Kirk C. Stange *
- Special thanks to Primrose Mungwari & Emily Donaldson for helping prepare these materials.
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1. Failure to Uncover Critical Financial Information
Broadly, the overall goal of any prenuptial agreement is to define the terms and conditions of property and debt division, spousal support, and how attorneys’ fees should be paid if the marriage of the parties’ ends in a dissolution or legal separation. “Premarital agreement” means an agreement between individuals who intend to marry which affirms, modifies, or waives a marital right or obligation during the marriage or at separation, marital dissolution, death of one of the spouses, or the occurrence or non-occurrence of any other event. The term includes an amendment, signed before the individuals marry, of a premarital agreement. The Uniform Premarital and Marital Agreement Act (UPAA) addresses the enforceability of prenuptial agreements and provides a basis for states to determine how and when a premarital agreement should be enforced. Twenty-seven states and the District of Columbia have now adopted some form of the Act
Modern statutory and case law holds that in order for a premarital agreement to be enforceable, the parties must fairly disclose their respective financial status and other material information. Further, the agreement must be voluntarily and freely entered, the division of property in the event of death or divorce must not be unfair, and the terms of the agreement may not otherwise be unconscionable at the time it is entered into. If these and various other criteria are established, and the agreement is not otherwise subject to some invalidating cause, the agreement will be enforced, but if they are lacking the agreement will not be enforced.
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a. Inaccurately Accounting for Support and/or Maintenance from a Previous Relationship
Prenuptial agreements are contracts bargained for the mutual benefit of both parties. Maintenance and support has thus far been seen as income and should be disclosed. A party has adequate financial disclosure if the party receives a reasonably accurate description and good-faith estimate of value of the property, liabilities, and income of the other party. It is essential to understand that the UPAA states that a modification or elimination of spousal support in a prenuptial agreement is not enforceable if it causes one party to the agreement undue hardship in light of circumstances not reasonably foreseeable at the time of the execution of the agreement.
The Ohio Supreme Court held that alimony provisions of prenuptial agreements, even if valid and enforceable when formed, will not be strictly enforced when they have become “unreasonable or unconscionable as to their application to the spouse upon divorce.”
Further, provisions in a prenuptial agreement purporting to limit alimony obligations are against public policy and therefore not enforceable.
There is a long-standing consensus that premarital agreements may not bind a court on matters relating to children: agreements cannot determine custody or visitation, and cannot limit the amount of child support (though an agreed increase of child support may be enforceable).
In In re Marriage of Best, it was held, “[p]remarital agreements limiting child support are … improper”. In Pursley v. Pursley, an agreement by parties in a separation agreement to child support well in excess of guideline amounts is found to be enforceable; because, it is not unconscionable or contrary to public policy.
The basic point is that parents and prospective parents do not have the power to waive the rights of third parties (their current or future children), and do not have the power to remove the jurisdiction or duty of the courts to protect the best interests of minor children. Subsection (b)(1) applies also to step-children, to whatever extent the state imposes child-support obligation on step-parents.
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b. Pre-Existing Debt Concerns
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When dividing assets, income, and debt of parties in a prenuptial agreement, parties have a large amount of flexibility. Debts are often considered property in a prenuptial agreement. If there’s no prenuptial agreement, creditors may be able to access marital or community property to satisfy the debts of just one spouse. However, parties may include terms within their prenuptial agreement to limit your liability for each other’s debts.
In Robbins v. Robbins, the court held: “the agreement also provided that all property acquired by either party after the date of the marriage and prior to the commencement of an action for divorce is marital property, and that any debts acquired during the marriage are joint obligations of the parties.” Therefore, a prenuptial agreement can state that husband and wife each remain responsible for any debts they may have incurred before they were married.
In Johnson v. Johnson, the trial court correctly determined that where the corporate entities in question had been excluded as marital assets under the prenuptial agreement, any debt incurred by such entities must similarly be deemed non-marital in nature, and that the husband’s personal guaranty of such debt during the marriage did not otherwise convert it into marital debt. Prenuptial agreement that clearly state that Husband and Wife each remain responsible for any debts they may have incurred before the marriage have therefore been consistently taken as valid.
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c. Failure to Address Retirement Benefits and Investments
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Like any other written agreement, a prenuptial agreement must be complete, clear and unambiguous on its face, and must be enforced according to the plain meaning of its terms. In cases where the prenuptial agreement failed to address pensions and deferred compensation accounts as separate property, upon divorce, they were included as marital property and shared as such. In Foley v. Foley, the court held, prenuptial agreements, are like any other contract, and will be “construed in accord with the parties’ intent.” The court concluded the husband’s pension and deferred compensation account were marital property under Domestic Relations Law § 236(B) because the spouses failed to reference these accounts in the more specific cash accounts list in their pre-nuptial agreement and therefore the spouses did not intend to include either as separate property. The husband had both a pension and a deferred compensation account prior to the marriage and these accounts could have been identified very easily and been included with the “simple combined list” attached to the agreement, which they ignored. Intent was gleaned from the wording of that contract.
