A premarital (or prenuptial) agreement is a contract entered into by a couple prior to marriage with the terms becoming effective when they marry. Generally, premarital agreements specify the property rights of each spouse should their marriage end in death or divorce.
There are several advantages of a premarital agreement including protection of separate property, supporting estate plans, defining community property and establishing procedures to decide future matters. However, premarital agreements may still be attacked as being invalid if they fail to meet certain requirements.
Basic Requirements of Premarital Agreements
Premarital agreements can provide several benefits with regard to clarification of property and financial rights and obligations of each spouse during and after marriage. State law varies with respect to the requirements, validity and enforcement of premarital agreements. Some states have adopted some form of the Uniform Premarital Agreement Act (UPAA) to govern any premarital agreements.
However, regardless of whether a state has adopted the UPAA, there remain slight variations on the specific requirements that make a premarital agreement valid and enforceable. In general, the agreement must:
All states allow premarital agreements and courts are becoming increasingly willing to enforce them. However, there are certain instances where the premarital agreement will be set aside for unfairness or failure to meet state requirements.
Lack of Voluntariness
One of the grounds upon which a spouse might challenge a premarital agreement is that they did not enter into the agreement voluntarily. Where the agreement is found to have been entered into through duress or undue influence, it is unlikely that it will be upheld in court. Most courts hold that duress and undue influence are forms of fraud; contracts made on fraudulent grounds are generally invalid.
A challenge to a premarital agreement on the basis of involuntary execution may be thwarted if the challenging spouse had the benefit of independent counsel and/or plenty of time to review the agreement and seek counsel before entering into the agreement. However, lack of independent counsel is only one factor courts will consider in determining whether the premarital agreement is invalid.
Unconscionability and Failure to Fully Disclose
Another ground used to attack a premarital agreement is that the agreement is “unconscionable.” The definition of what constitutes unconscionability varies and depends on the facts and circumstances of the agreement. Generally, the UPAA test for unconscionability is whether there was sufficient protection against overreaching, concealment and manipulation by one spouse.
A challenge to a premarital agreement based on unconscionability is typically only successful where it can be shown that the actual procedural process was unfair. Generally, courts will review the fairness of the agreement when it was entered into, not as it applies upon divorce. For example, disproportionate bargaining power between spouses might support a finding of procedural unconscionability. However, a later change in circumstances does not affect the enforceability of the agreement.
A showing that the procedural circumstances surrounding the premarital agreement were unconscionable is not sufficient in and of itself to invalidate the agreement. There must also be a finding that the non-challenging spouse failed to fully disclose their financial standing prior to entering into the agreement. What constitutes a “fair and reasonable” disclosure will vary and must be determined on a case by case basis.
One final ground on which a premarital agreement will be invalidated and unenforceable is where it violates public policy. Typically, courts will not enforce premarital agreements, or specific terms contained therein, that would promote divorce or eliminate traditional spousal duties. For example, an agreement that attempts to do anything illegal will be invalid. In addition, courts will not honor an agreement which limits child support, custody or visitation rights. Finally, while some courts will invalidate any agreement which attempts to eliminate the right to alimony, others will allow such waivers.