expectancy go to the new spouse in a divorce, the prenup would preserve the bulk of the riches for them. A prenup can also free the new spouses from the weight of that issue of whether the poorer spouse is marrying for money or love. If the marriage doesn’t offer the prospect of riches on divorce, then the poorer spouse must be marrying for love. Prenups can also protect business interests from divestment in divorce, substantially reduce costs and conflict in the event of divorce, and even define financial obligations during the marriage. Putting some plans on paper, whether for the marriage or in the event of divorce, can help the about-to-be newlyweds clarify their expectations.

Terms

Common terms in a prenuptial begin with the spousal support, if any, that the richer spouse will owe to the poorer spouse in the event of a divorce. The prenup will generally provide for some spousal support if the poorer spouse does not have the ready ability to earn a sufficient income or live off of property. But the spousal support would generally not be the much higher amount that the richer spouse’s income and assets could afford, to keep the poorer spouse living at the high standard to which the poorer spouse had become accustomed during the marriage. The prenup may also provide for some property distribution to the poorer spouse, perhaps even including a residence, vehicle, and other common accommodations and conveniences. But the property distribution would not generally be anything approaching what the poorer spouse would have received in the prenup’s absence. Prenups routinely prohibit the poorer spouse from reaching other assets of the richer spouse, often naming the business or other financial interests that the richer spouse will hold free and clear of any claims of the poorer spouse in divorce. That prohibition is typically the prenup’s main point.

Policy

State laws can authorize and require courts to look closely at whether to recognize and enforce prenuptial agreements Ordinarily, states have little interest in regulating private contracts between consenting individuals. Yet states can have substantial interests in divorce. State legislatures generally want to ensure that divorcing parties provide for one another’s basic needs if they are able, so that the state through its taxpayers doesn’t have to do so for them. State legislatures may also want to protect a poor and naive spouse from having a rich and conniving spouse lure the poor spouse into a disadvantageous marriage. Many state legislatures have adopted a uniform prenuptial-agreements act or versions of it. The uniform act authorizes prenups but relieves the disadvantaged spouse from their harsher versions and effects. Prenup laws vary from state to state. Just know that prenups are not always enforceable in specific circumstances. More on enforceability in a paragraph below.

Execution

Under state contract law and special prenup laws, prenuptial agreements must generally be in writing and signed by both parties before the marriage. In the better instances, the party advocating for a prenup, uniformly the party with the greater financial interests to protect, will present the proposed prenuptial agreement well enough in advance of the wedding date for the other party to give it due consideration. In point of fact, though, parties proposing prenups can be notorious for surprising the other party with them on the eve of the wedding, when it would be hardest for the other party to refuse to sign and thus endure the embarrassment of canceling the wedding. Your state’s law may not draw any hard-and-fast lines as to just when the parties agree and arrange to sign the prenup before the wedding, but the fairness of the prenup’s presentation, consideration, and execution can influence its enforceability.

Consultation

Prenups commonly recite that the parties had ample time and encouragement to consult with their own attorney. That recitation may help ensure the prenup’s enforceability, especially if in fact the parties had ample time and took advantage of it to consult with their own attorney. Attorney consultation makes it much harder for the party later objecting to the prenup to claim that they did not understand it and signed it under some degree of misunderstanding or duress. The attorney would naturally have ensured that their client understood the agreement, including its disadvantages and risks.

Disclosures

The disclosures that the parties make in the course of executing a prenuptial agreement are another key, along with the manner of execution, as to whether the agreement is enforceable in a later divorce. Prenuptial agreements often recite that the parties made certain financial disclosures, sometimes shown on an attached schedule. Prenups also sometimes recite that the parties had the opportunity to investigate and review other financial information. Disclosures are significant because the parties may rely on them to decide whether to sign. If, for instance, the richer party discloses a net worth of a million dollars, when instead the richer party has an actual net worth of a billion dollars, the poorer party might have refused to sign a prenup that offers only modest property or spousal support in the event of a divorce. 

Misrepresentation

Thus, misrepresentations inducing the signing of a prenuptial agreement, particularly fraudulent disclosures, affect the agreement’s enforceability. Indeed, the divorce court would ordinarily not enforce an agreement executed on deliberately false, material disclosures, made to induce the other party to sign the agreement to that party’s detriment, and that do in fact induce the other party to sign. Not only affirmatively false disclosures, but also deliberately omitting to disclose assets with the intent to deceive, can make a prenup unenforceable. A party asking the other party to sign a prenup should take great care in the accuracy of financial disclosures because in the event of a divorce, the spouse objecting to the prenup’s enforcement may claim that the inaccuracies were deliberately deceptive, to induce the agreement.

Enforceability

The question of enforceability may not come up until one or the other spouse files for divorce, and the richer party asserts the prenuptial agreement as a ground on which to limit the poorer spouse’s support or property division. When a party in divorce attempts to rely on a prenup to limit the other spouse’s spousal support or property division, the other spouse’s attorney will generally scrutinize the prenup’s associated disclosures closely, even investigating those disclosures using the divorce proceeding’s discovery powers, to determine whether misrepresentation occurred. The attorney may also examine closely the circumstances of the prenup’s execution before marriage, looking for evidence of unfairness, coercion, or duress inducing its signing.

Unconscionability

The party challenging a prenuptial agreement may have another ground on which to prove its unenforceability in a divorce proceeding. That other ground has to do with whether the agreement is unconscionable. Unconscionable may have different definitions in different states under different circumstances. But unconscionability generally means an agreement so one-sided as to shock the conscience with the unfair advantage it takes of the party objecting to the prenup’s enforcement. An example of unconscionability may be if the agreement offers the poorer spouse a meager monthly support payment, insufficient to meet basic expenses, and little or no property of any value, when the richer spouse is a billionaire. Other circumstances could add to the unconscionability, such as the timing in which the richer spouse sought divorce and manner in which the richer spouse invoked the prenup, to harm the poorer spouse. Get skilled attorney representation to evaluate the enforceability of your prenuptial agreement in the event of divorce.

Key Points

• Prenuptial agreements are relatively uncommon but increasing.

• A prenuptial agreement is a private contract made before marriage.

• A prenup limits spousal support and property division on divorce.

• A prenup’s main purpose is to protect business and financial interests.

• Both parties must sign the prenup before marriage to enforce it.

• State laws encourage close examination of a prenup’s enforceability.

• False disclosures inducing a prenup may prevent its enforcement.

• Terms so unfair as to shock the conscience prevent enforcement.

Read Chapter 18.