Under New York law, prenuptial agreements addressing the ownership, division, or distribution of property must be read in conjunction with their Domestic Relations Law § 236(B), which provides that, unless the parties agree otherwise in a validly executed prenuptial agreement pursuant to § 236(B) (3), upon dissolution of the marriage, marital property must be distributed equitably between the parties, while separate property shall remain separate. In a premarital agreement context, the intent to override the rules of equitable distribution by express waiver or by specifically separating property must be put clearly in writing. For purposes of equitable distribution, a waiver of any interest in a pension as marital property by an otherwise valid prenuptial agreement is not prohibited by the Employee Retirement Income Security Act of 1974, 29 U.S.C.S. § 1001 et seq., as amended by the Retirement Equity Act of 1984. Prenuptial must conform to the waiver requirements in 29 U.S.C.S §1055(c)(1).Prenuptial must conform to the waiver requirements in 29 U.S.C.S. § 1055(c)(1), (2)
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d. Not Establishing a Comprehensive Financial Disclosure
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A premarital agreement or marital agreement is unenforceable if a party against whom enforcement is sought proves that before signing the agreement, the party did not receive adequate financial disclosure under subsection (d).
A party has adequate financial disclosure under this section if the party: (1) receives a reasonably accurate description and good-faith estimate of value of the property, liabilities, and income of the other party; (2) expressly waives, in a separate signed record, the right to financial disclosure beyond the disclosure provided; or (3) has adequate knowledge or a reasonable basis for having adequate knowledge of the information described in section (1).
It is important to include in the agreement a full disclosure of all assets and liabilities, including the values of each asset. While the Uniform Premarital Agreement Act allows the parties to expressly waiver full disclosure, better practice is to disclose assets in order to preclude an attack on this basis. Furnishing a list of assets and their value has the additional benefit of providing a good record if the agreement is later set aside or revoked by the parties.
While the UPAA limits in the type of agreements to which it is applicable, it does not significantly limit what can be covered in a premarital Agreement. However, courts may invalidate an agreement for unfairness or lack of full disclosure of assets. Some examples include the following cases:
What constitutes satisfactory disclosure is to be on a case by case basis. In McMullin v. McMullin, the husband revealed all of his property, but failed to price a value on any of his assets. The agreement did not indicate whether any of the real estate was encumbered, whether equity existed, or any other information regarding the properties. Lastly, the trial court found no evidence that demonstrated that the wife had knowledge about the husband’s property; the agreement failed to satisfy the requirement of full disclosure. Therefore, the prenuptial agreement was unenforceable.
In Winchester v. McCue, wife who executed prenuptial agreement intelligently waived her right to any of husband’s income and real or personal property, and any claim to alimony, even though neither party disclosed their income in the agreement. The parties dated for several years before marriage, became knowledgeable as to each other’s standard of living and spending habits, and thereby acquired independent knowledge of each other’s financial circumstances . Wife was an attorney who was represented by an attorney during negotiation of the agreement. Wife’s attorney drafted the original agreement which was intensely negotiated and went through at least seven drafts before finally being executed.
Florida law does not require prior disclosure of assets for an antenuptial agreement.
Additionally, in Hjortaas v McCabe, a premarital contract was invalid and would not be enforced where agreement itself contained no information about husband’s finances. The fact that parties resided together before marriage and wife had visited one property owned by husband, and even worked at commercial property owned by husband were insufficient to establish degree of required disclosure of assets.
In Dove v. Dove, husband’s failure to disclose his income when he and wife executed a prenuptial agreement addressing alimony issues did not constitute nondisclosure of material facts so as to render agreement unenforceable since the financial statement that husband provided to wife revealed him to be a wealthy individual with significant income-producing assets, and wife had lived with him for four years before the prenuptial agreement was entered.
In Reed v. Reed, husband’s alleged failure to fully disclose his assets at the time husband and wife entered into a prenuptial agreement did not render the agreement void. The court reached its finding because: (a) husband and wife entered into the agreement when they were both young professionals; (b) they were both just starting their careers; (c) they had combined assets of less than $20,000; and (d) wife did not claim that husband’s alleged failure to disclose his assets had any effect on her decision to sign the prenuptial agreement.
A prenuptial agreement that provided that each party retained ownership of all property owned as of the date of the marriage was valid and enforceable, although agreement did not disclose each asset it described or nature of husband’s ownership interest in them. The agreement contained a complete list of husband’s assets, proposed agreement was presented to wife more than one week prior to marriage, wife read the agreement and insisted on amendments to it that permitted her to share in the ownership, and husband insisted that she review the amended agreement with her own lawyer which she did.
In re Estate of Arbeitman, wife appealed contending that the prenuptial agreement was procured by fraud due to inadequate disclosure of decedent’s estate. The validity of such prenuptial agreements depends upon whether the parties have knowledge or reasonably ought to have knowledge of the extent of each other’s property. Information as to the nature and extent of the decedent’s holdings need not come directly from him; surrounding circumstances may be such as to charge the spouse with knowledge of his property. Here, although the decedent’s assets were set out in the prenuptial agreement as totaling $5,000,000, they were valued closer to $2,000,000 at death. Further, there was evidence that wife had knowledge of the decedent’s business dealings. She had known him for eleven years; she had lived with him for four years prior to their marriage; and she had worked in his businesses. This evidence belies wife’s claim of inadequate disclosure.
