What Is a Prenup?
In Kentucky marriage, like any other contract, the parties to the contract may negotiate their own unique agreement that is appropriate for their specific situation. A prenuptial, or antenuptial, agreement is simply a legal contract that is signed before marriage. It does not take effect until the people who signed it are married. Prenuptials describe a variety of things, but most often they set forth, among other things, how the property is to be divided and what spousal support, if any, is to be paid. It is essential to understand that there are separate provisions in the law governing premarital agreements, so if you have one, it is best to consult with a family law attorney to ensure that it meets the legal requirements to be enforceable . Because the law of marriage recognizes that a contract cannot be enforced unless both parties had the capacity to enter into an agreement, the law specifically requires that at a minimum both parties must have had the ability to understand the nature of the agreement and the proposed financial consequences, entered into the agreement voluntarily and, generally, have made a full and fair disclosure of the income and property held by each party, signed the agreement prior to marriage and received independent legal counsel, except under a few very specific instances such as in the case of a waiver of spousal support upon divorce. Remember, a prenuptial agreement cannot include the waiver of parental rights because at the time of its execution, the parties do not yet have children.
The Significance of Prenups in Kentucky
Prenuptial agreements in Kentucky provide a level of insight, clarity, and asset protection that is unmatched in most states. With respect to prenuptial contracts, Kentucky is a state that explicitly permits "hybrid" contracts. Meanwhile, Kentucky is one of the few states that allows a party to contract away spousal support if the agreement is "knowing and voluntary." Finally, the Kentucky courts have clear law concerning if a prenuptial agreement is unenforceable or one spouse is going to be unconscionably disadvantaged if the agreement is enforced. Many other states do not have such clarity and this results in less favorable prenuptial agreements for people who reside in those states.
After you have read Part One of this six-part series, you will see that signs of a universally valid prenuptial agreement include some of the following factors: Signing of a prenuptial agreement prior to being engaged. It is also a good idea that the parties sign at least two witnesses so that they can later testify as to the voluntariness of the process. More specifically, with regard to Kentucky, a valid Agreement is one that is consciously agreed to by the parties after the finances were completely and clearly disclosed in writing (in order to know what each party will get in the event of a divorce). There are some exceptions, such as if each independent party had their own attorney review the prenup before signing — however, this is not a requirement in Kentucky like it is in California. Further, if both parties jointly time to review the proposed prenup and this time period was not rushed, this can show that the Agreement was entered into knowingly and voluntarily.
How Prenups Work in Kentucky
A prenuptial agreement is only enforceable in Kentucky if certain requirements have been met. Section 403.195 of the Kentucky Revised Statutes details the only conditions under which a Kentucky prenuptial agreement will be enforced.
Compliance with the Statute
The statute requires that for an agreement to be enforceable, it must be in writing and signed by both parties. The agreement must also be entered into voluntarily by both members of the couple. Even if the drafting of the agreement is not done fairly and even if one of the parties was under stress or duress at the time of signing the agreement, it will be enforceable as long as it meets the requirements of the statute and it is not unconsciounable.
Full Disclosure Required
Section 403.195 requires full disclosure to have taken place between the parties prior to entering into the agreement. Undisclosed assets belonging to either party are viewed very harshly under the statute. Failure to disclose a material asset is grounds for not enforcing a prenuptial agreement.
Proving Full Disclosure
The burden of proof rests upon the party who seeks not to enforce the agreement. The person asserting that the agreement is unenforceable will have to present evidence to the court to prove that full and fair disclosure did not take place prior to the date that the agreement was signed. Evidence can include affidavits submitted by expert witnesses and documents such as tax returns, bank statements, W-2’s, lease agreements and any other documents or records related to all assets owned by both parties.
The Essential Ingredients of a Kentucky Prenup
A well-crafted prenuptial agreement addresses the day-to-day issues that can become contentious later in the marriage, as well as how important assets and debts will be allocated if a couple decides to divorce. The agreement can also address how assets should be divided if a couple separates but does not divorce. In Kentucky, state law only permits a judge to support a spouse for a limited duration or under certain conditions. For that reason, provisions about alimony or spousal support should be addressed, also.
