Prenup Agreements Explained
A prenuptial agreement is a legally binding, private contract that is established and signed before a marriage commences. This agreement serves to outline the respective assets and financial obligations that each party carries into the marriage, as well as any further stipulations about asset division, spousal support, and more that they might agree upon. While these agreements might seem almost routine, there are precise procedures that must be followed if a prenuptial agreement is to be upheld both at the date of the marriage and for the future.
For example, both parties must have a sound understanding of the assets and debts of the other . Given how important this is, attorneys are often used to represent each individual in regard to the drafting and signing of the agreement.
This contract must be written and signed in accordance with the laws of the state where it is located, and must then be notarized prior to the wedding. It is advised that both parties discuss the contract with their attorneys before the marriage and that they strike out any clauses that appear to be one-sided, as this is sometimes a tactic intended to "fool" one side – thus rendering it null and void when the divorce occurs.
Legal Grounds to Overturn a Prenup
There are several legal grounds which might render a prenuptial agreement unenforceable, or subject to being invalidated by a court. These include:
Duress or Improper Influence
Fraud
Inadequate or Improper Disclosure
Lack of Disclosure
Unconscionability
Inequitable result
Failure to fulfill the purpose of the agreement
The main possible reason a prenuptial agreement will be set aside is if there was fraud in the execution of the agreement. For example, if one person induced the other to sign the agreement by lying about their financial condition, this would constitute fraud in the execution of the document. Another way the agreement could be invalidated is if either party failed to make a full and reasonable disclosure of the property or financial obligations held by the other party.
A prenuptial agreement can also be set aside if one of the parties or attorneys involved in the preparation of the document exerted duress or undue influence on the other party. In order for undue influence to be present there must be a showing that one of the parties was vulnerable to undue influence and that this vulnerability led to an inequitable result regarding the terms of the agreement.
Examples When Prenups Were Voided
In the real legal world, the overturning of a prenuptial agreement is significantly more frequent than the dissolution of a superannuation fund. For one thing, over 50% of prenuptial agreements come back to bite the signatories on the backside. They’re not tunnel proof when it comes to a dispute, in other words. It’s hard to understand exactly why so many otherwise intelligent people so overestimate the durability of their contracts until it’s too late and much has been lost in the divorce. The cases below show a pattern of what went wrong:
Hoffman v Hoffman (1991)
In this case, the terms of the agreement were declared to be too onesided and frivolous to be fair. The fact that the wife was a shoe saleswoman, for example, was of little import, given that the parties were wealthy and powerful. The $179,000 she requested was deemed to be ultimately not unreasonable.
Connors v Connors (1991)
Even though a prenup was found to be in compliance with the Uniform Premarital Agreement Act of 1983, it was declared against public policy because the husband had refused to disclose assets before the marriage. As such, it had an air of unconscionability.
Ingo v. Ingo (1990)
A wife with a modest education was persuaded to sign a poorly drafted and typed prenup that reached 41 pages in length and was effectively a waiver of all claims. The Court of Appeals agreed with the prenuptial agreement’s termination.
The above cases illustrate how prenuptial agreements can be struck down if they’re entirely unreasonable or if the terms are so onesided that they qualify as reports of unconscionability. While courts are inclined towards upholding these documents, they’re also able to concede objections when the scrutiny is placed on the documents’ fine print.
How to Challenge a Prenup
For an agreement to be enforced, it must be deemed valid. To make an overturning request, evidence must be presented to the court that demonstrates the agreement should not be enforced. While the court’s reasons for finding a prenuptial agreement unenforceable can vary, there are several circumstances that must be proven.
In general, the case for overturning a prenuptial agreement is based on improper drafting and/or improper execution. The family code lists some specific requirements; violation of these is grounds for an agreement’s invalidation. They include: In some cases, even though an agreement is enforceable, it may not be just under the circumstances. The court can decide a prenuptial agreement is unconscionable and therefore, inequitable. Though it may not seem that way to those who have been through a contentious divorce, the legal process for handling issues related to prenuptial agreements can be relatively straightforward.