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e. The Danger of not having the Agreement Reviewed by a Tax Expert
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There are several problematic provisions you should be mindful of when drafting pre-nuptial and settlement agreements. For example, there may be unintended tax consequences harmful to your clients that result from the terms of the prenuptial or settlement agreement. Tax experts understand better the changes which are happening in tax laws and have solutions on how to protect the interests of the client. For example, the current changes in tax law are likely to affect divorce and prenuptial agreements. The new tax laws change the impact of receiving maintenance in divorce, with regards net family income for filings starting January 1, 2019. The paying party will not be able to deduct maintenance from federal income tax as maintenance is no longer treated as received income. Since setting up maintenance in prenuptial agreements gives parties certainty in finances about the future, this will be a big change for those who do not take into consideration such changes. Prenuptial contracts are made for the common good of both parties. If one party had depended on the assumption that they will be able to deduct the sum from their federal income tax, then that changes the whole face of the contract. A tax expert would potentially see these issues and be best suited to explain to the parties what happens in such circumstances and how to protect the clients’ interests.
Seemingly harmless are the changes in the Tax Act which relate to taxability of some trust income after a divorce, particularly irrevocable trusts benefiting a former spouse during the marriage. These irrevocable trusts commonly known as grantor trusts usually have provisions which cause the income tax and expenses to be reported by the grantor (the person who created the trust). This means that the tax is paid by the grantor and not by the trust. The grantor spouse is the grantors’ spouse at the time of creation of the trust, and even after divorce for the purposes of the grantor trust, that individual is still the grantor spouse. This meant the grantor would be taxed on the income regardless of whether the grantor and the grantor spouse remain married. The grantor would be taxed on the trust income, while the spouse would gain income and not need to report it or pay income tax. This position was cured by the 2017 Tax Act in §682. This section provided that the trust income would be taxed not on the grantor but on the grantor spouse. However as of January 1st, 2019, §682 will be repealed, the effect of which will mean the grantor would be required to pay tax while the other does not.
Different types of trusts have different benefits to the parties, and this information is very important during the drafting of prenuptial agreement. Examples include irrevocable trusts created for the benefit of the other spouse within their respective estate plans, which qualify for gift tax marital deduction as qualified terminable interest property (QTIP). These are called inter -vivos QTIP trusts. Another example would be the spousal lifetime access trust (SLAT, which acted as a taxable gift by one spouse, and would provide the other with discretionary distributions of trust income. Parties could therefore get the gift tax exemption and still keep the assets within the marriage SLATs are also affected by the changes. A SLAT would under the new law be considered as a grantor trust and as such the grantor bears the tax liability after 31 December 2018 without exception.
Tax implications of marriage and divorce are complicated without the added layer of the changes in the law. It is therefore always prudent to make sure that a tax expert reviews the agreement and provide guidance on the implications of what is contained in the draft, and the benefits of including or excluding other clauses.
Retirement and Pension assets are required to be disclosed in premarital agreements and as such also need special consideration and advice from a tax expert. These types of assets are usually from pre-tax savings and should be divided differently than assets typically purchased after tax, such as real estate. Without consulting a tax or financial expert, these small nuances may be overlooked, and these assets could be put in jeopardy of being lost. Retirement accounts and investment accounts can become a critical issue. A tax expert advising a party to a prenuptial agreement who is able to choose between a Traditional IRA and a Roth IRA can save them financially in the long run as these have different tax implications. Roth IRAs can have a substantive advantage in that they allow for tax-free withdrawals after age 59 1/2. In other words, although the actual contributions are not tax-deductible, withdrawals at age 59 1/2 are generally tax-free as long as it has been in the account for at least five years. This contrasts with Traditional IRAs where taxes are paid when withdrawals are made even after age 59 1/2. Review of your agreement by a tax expert could therefore protect your financial interests in the future.
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2. Top Drafting Errors Made in Prenuptial Agreements
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a. Has the Agreement Been Drafted With a Divorce in Mind?
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The terms of a prenuptial agreement must not promote dissolution. While generally enforcing or promoting premarital agreements, courts have consistently held that agreements encouraging dissolution are unenforceable as against public policy.
California courts have uniformly held that contracts offend the state policy favoring marriage only insofar as the terms of the contract ‘facilitate,’ ‘encourage,’ or ‘promote’ divorce or dissolution.
In addition to stating that a premarital agreement reducing or eliminating a husband’s spousal obligation upon divorce would be voided as contravening public policy, the court indicated that such an agreement would also be voided as encouraging divorce if the terms governing property or support offered such financial gain as to induce a spouse to seek dissolution of the marriage.
“Prenuptial agreements are valid and enforceable (1) if they have been entered into freely without fraud, duress, coercion, or overreaching; (2) if there was full disclosure, or full knowledge and understanding of the nature, value and extent of the prospective spouse’s property; and (3) if the terms do not promote or encourage divorce or profiteering by divorce.”
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b). Are all Estate Planning Considerations Addressed?
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In drafting any premarital agreement and concurrent estate planning documents, the right of a spouse to take an elective share should be considered. Under the Uniform Probate Code, a spouse may waive the spousal elective share before or after marriage by written contract, agreement or waiver. Thus, the attorney should address whether such a waiver will be included in the agreement.
The prenuptial agreement can contain a provision requiring the parties to execute joint wills. It is important to include supporting documents along with the pre-nup such as a valid will and living trusts. Pre-nups can therefore help ensure an estate plan is carried out how the client intends.
