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Premarital Agreements

Nov 22, 2021 | Premarital and Postmarital Agreements

During the time when two future spouses intend to be married, the discussion of entering into a premarital agreement can be cumbersome and unromantic. But, premarital agreements serve a purpose beyond the general idea that the agreement is used to control or manipulate a future spouse. A premarital agreement is important in that it forces a future couple to address and answer questions surrounding finances, inheritance, property, obligations, and children in the event of divorce or death. Premarital agreements are used to define the rights and obligations of couples who are about to marry. In general, a premarital agreement can cover a plethora of matters provided that the agreement does not violate public policy or a criminal law, adversely affect a child’s right to child support, or defraud a creditor.

There are several functions that a premarital agreement can serve. If drafted correctly, premarital agreements can be detail-oriented and address a vast scope of topics. One of the most common functions of premarital agreement is to establish the legal characterization of certain property owned by the parties, whether currently owned or expected to be acquired in the future during the marriage. A premarital agreement can establish, by agreement of the parties, whether property is intended to be community property, separate property, or some combination of both. This characterization is especially important at the time of a divorce, as the Court only possesses the legal power to divide community property owned by the parties at the time of the divorce. A Court cannot divest a spouse of his or her separate property and award it to the other spouse. Therefore, a premarital agreement’s most prominent function is to establish the characterization of marital property, so as to make the divorce process more efficient and less emotional, should a divorce become necessary.

Other functions of a premarital agreement include, but are not limited to, establishing spousal support or spousal maintenance, addressing family household functions and obligations during the marriage, characterizing debts owed prior to marriage or debts incurred during marriage, dictating how income earned during marriage is to be characterized, establishing rights regarding business interests presently owed or to be owed in the future, clarifying how the spouses will file taxes during the marriage and responsibilities associated with income-tax liabilities, addressing options having to do with a surviving spouse should the other spouse become deceased, and controlling life insurance or retirement benefits. As illustrated above, premarital agreements present a broad scope of topics that should all be contemplated by the parties when entering into the drafting process.

If a future spouse determines that a premarital agreement is appropriate given his or her circumstances, it is important that the future spouse seeks the guidance and advisement of a family law practitioner who is well-versed in the nuances that an agreement entails. If drafted or executed improperly, there is a chance that the premarital agreement can be ruled unenforceable by the Court, should a spouse attempt to contest the enforceability and validity of the agreement upon the filing of a divorce. Often times, two future spouses will enter into a self-drafted agreement, only to later discover that the agreement is unenforceable or does not relay the initial intent and agreement reached by the spouses.

There are necessary steps that must be taken in order to protect the enforceability and validity of the premarital agreement. The two future spouses are required to provide a full financial disclosure of all assets and liabilities owned to each other. A future spouse is entitled to review a full disclosure of the financial profile of the other future spouse.  A party can also agree to waive the right to financial disclosure if signed and in writing. If a future spouse does not accomplish this necessary requirement at the outset of the process, that premarital agreement is certainly vulnerable to attack by a contesting spouse.

The process of entering into a premarital agreement prior to marriage is particular. Not only should an attorney ensure that the agreement reflects the goals and intent of the individual, but the draft should take into consideration the possibility that the agreement could be contested in the future. Upon the filing of a divorce, the party wanting to enforce the premarital agreement will identify the existence of the premarital agreement and ask the Court to conduct the divorce based on its terms. There is always the possibility that the other spouse will attempt to contest the enforceability and validity of all or part of the premarital agreement. The party who wants to contest the enforceability or validity of the agreement, must prove such.

Defenses against enforcement of a premarital agreement include a showing that the agreement was entered into involuntarily or that the agreement is unconscionable. There are a number of well-established factors that a Court can consider in deciding enforceability. Although most factors, alone, are not outcome determinative, a combination of factors proven in Court can have a cumulative effect in establishing unenforceability. One important factor to consider is whether one or both spouses received independent advice of legal counsel during the drafting and execution process. A family law practitioner cannot mutually represent the interests of both future spouses. Therefore, it is necessary that both future spouses work with his or her independent attorney throughout the entire process. A contesting spouse who was not represented by counsel when entering into the agreement can raise an argument that he or she did not enter into the agreement voluntarily. When one future spouse chooses to forego legal representation, the drafting attorney should include a bold and distinctive provision acknowledging the future spouse’s decision to forego legal representation. Other factors as to enforceability include proximity of execution to wedding day, mental capacity and maturity of the individuals, business and educational backgrounds of the individuals, and age and bargaining abilities of the individuals. Additionally, a showing of fraud or duress when entering into the agreement can also poke holes in the agreement.

Because premarital agreements can be complicated and lengthy, it is of utmost importance to seek counsel who can advise the future spouse as to the interpretation and legal effects of the agreement. The execution and signing of a premarital agreement are also as important as its substance. A family law attorney is prepared to navigate the signing process to ensure all steps are followed properly. It is also important to understand the future effects of the agreement as well as any necessary modifications possibly needed in the future. Premarital agreements serve to protect and clarify the rights and obligations of two individuals entering into a marriage. Making such determinations prior to marriage can provide positive insight as to a couple’s expectations when deciding to marry and in the event of unlikely divorce, help to streamline the process when emotions are high, and fees tend to accrue.

If you are planning on getting married and looking to have a premarital agreement drafted, it is always a good idea to speak with an experienced family lawyer. The experienced family lawyers at Skillern Firm are ready to guide and assist you through the process. Call our office at (713) 229-8855 today to set your consultation. We are here to help you as we have helped many others.

* At Skillern Firm, we pride ourselves on the results we have achieved for those we help. We stand ready to assist you with any of your Family Law needs. Contact us today.