Assets Include Both Marital and Non-Marital Property
When it comes to property included in a marital estate, Kentucky is equitably distributed, most likely on a 50/50 basis. Marital property includes assets or debts collected during the marriage. Non-marital, or separate, property includes assets acquired or owned by one person prior to marriage. Inheriting an asset also may not impact the division of assets during a divorce. Kentucky courts consider separate property to belong to the person who acquired the property before the marriage. However, commingling of assets does occur and can be debated in court.
Debt allocation should be included in a prenuptial agreement. Just like property, debts are also considered by courts when a marriage ends. Issues related to debt responsibility can be high for unique, large assets that are often acquired during a marriage, such as a business, real estate, or an expensive college education. It is important to delineate in advance responsibility for these items and their related debts. Additionally, both pre-nuptial and post-nuptial agreements cannot address child support or custody.
Protection of inherited property is a common provision. With many families including blended siblings with various biological mothers and fathers, each acquiring step-siblings, step-grandchildren, and step-great-grandchildren, it is not unusual to see provisions protecting property that is verbally intended for a specific heir. And if you have children, much of your planning will be focused on how to protect your children in the event of a divorce. Making an agreement with your future wife or husband and outlining the distribution of property, income, and debt is a good way to head off bitter battles between family members who think they should have received a cherished item such as a house, car, or piece of furniture that you intended for someone else.
Common Myths About Prenups
There are a number of common misconceptions about Kentucky prenuptial agreements, the most basic of which is that some people don’t view them as legally binding documents. They might think that such an agreement won’t hold up if challenged in court because there was no high level of scrutiny about its provisions at the time of the marriage, which they feel should be the case in order for them to be enforceable.
The truth is that a prenuptial agreement does not need to be reviewed by an attorney for both partners before being signed in order to be valid. If the agreement is deemed unconscionable, the court could find that the prenuptial agreement is invalid.
Kentucky law also does not require the financial disclosures made by the future spouses in the prenuptial agreement to be detailed. It is enough for the partners to simply fully disclose their assets and debts, even if the agreement is not made in the presence of an attorney.
Religious and spiritual injunctions or requirements for prenuptial agreements are not legally binding. Requirements for such agreements to be reviewed by attorneys or notarized before being signed do not exist at the federal or state level. The parties can also choose to waive those requirements if they desire.
Many people think that a prenuptial agreement is only appropriate for wealthy people. The reality is that an agreement can benefit everybody — even those who don’t have substantial assets.
How to Create a Kentucky Prenup
The ideal first step when approaching the creation of a prenuptial agreement is to consult with a qualified family law professional that has experience with prenuptial agreements. This professional will work to make the process easier to understand and will be able to advance your interest and ensure all your legal needs concerning the prenup are taken care of. It’s best to handle this initial step as early as possible to make the legal proceedings move along quickly and smoothly.
Responsibilities for the prenuptial agreement itself are not equal amongst the two parties. Typically, the burden of creating the contract will fall most heavily on the party that is more financially successful. For example, if one party has significantly more wealth than the other, the wealthier party will be the one most often drafting the agreement and having it reviewed by an attorney.
It is crucial to allow both parties the time to have their own attorney review the contract , in the interest of making sure it is enforceable and both parties understand its terms.
When drafting your prenuptial agreement in Kentucky, you will need to fill out a form detailing the identities of both individuals and a list of all property and assets, including income, debts, property, insurance and the like. You will also be able to discuss how you would like any potential future children to be addressed in the prenuptial agreement.
Additionally, consider what might happen in the event that you obtain future business ventures that will be jointly held with your spouse. You can set forth your expectations for these assets in the agreement as well, which protects you from having your spouse claim that you owe him or her a portion of these new assets in the event that you divorce. Every potential contingency should be discussed openly and honestly, making sure to respect the other person’s feelings while also looking out for your own best interests.