In In re Fizzinoglia, a probate action, wife contested prenuptial agreement that waived her right to elect intestate share of husband’s estate. The Court of Appeals held that: the prenuptial agreement was valid and enforceable, and that the wife had failed to establish proof that fact-based, particularized inequality existed between her and her husband at time prenuptial agreement was executed. It was valid and enforceable, notwithstanding the fact that statement of parties’ assets and liabilities was omitted. The wife was aware when signing the agreement that the statement was absent and that, at the time, husband’s finances did not matter to her, and there was no indication that husband had at any time attempted to conceal or misrepresent the nature or extent of his assets.
In In the Estate Cassidy, it was held that, testator, in forming an antenuptial agreement with wife six hours before their wedding, had overreached and defrauded wife such that agreement was invalid and wife did not waive her statutory right to elect to take against testator’s will. There were no substantive discussions about the terms of the agreement, wife had no prior experience with an antenuptial agreement, testator picked the attorney who drafted the agreement and told wife that she did not need her own attorney. Testator prohibited wife from telling anyone about their impending marriage, recital in the agreement that each party consulted with an independent attorney was false, and wife did not understand what waivers in agreement meant in the event of a death of spouse.
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c. Misunderstanding the Client’s Goals for the Agreement
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Clients will often come to attorneys with a draft of a prenuptial agreement, hoping to cut down on the cost thinking they have already done a majority of the work. What many clients do not realize is that there are several formalities in every state which must be met in order for the agreement to be found legal and valid. Additionally, clients might not realize everything that should be or could be included in the agreement. Your job as an attorney drafting such a document is to not only include all the wishes of the client, but also draft something that will stand up to a challenge legally. This often means balancing the client’s wishes with formalities. Remember to keep in mind the client’s goals as well as the larger goals accomplished by a premarital agreement.
Anyone drafting a prenuptial agreement has a duty to carefully scrutinize any form they are working from to ensure it meets the specific needs of their client.
Make sure the agreement you draft is balanced. If your client wants his or her earnings to remain separate, ensure that the spouse’s earnings also remain separate. Try to mitigate any greed on the part of your client. Advise the client to provide some consideration for the other party’s waiving of property rights, such as payment at the time of dissolution or the ceding of the family home. If the parties feel they have been treated fairly, they are less likely to challenge the agreement later.
You can include a formula that increases benefits according to the length of the marriage, and perhaps again after the birth of children. While consideration is not always essential to the enforcement of a premarital agreement, it can forestall a claim that the agreement is unfair. Accepting the benefit of the bargain leaves a party in a poor position to argue that the agreement was unjust.
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d. Not Knowing When an Update is needed
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An important thing to remember when advising clients and drafting prenuptial agreements it to make sure your client understands the need to keep the agreement up to date. Due to the exceptionally indefinite nature of marriage, it is almost impossible to predict the impact that a prenuptial agreement will have if it does come into play. Personal income may increase or decrease; job skills may be acquired or lost; family obligations may vary in regard to both the other spouse and children; personal expectations may change. Change in the course of marriage is foreseeable, but the specifics of the change are not.
Therefore, agreements should be designed to accommodate the passage of time and changes in status, such as the birth of children, an increase or decrease in wealth or the disability of either party. However, life changes happen down the road that are not able to be anticipated when drafting a prenuptial agreement and your clients need to understand the agreement may become virtually useless if it is not updated.
A sunset clause is a provision within a prenuptial agreement which explicitly states the point in time in which the agreement will be considered no longer valid. It is like an expiration date for the agreement. The idea is that after a certain number of years, the agreement becomes invalid and everything is split according to normal procedures within the court system.
Why include a Sunset Clause in the first place? It is a protection against a short marriage and can be used to avoid the risks of financial fallout that may result from going through the court system. It also shows the hope for the marriage to last forever or at least a certain number of years into the future. Using a sunset clause often offsets all the negative connotations of a premarital agreement and gives the judges more reason to see them through.
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3. Avoid Inadvertent Compliance Errors
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a. Statutory Restriction Issues
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It is critical that anybody drafting a prenuptial agreement check with the laws in their specific state as there can be various nuances and requirements from state to state. Additionally,
there are several different requirements that states put into place that must be met for a prenuptial agreement to be enforceable or for courts to modify or set aside agreements for unfairness.
Almost all jurisdictions currently require premarital agreements to be in writing. A small number of courts have indicated that an oral premarital agreement might be enforced based on partial performance; for example, in In re Marriage of Benson, the court ultimately held that the partial performance exception to statute of frauds did not apply to transmutation agreement. Ehlert v. Ehlert, enforced an oral agreement that a written premarital agreement would become void upon the birth of a child to the couple. At least one jurisdiction has held that a premarital agreement could be amended or rescinded by actions alone.
Provision regulating and ongoing marriage are likely to invalidate a pre-nuptial agreement. Though there have been a handful of prenuptial agreements that have allowed parties to regulate the ongoing marriage. An example is the prenuptial that Rex and Teresa LeGalley created which specifies how much money per week they get for expenses ($70), what kind of gas they will buy (Chevron unleaded), and how often they will engage in “healthy sex” (three to five times per week). Nevertheless, courts generally will not enforce provisions of prenuptials that regulate conditions of the ongoing marriage, citing the “well-established rule that it is improper for courts to intervene in a married couple’s daily domestic affairs.” Examples of provisions not enforced: treasured snowball collection may be kept in the freezer, one party must walk the dog, or that a husband has the option to sue for divorce if his wife gains more than fifteen pounds.