The first step in a prenuptial agreement overturning case is the filing of a complaint by the individual seeking an overturning. This is known as a "petition to set aside." Once the petition is filed , the court begins mediation to reach an agreement. At this point, it may still be possible to settle the matter. If no settlement is reached through mediation or if one party is not happy with the results of mediation, the court will conduct a triable issue. The petitioning party can request a temporary restraining order while a hearing is pending, asking the court to limit the other party’s spending and encumbering of assets.
In some complex prenuptial agreement overturning cases, a forensic accountant may be used to provide evidence of poor financial practices or bad decisions. This type of professional is called as an expert witness. The expert takes the stand and presents evidence that supports the petitioning client’s claims. Trial is the next step in the process. After the evidence is presented, the judge decides the case. A family law attorney can provide legal representation throughout this process. The outcome of the case will affect the divorce process and settlement, and a good attorney will be able to protect their client’s interests throughout every stage.
Avoiding a Voided Prenup
When it comes to the enforceability of premarital agreements, the certainty of the law and predictability for your future cannot be overstated. You and your spouse are not Albert Einstein or Marie Curie. We do not know what medical breakthroughs will occur and whether one partner will be left sick or injured. We do not know whether a pandemic will cause inflation. And we cannot predict how a party’s business interests may increase in value.
However, except for extreme extenuating circumstances, the party who seeks to overturn a prenuptial agreement based on an assertion that there was not sufficient disclosure as required by the statute or that the other party did not have adequate opportunity to seek independent counsel will have a very difficult time making his or her "strawweight" factual claims fly.
A draftsman of a premarital agreement should:
Complete Financial Statements: Both parties should be required to complete financial statements to the best of their ability. However, where one party has the unique ability to access financial information that is within his or her exclusive control and the other does not, to comply with a good faith disclosure requirement set forth in the statute, there should be a more thorough effort to provide full, fair and reasonable disclosure as to the asset or the debt.
An Affidavit Concerning Assets and Debt: While we frequently see individual schedules concerning assets drafted on a per-party basis, we have found that the process is better served when the assets and debts are compiled together. The less parsing of the proverbial "apple" the better. Such strategies minimize potential errors, incomplete disclosures, and may lessen arguments concerning technicalities.
Full Disclosure: While requiring the full financial disclosures as described above becomes a helpful evidentiary tool, such effort should also be combined with a specific statement in the agreement: "Each party acknowledges and understands that the disclosure of the other party’s property was neither voluminous nor detailed, that the information disclosed was sufficient for each party to enter into this agreement."
Independent Legal Counsel: There are many law firms composed of leaders within the community who have decades of experience and also believe in educating their clients concerning their prospects and potential exposure long before the premarital agreement is drafted. Likewise, if the principle involved is someone who operates a business, the business itself should have an ongoing legal relationship as well. When that occurs, there is less of an "unjust advantage" claim.
The fact that the law does not produce the expected result does not give everyone the right to veto arrangements which have been equitably negotiated. Everyone wants to have his or her cake and eat it too. It is not a matter of compromise, but carefully advancing well-researched statements of need. While the above guidelines have been widely successful, these examples are meant to be illustrative only and the outcome of an individual case can turn on its unique facts.
Seeking Legal Advice and Representation
It is essential to seek the guidance of a family law attorney when a prenuptial agreement is being drafted. A seasoned legal professional will ensure that the document is prepared in compliance with the strict Florida statutory requirements and educate both parties on the full range of implications inherent in entering into such an agreement. An experienced lawyer will be appointed in any contested or litigated prenuptial agreement dispute . Many people mistakenly assume that prenuptial agreements are ironclad contracts that leave no room for negotiation or modification. In truth, prenuptial agreements, like any other type of contract, may be amended or set aside if it can be demonstrated that a material change of circumstances, fraud, mistake, inappropriate influence or improper planning occurred.
No Responses