Premarital Agreements
What does a spouse
give up by signing a premarital agreement?
In signing an agreement, a
spouse agrees to have his or her property rights and support obligations
determined by the agreement rather than by the usual rules of law that a court
would apply on divorce or death. An agreement can give the spouse more or less
than state law allows. In most states, courts divide property as the court
considers fair, and the result is less predictable: The split could be
fifty-fifty or something else. If one spouse dies, courts normally follow the
instructions of that person's will, but in most states the surviving spouse is
entitled to one-third to one-half of the estate regardless of what the deceased
spouse's will says. If the husband and wife have signed a valid premarital
agreement, that agreement will supercede the usual laws for dividing property
and income upon divorce or death. In many cases, the less-wealthy spouse will
receive less under the premarital agreement than he or she would receive under
the usual laws of divorce or wills.
What does a spouse give up by signing
a premarital agreement?
In signing an agreement, a spouse agrees to have
his or her property rights and support obligations determined by the agreement
rather than by the usual rules of law that a court would apply on divorce or
death. An agreement can give the spouse more or less than state law allows. In
most states, courts divide property as the court considers fair, and the result
is less predictable: The split could be fifty-fifty or something else. If one
spouse dies, courts normally follow the instructions of that person's will, but
in most states the surviving spouse is entitled to one-third to one-half of the
estate regardless of what the deceased spouse's will says. If the husband and
wife have signed a valid premarital agreement, that agreement will supercede the
usual laws for dividing property and income upon divorce or death. In many
cases, the less-wealthy spouse will receive less under the premarital agreement
than he or she would receive under the usual laws of divorce or wills.
Why
would a spouse sign a premarital agreement if he or she would receive less under
the agreement than under other laws?
The answer to that question depends
on the individual. Some people prefer to control their fiscal relationship
rather than to leave it to state regulation. They may want to avoid uncertainty
about what a court might decide if the marriage ends in divorce. For some, the
answer may be "love conquers all"--the less-wealthy person may just want to
marry the other party and not care much about the financial details. For others,
the premarital agreement may provide ample security, even if it is not as
generous as a judge might be. Still others may not like the agreement, but they
are willing to take their chances and hope the relationship and the financial
arrangements work out for the best.
What is necessary to make a valid
premarital agreement?
In general, the premarital agreement must be in writing
and signed by both parties. In most states, the parties must fully and clearly
disclose in writing their income and assets to each other. This way the parties
will know more about what they might be giving up. In some states, it may be
possible to waive a full disclosure of income and assets, but the waiver should
be done knowingly, and it is still best if each party has a general idea of the
other's net worth.
The premarital agreement must not be the result of fraud
or duress. An agreement is likely to be invalid on the basis of fraud if one
person (particularly the wealthier one) deliberately misstates his or her
financial condition. For example, if a man hides assets from his future wife so
that she will agree to a low level of support in case of divorce, a court
probably would declare the agreement invalid. Similarly, if one person exerts
excessive emotional pressure on the other to sign the agreement, a court might
declare the agreement to be invalid because of duress
Family Law
FAQ
Must the parties to a premarital agreement be represented by
lawyers?
No, but it is a good idea. Lawyers can help make sure that the
agreement is drafted properly and that both parties are making informed
decisions. The lawyer for the wealthier party usually prepares the initial draft
of the agreement. The less-wealthy party should also have a lawyer to review the
agreement, even if only on a minimal-cost consultation basis. Although you do
not need to have a lawyer in order to have a valid agreement, the agreement is
more likely to be enforceable if each person's interests are represented and
significant back-and-forth negotiations have taken place. The agreement is more
likely to be challenged if one of the parties does not have an independently
chosen lawyer.
Do premarital agreements need to provide for a certain
amount of support?
No, the law does not set a specific amount. In some
cases, though rare, a court may decide that an agreement is enforceable even if
it leaves one spouse with no property and no support from the other party. In
determining whether a premarital agreement is enforceable as drafted, courts
will examine circumstances that may have changed since the time of the
marriage--such as the birth of a child, a career given up, or an unforeseen
illness.
Some states will enforce an agreement to provide no spousal support,
so long as waiver of support does not leave the less-wealthy party so poor that
she or he is eligible for welfare. Many courts will apply broader notions of
fairness and require support at a level higher than subsistence. Some states
provide that the support cannot be "unconscionably" low. That is a somewhat
vague term that means different things to different courts.
Some lawyers
think it is a good idea for premarital agreements to contain an escalator clause
or a phase-in provision that will increase the amount of assets or support given
to the less-wealthy spouse based on the length of the marriage or an increase in
the wealthier party's assets or income after the agreement is made.
May
premarital agreements decide future issues of custody and child
support?
No. A court may consider a premarital agreement the parties have
reached regarding child custody or support, but the court is not bound by it.
Broadly speaking, parties cannot bargain away rights of children, particularly
before children are even born. A later section in this chapter will discuss
child support guidelines and custody.
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