Clients might not always remember to include everything about their financials and might not know everything about their perspective spouse. In this case it is a good idea to ask the client to provide you with the following documents upon commencement of representation:
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- Tax returns for last five years;
- Copies of car and boat titles;
- Life insurance and annuity contracts;
- Documents relating to business ownership and value of interest;
- Copies of stocks and bonds;
- 401K, IRA and Retirement Account Statements;
- Recent statements relative to bank accounts;
- Deeds to property owned;
- Divorce papers if married previously;
- Wills and Trusts;
- Powers of attorney; and
- Health Care Power of Attorney or Living Will.
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It is the attorney’s responsibility to draft an agreement that is valid. Be sure to document all of your advice to your client in writing. State the conditions under which the agreement was drafted and any recommendations you made that the client rejected. You want to make it easy to defend the document you drafted as well as your own actions as an attorney in the case you or the document are challenged or questioned.
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b. Avoid Dual Representation Pitfalls
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The topic of dual representation of parties and the representation of multiple clients is an issue prevalent in many ethical codes and rules governing professional responsibility. If the attorney has a pre-existing relationship with one of the future spouses’ questions of partiality and unfairness may be raised. Dual representation may lead to conflict of interest. Many states have adopted in some form the Model Rules or a Code of Professional Responsibility. Representation of two adverse parties is not allowed under Model Rule 1.7, which provides that:
“(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
1. The lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
2. Each client consents after consultation…”
Comment two of the Rule suggests that, if such a conflict arises, an attorney should withdraw from the representation. Alaska has one of the more strict requirements on dual representation. Their Rule 1.7(a), restricts an attorney from accepting adverse representation “in the same or substantially related matters.” The nature of the relationship between the parties involved in a premarital agreement makes it especially important to get independent counsel especially were one of the future spouses is considerably more wealthy than the other, or one spouse has waived their rights to an elective share.
Courts in Idaho have held as enforceable pre-nups where there is subsequent contact with independent counsel, prior to signing of a prenuptial agreement but drafted without independent counsel.
The unrepresented party may believe that the attorney is an expert in the law and not interested in either party or that the attorney is representing his or her interests as well.
See, Tenneboe v. Tenneboe, 558 So.2d 470, 474 (Fla. Dist. Ct. App. 1990) (explaining that unrepresented party may believe attorney is disinterested in parties); Demaggio v. Demaggio, 317 So.2d 848, 849 (Fla. Dist. Ct. App. 1975) (explaining that husband thought attorney represented both parties to his prenuptial agreement). Perhaps the best advice an attorney can give to an unrepresented party is to seek their own representation. See In re Marriage of Foran, 57 Wash. App. 242, 254 (1992) (holding that attorney should advise unrepresented party as to why it is important that he or she obtain advice from independent counsel).
See In re Estate of Cassidy, 356 S.W.3d 339, 339 (Mo.App.2011) (explaining that the surviving spouse was defrauded and overreached by her husband when the husband gave her the antenuptial agreement six hours before the wedding. Further, the husband misrepresented the significance of the agreement and did not allow the wife ample opportunity to read the agreement or have independent counsel review the agreement).
A party has access to independent legal representation if: (1) before signing a premarital or marital agreement, the party has a reasonable time to: (a) decide whether to retain a lawyer to provide independent legal representation; and (b) locate a lawyer to provide independent legal representation, obtain the lawyer’s advice, and consider the advice provided; and (2) the other party is represented by a lawyer and the party has the financial ability to retain a lawyer or the other party agrees to pay the reasonable fees and expenses of independent legal representation. Uniform Premarital and Marital Agreements Act, Section 9(b).
Independent counsel is routinely recommended by the courts when drafting a prenuptial agreement because the parties’ interests are often adverse. See In re Marriage of Leathers, 309 Ore. 625, 631 (1990) (stating absent full disclosure joint-representation of adverse parties is prohibited); see also Leah Guggenheimer, A Modest Proposal: The Feminomics of Drafting Premarital Agreements, 17 Women’s Rights L. Rep. 147, 196 (1996) (noting there are adverse parties to prenuptial agreements). See generally Michael Cohen, Trying Second Marriage? Prenuptial is Crucial, Boston Globe, Aug. 20, 2000, at G7 (discussing that parties to prenuptial agreement are opposing each other).
Due to the nature of the relationship between the parties involved in a premarital agreement, there may be certain situations in which independent counsel may be especially important such as when one of the future spouses is considerably wealthier than the other, or when only one spouse waives his or her rights to an elective share. Judith T. Younger, Antenuptial Agreements, 28 Wm. Mitchell L. Rev. 697, 718 (2001) (indicating presumption of informed consent despite not having independent counsel, assuming there is clear language to explaining the significance of possible adverse consequences of prenuptial agreement); John G. Gherini, Note, The California Supreme Court Swings and Misses in Defining the Scope and Enforceability of Premarital Agreements, 36 U.S.F.L. Rev., 151, 163-64 (2001) (examining California’s decision that lack of independent counsel is an important factor in determining enforceability of prenuptial agreement).
APPENDIX
SAMPLE PRENUPTIAL AGREEMENT
THIS AGREEMENT, made and entered into as of this_____ day of ________, 20__, by and between [NAME] of the County of [INSERT COUNTY], State of [INSERT STATE], and [NAME] of the County of [INSERT COUNTY], State of [INSERT STATE].
