Pre-Nuptial Agreementsby Ponichtera & DeNardis, P.C. on 01/20/11
A Pre-Nuptial Agreement is an agreement made in contemplation of marriage which seeks to determine property division and alimony on a divorce or upon death of one of the parties. A pre-nuptial agreement is often a good idea for people who are marrying later in life and have amassed significant assets prior to the marriage on their own. Others finding such an arrangement desirable, may be those with children from a former marriage, who want to assure that their assets will be preserved for their children. Individuals who’ve inherited significant amounts of property may also consider the benefits of preserving those assets on their side of the table, prior to entering into a marriage.
Mostly a pre-nuptial agreement requires a couple to carefully consider the financial aspect of their marriage prior to jumping into a marriage. A pre-nuptial agreement is often not considered for the young couple who have nothing, and therefore have nothing to lose. But for those who have amassed some individual wealth before marriage, a pre-nuptial agreement is a way of honestly discussing with a future spouse your expectations, if the marriage does not work out.
If you’re contemplating entering into a Pre-Nuptial Agreement, there are a number of items which must be addressed to help to assure that the agreement will hold up in Court. An agreement must both be valid and enforceable, for a Court to hold the parties to it.
In judging the validity of an pre-nuptial agreement the Court will consider(1)whether the agreement was fair and reasonable at the time the agreement was signed, for the party contesting the agreement (2) whether the contesting party was fully informed of the other party’s worth prior to the agreement’s execution, or had, or should have had, independent knowledge of the other party’s worth; and (3) whether a knowing waiver by the contesting party of his or her rights is set forth. An agreement may be found to be unfair and unreasonable and therefore invalid, if the agreement essentially strips a party of all marital interests. In short the other party must be left with something, for an agreement to be valid. Something must be to the benefit of the other party, for an agreement to be found to be valid.
Complete details of the financial assets, income and liabilities of each party must be exchanged with the other party. A good way to prove disclosure, is to attach the financial disclosure to the signed agreement along with initials of each party showing that they read and understood the disclosure – and the date that they received the disclosure. If the agreement is sought to be enforced at a later date, the judge will want assurances that both parties were fully aware of the financial situation of the other party, before they signed the agreement. So if you want to protect your assets, you need to be sure that the other side knows exactly what you want to protect. A pre-nuptial agreement is no time to be evasive about your net worth – full disclosure is what’s fair and what’s required.
The third prong of the test requires a knowing waiver by the contesting party of his or her marital rights. To assure that the parties know what they are giving up by signing the agreement – their marital rights should be plainly stated within the agreement – so there is no question about what he or she is giving up. Each party should be encouraged, and have a reasonable opportunity to get their own independent legal advice to review the agreement carefully with their respective legal counsel.
Timing is very important in a determination of whether or not an agreement is enforceable. Each party must have the opportunity to carefully consider the agreement and its ramifications without pressure of a looming wedding date. An agreement signed under duress will not be enforceable. An agreement is likely to be suspect if it is signed on the day before the marriage, when 300 guests are set to attend, and it is too late to call it all off. To make sure your agreement is enforceable, discuss the agreement months before the wedding plans are finalized. Sign it before it’s too late to get back your deposits, before the invitations went out, before the dresses are bought and ordered… You get the idea - before the pressure is on. The earlier it is signed, the greater the likelihood that there was no undue pressure to sign the agreement. A Court has found that an agreement signed thirty days before a marriage was enforceable. But in my opinion, the earlier – the better!
Lastly an agreement must be fair and reasonable at the time of a divorce as well. This goes back to the stripping of the other spouse of all marital rights issue. It’s unlikely if a spouse is stripped of everything, that they would otherwise be entitled to, that the agreement will be enforced.
I guess the question becomes if you truly do not want your potential spouse to have the possibility of getting anything from you in the event of a divorce, and that’s what you want to achieve from a pre-nuptial agreement, then maybe you really don’t want to get married. But if you are honestly looking to protect your premarital assets, then a carefully crafted Pre-nuptial agreement can be used to preserve most of your assets, and most of your rights, so long as your future spouse is entitled to something in exchange.