Enforcing and Contesting a Prenup
In Kentucky, a prenuptial agreement may be challenged on several grounds, including lack of full disclosure, unconscionability, or duress. Failure to adhere to statutory requirements for a prenuptial (also known as antenuptial) agreement is another ground upon which it may be challenged. By statute, a premarital agreement is not enforceable if the party against whom enforcement is sought proves that: (a) That party did not execute the agreement voluntarily. (b) The agreement was unconscionable when the agreement was executed because that party (1) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; (2) did not voluntarily and expressly waive in writing any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and (3) did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party. (c) That party was not given a reasonable opportunity to consult with independent legal counsel. If one of these conditions is met, a court has the power to grant or deny the enforcement of the prenuptial agreement. To prove that a prenuptial agreement was made under duress, a party must show that he or she was deprived by a party of meaningful choice and entered into the agreement as a result. To determine whether such a situation exists, Kentucky courts will examine if the prenuptial agreement was signed under extreme circumstances which caused one of the parties to succumb to pressure. Although a court must find that a prenuptial agreement was either procedurally or substantively unconscionable (or both) before an agreement may be invalidated, the burden of proof is on the party claiming the agreement is invalid.
How Lawyers Handle Prenups
The drafting and review of a prenuptial agreement can be challenging to the parties. In addition to the applicable case law, the importance of having an attorney who focuses on family law, and a qualified and experienced one at that, cannot be understated. The majority of courts across the nation, including Kentucky, have held that even if a party had independent counsel before signing a prenuptial agreement, it does not mean that the prenuptial agreement is fair or conscionable. As case law has demonstrated, the parties need to give full, fair and honest financial disclosure. Importantly, the attorney’s role is not to protect their client at the exclusion of the other party. The attorney’s role is to ensure the prenuptial agreement is drafted in accordance with the requirements of the case law so that it will be held enforceable by the court.
Making Real-World Use of Prenups
Prenuptial agreements are not one-size-fits-all solutions. The ability of the parties to a marriage to dictate in advance how their property will be divided in the event of divorce, and even how their relationship will be managed during the marriage is often influenced by the circumstances surrounding the specific relationship. In one Kentucky case, a couple’s agreement addressed financial infidelity — a scenario that garners significant attention in both national and local media. In another case, a couple’s agreement also provided for their health care decisions in the event of a medical emergency. More commonly, agreements may allocate property or determine spousal support. Below are descriptions of actual cases with prenups that worked or did not work.
Financial Infidelity
In 2018, the Kentucky Court of Appeals, in Gutzwiller v. Gutzwiller, allowed a high income earner spouse to enforce a prenuptial agreement that allocated his monthly income from his practice with a hospital to him alone, even if he worked there during the marriage.
In the court’s view, the only material change was in the health insurance coverage for the wife. Because the hospital provided partial payments for the wife’s health insurance through the husband’s employment during the marriage, when the husband retired , the couple was forced to purchase private health insurance. According to the court, the couple had agreed to divide the income of Mr. Gutzwiller from his hospital employment. Such an agreement was legal. Furthermore, the parties were represented by counsel who negotiated the prenuptial agreement. "At a minimum," the court said, "this factor demonstrates the intent of the parties to agree to an arrangement regarding Mr. Gutzwiller’s income while he was employed at St. Claire Medical Center and to distinguish between earnings from Mr. Gutzwiller’s practice of law and his earnings from St. Claire Medical Center."
Health Care Decisions
In 2019, The Kentucky Court of Appeals, in Hasty v. Hasty, specifically ruled that spouses have a right to direct their medical care. In that case, the husband and wife agreed to share joint decision making in all areas, including medical.
Unfortunately, the level of emotion and conflict inherent in some relationships may cause one spouse to resent the other for the care that he or she has to provide. In some cases, the care may be cumbersome or difficult and culminate in doing what the caregiving spouse perceives to be the right thing for his or her medical decision making. Here the parties’ agreement and joint decision making provided some stability for the decision making.
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