WITNESSETH:
WHEREAS, a marriage is intended to be, shortly after the date hereof, solemnized between said [NAME] said [NAME]; and
WHEREAS, [NAME], born [DATE OF BIRTH] (Social Security Number [INSERT], is presently employed by [NAME OF EMPLOYER], and earns approximately [AMOUNT] per year, and is possessed of certain personal property indicated on Schedule 2 attached hereto (hereinafter referred to as [NAME] separate assets), and [NAME], born [DATE OF BIRTH] (Social Security Number [INSERT], is presently employed by [NAME OF OF EMPLOYER] and earns approximately [AMOUNT] per year, and is possessed of certain real and personal property indicated on Schedule 1 attached hereto (hereinafter referred to as [NAME] separate assets); and
WHEREAS, it is the desire of both parties to this Agreement to define and set forth the respective rights of each in the property of the other after they are married and in the event that their marriage is dissolved; and
WHEREAS, the parties have fully disclosed the nature and extent of their property and have been advised by their respective attorneys as to their respective rights under this Agreement.
NOW, THEREFORE, in consideration of said marriage and of the agreements herein contained, it is agreed by said parties as follows:
Except as otherwise provided in this Agreement, each party hereto shall have the full right and authority in all respects regarding his or her separate assets as each would have if unmarried, to use, enjoy, manage, convey, lease, mortgage and dispose of all of his or her separate assets without requiring the signature, joinder or other assent of the other, including specifically the right or power to dispose of said separate assets by gift, trust or Last Will and Testament. The signature of each spouse on this Agreement shall constitute any express assent required by law.
It is mutually agreed that in case either party desires to mortgage, pledge, hypothecate, sell, exchange or convey all or any portion of his or her separate assets, the other party will join in such deed or instrument of conveyance or mortgage as may be necessary to make the same effectual; provided, however, that neither party shall be liable in any manner for the indebtedness of the other, nor shall either party be obliged under this paragraph to join in any instrument which would cause either party to be so liable.
With respect to the separate assets of each party, each party hereto and his or her respective heirs, assigns and legal representatives agree that, upon request of the other party or the other party’s heirs, assigns, or legal representatives, he or she or their respective heirs, assigns or legal representatives will promptly execute, acknowledge and deliver any additional instruments or documents that may be necessary to carry out more effectively the purposes of this Agreement, including, but not limited to, sale contracts, bills of sale, deeds, mortgages, deeds of trust, assignments and other conveyances; provided, however, that neither party shall be obligated to sign any such instrument which would cause such party to be liable for the indebtedness of the other.
It is mutually agreed that each party shall pay all taxes upon or attributable to his or her separate assets out of his or her own separate income or property; provided, however, that nothing in this paragraph shall be construed to prevent the filing by the parties of joint tax returns.
It is further agreed to by the parties hereto that this Agreement is entered into by each party in reliance on the other party’s full disclosure of his or her property, the extent or probable value of which may not be known exactly to the other party, but each party is satisfied that he or she has sufficient knowledge of the extent of probable value of the estate of the other to enable the parties to enter into this Agreement; and each of the parties hereto agrees that he or she has had the full opportunity to determine the probable value and extent of the estate of the other, and it is their desire that their respective rights in and to each other’s estate shall be determined and fixed by this Agreement.
Except as may be hereinafter specifically provided, the separate assets of each party, as the term is used in this Agreement, shall include the assets in his or her Schedule of Property (Exhibits 1 and 2 attached hereto) and all interest, dividends and other earnings therefrom, and all additions, appreciation and accretions thereto, and any assets which may be substituted therefore or into which said assets may be converted, excluding that which may have been converted by them into a tenancy by the entirety.
Marital Property as the term is used in this Agreement, shall mean: 1) all property, if any, acquired by [NAME] or [NAME] subsequent to their marriage to each other which is neither [NAME’S] Separate Property, nor [NAME’S] Separate Property; 2) [NAME’S] Separate Property, which [NAME] voluntarily chooses to place in joint names or [NAME’S] Separate Property which [NAME] voluntarily chooses to place in joint names, titling each of their property with the other as joint tenants with rights of survivorship or tenants by the entirety; and 3) all property acquired by [NAME] or [NAME] subsequent to their marriage to each other, which is acquired with wages, salaries, bonuses and commissions.
Except as otherwise provided in this Agreement, it shall be presumed that after the date of this Agreement: 1) property jointly titled in the name of both [NAME] and [NAME] shall be Marital Property; 2) property titled in the name of [NAME] solely or in the name of [NAME] and a third party shall be [NAME’S] Separate Property; and 3) property titled in the name of [NAME] solely or in the name of [NAME] and a third party shall be [NAME’S] Separate Property.
Each party may, pursuant to the procedure set forth in the subparagraph immediately below, during life or at death, restore statutory or other rights of the other party, and no such restoration shall be construed as a waiver or release of other rights or obligations under this Agreement.
In the event that the marriage of [NAME] and [NAME] shall be dissolved by court action, it is mutually agreed that their respective rights and responsibilities with respect to maintenance, support and the possession and ownership of their respective individual and marital property shall be as follows:
Each party shall have no right, title or interest in or to (i) the separate assets of the other party, (ii) any property either of them may receive by gift, devise, bequest, or descent during their marriage, (iii) any property acquired in exchange for any of the property described in (i) or (ii) above, and (iv) any increase in value of any of the property described in (i), (ii), or (iii) above, by reason of appreciation or by reason of any earnings or increments therefrom and additions thereto by way of cash or stock dividends, interest, stock splits or other method.
All property denominated as separate assets in this Agreement shall not be considered as marital property by any court in connection with dissolution proceedings.
Any marital property not disposed of under subparagraphs A and B shall be divided equally between the parties.
Neither party shall seek or be entitled to maintenance from the other. [NAME] and [NAME] each hereby waive his or her respective right to maintenance from the other.
Each party shall bear his or her own court costs and attorneys’ fees, and neither party shall be entitled to temporary maintenance.
Each of the parties hereto shall execute, after separation, such separation agreements or other documents as may be necessary to effectuate the foregoing provisions of this Paragraph 8.
This Agreement shall take effect only upon the solemnization of the marriage now contemplated by the parties to occur on [DATE].
This Agreement shall be binding upon the parties and upon their respective heirs, executors, administrators, legal representatives and assigns.
It is agreed by and between the parties that this Agreement shall be construed under and pursuant to the laws of the State of [INSERT STATE], which state is and is intended to be the matrimonial domicile.
In the event that any of the provisions of this Prenuptial Agreement shall, for any reason, be declared invalid, unenforceable, or contrary to public policy, the remainder of this Prenuptial Agreement shall, nevertheless, continue in full force and effect.
The parties hereto hereby jointly and severally acknowledge that they have had the opportunity to separately consult with independent legal counsel with regard to the legal and other effects of the provisions of this Agreement, the rights and privileges waived hereunder, and the rights and privileges granted hereunder, and all other matters pertaining thereto. Both parties hereby jointly and severally acknowledge their complete understanding of such legal and other effects of this Agreement; and each of the parties hereby warrants and represents that the legal counsel of such party executing this Agreement was and is a sole and exclusive legal counsel representing such party with regard to the matters herein contained. Each acknowledges his or her understanding that he or she is giving up and waiving rights which might well have great value in exchange for the provisions of this Agreement, and each does so freely and willingly. [NAME’S] legal counsel is [INSERT NAME AND ADDRESS OF ATTORNEY]; [NAME’S} legal counsel is [INSERT NAME AND ADDRESS OF ATTORNEY].
IN WITNESS WHEREOF, the parties have hereunto set their hands in the State of Missouri, the day and year first above written.
X
[NAME 1]
X
[NAME 2]
STATE OF [INSERT STATE] )
) SS.
COUNTY OF [INSERT COUNTY] )
Before the undersigned, a Notary Public, personally appeared [NAME], to me known to be the person described in and who executed the foregoing instrument and acknowledged that he/she executed the foregoing instrument and acknowledged that he/she executed the same as his/her free act and deed; and the said [NAME] further acknowledged himself/herself to be single and unmarried.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal in the County of [INSERT NAME], State of [INSERT STATE NAME], this _____ day of ___________, 20___.
_______________________________
NOTARY PUBLIC
My Commission Expires:
_____________________
STATE OF [INSERT STATE] )
) SS.
COUNTY OF [INSERT COUNTY] )
Before the undersigned, a Notary Public, personally appeared [NAME], to me known to be the person described in and who executed the foregoing instrument and acknowledged that he/she executed the foregoing instrument and acknowledged that he/she executed the same as his/her free act and deed; and the said [NAME] further acknowledged herself to be single and unmarried.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal in the County of [INSERT COUNTY], State of [INSERT STATE], this _____ day ___________, 20__.
_______________________________
NOTARY PUBLIC
My Commission Expires:
_____________________
SCHEDULE NO. 1
[NAME’S] PERSONAL PROPERTY
| DESCRIPTION | VALUE |
[NAME’S] REAL ESTATE
| DESCRIPTION OF PROPERTY | VALUE |
[NAME’S] MOTOR VEHICLES
| DESCRIPTION/V.I.N. | VALUE |
[NAME’S] BANK ACCOUNTS
| BANK/ACCOUNT NUMBER | VALUE |
[NAME’S] SECURITIES
| DESCRIPTION | VALUE |
[NAME’S] LIFE INSURANCE
| NAME OF COMPANY/POLICY NO. | VALUE |
[NAME’S] RETIREMENT,
PENSION AND/OR PROFIT SHARING
| DESCRIPTION | VALUE |
DEBTS OWED TO [NAME] BY OTHERS
| DESCRIPTION | VALUE |
[NAME’S] DEBTS OWED FROM
EMPLOYMENT AND EARNINGS
| DESCRIPTION | VALUE |
SCHEDULE NO. 2
[NAME’S] PERSONAL PROPERTY
| DESCRIPTION | VALUE | |
[NAME’S] REAL ESTATE
| DESCRIPTION OF PROPERTY | VALUE |
[NAME’S] MOTOR VEHICLES
| DESCRIPTION/V.I.N. | VALUE |
[NAME’S] BANK ACCOUNTS
| BANK/ACCOUNT NUMBER | VALUE |
[NAME’S] SECURITIES
| DESCRIPTION | VALUE |
[NAME’S] LIFE INSURANCE
| NAME OF COMPANY/POLICY NO. | VALUE |
[NAME’S] RETIREMENT, PENSION AND/OR PROFIT SHARING
| DESCRIPTION | VALUE |
DEBTS OWED TO [NAME]BY OTHERS
| DESCRIPTION | VALUE |
DEBTS OWED FROM EMPLOYMENT AND EARNINGS
| DESCRIPTION | VALUE |
DEBTS OWED [NAME] TO OTHERS
| DESCRIPTION | VALUE |
Uniform Premarital and Marital Agreements Act, Section 2(5).
Amberlynn Curry, The Uniform Premarital Agreement Act and Its Variations Throughout the States, 23 J. Am. Acad. Matrim. Law. 355 (2010).
5 Williston on Contracts § 11:8 (4th ed.).
Uniform Premarital and Marital Agreements Act,
Gross v. Gross, 464 N.E.2d 500, 504 (1984).
Sanford v. Sanford, 694 N.W.2d 283, 283 (2005).
Uniform Premarital and Marital Agreements Act, 46 Fam. L.Q. 345, 363-64 (2012).
In re Marriage of Best, 901 N.E.2d 967, 970 (Ill. App. 2009).
Pursley v. Pursley, 144 S.W.3d 820, 823-26 (Ky. 2004).
Uniform Premarital and Marital Agreements Act, 46 Fam. L.Q. 345, 363-64 (2012).
Robbins v. Robbins, 975 N.Y.S.2d 369, 369 (N.Y. Sup. Ct. 2013).
Saari v. Saari, 2009-Ohio-4940, 2009 WL 2992301 (Ohio Ct. App. 2009).
Johnson v. Johnson, 725 S.W.2d 1209, 1209 (Fla. Dist. Ct. App. 1999).
Saari, 2009-Ohio-4940 at 2992301.
Foley v. Foley, 155 A.D.3d 1506, 1506 (N.Y. App. Div. 2017).
Strong v. Dubin, 75 A.D.3d 66, 67 (N.Y. Sup. Ct. 2010).
Uniform Premarital and Marital Agreements Act, Section 9.
Uniform Premarital and Marital Agreements Act, Section 9(d).
To Have and To Hold, by Peter M. Walzer, pg. 4
McMullin v. McMullin, 926 S.W.2d 108, 108 (Mo. App. 1996).
Winchester v. McCue, 882 A.2d 143, 144 (Conn. App. 2005).
Foster v. Estate of Gomes, 27 So 3d 145, 145 (Fla. Dist. Ct. App. 5th Dist. 2010).
Hjortaas v. McCabe, 656 So 2d 168, 170 (Fla. Ct. App. 1995).
Dove v. Dove, 680 S.E.2d 839, 841 (Ga. Sup. Ct. 2009).
Reed v. Reed, N.W.2d 825, 826 (Mich. Ct. App. 2005).
Matter of Marriage of Yager, 963 P.2d 137, 139 (Or. Ct. App. 1998).
In re Estate of Arbeitman, 886 S.W.2d 644, 646 (Mo. App. 1994).
Franklin Karibjanian & Law PLLC, Alimony, Prenuptial Agreements and Trusts under the New Tax Act, (Apr.18,2018),https://static1.squarespace.com/static/52d6dce1e4b0a6a1dc27ca56/t/5ad77d508a922deac718edfc/1524071761605/Alimony%2C+Prenuptial+Agreements+and+Trusts+under+the+New+Tax+Act.pdf
See, 11051 (b)(1)(C) of the Tax Act
Franklin Karibjanian & Law PLLC, Id. at 8
Stange Law Firm, https://www.stangelawfirm.com/High-Net-Worth-Divorce/Pensions-IRAs-and-401-k-s.shtml(Last visited Dec. 5, 2018)
Stange Law Firm, https://www.stangelawfirm.com/Property-Division/Roth-IRA-vs-The-Traditional-IRA/ (Last visited Dec. 5, 2018)
To Have and To Hold, by Peter M. Walzer, pg. 4.
In re Marriage of Dawley, 17Cal.3d 342, 344 (1976).
Buettner v. Buettner, 505 P2d 600, 605 (Nev. Sup. Ct. 1973).
P. Andre Katz & Amanda Clayman, When Your Elderly Clients Marry: Prenuptial Agreements and Other Considerations, 16 J. Am. Acad. Matrim. Law. 445, 457-58 (2000).
Carolyn L. Dessin, The Troubled Relationship of Will Contracts and Spousal Protection: Time for an Amicable Separation, 45 Cath. U. L. Rev. 435 (1996).
In re Fizzinoglia, 988 N.Y.S2d 648, 649 (N.Y. Sup. Ct. 2014).
In the Estate of Cassidy, 356 S.W.3d 339, 340 (Mo. 2011).
To Have and to Hold, by Peter M. Waltzer, pg. 3
Melvin Aron Eisenberg, The Limits of Cognition and the Limits of Contract, 47 Stan. L. Rev. 211, 254 (1995).
To Have and To Hold, by Peter M. Walzer, pg. 3.
In re Marriage of Benson, 116 P.3d 1152, 1153 (Cal. Sup. Ct. 2005).
Ehlert v. Ehlert, 1997 WL 53346 1, 5 (Conn. Super. Ct. 1997).
Marriage of Baxter, 911 P.2d 343, 345-46 (Or. App. 1996).
Allison A. Marston, Planning for Love: The Politics of Prenuptial Agreements, 49 Stan. L. Rev. 887, 889 (1997).
To Have and To Hold, by Peter M. Walzer, pg. 3.
NOTE: Prenuptial Agreements and The Significance of Independent Counsel, 17 St. John’s J.L. Comm. 313, 321
Wolford v. Wolford, 785 P.2d 625, 625 (Idaho Sup. Ct. 1991).
