The Dos and Don’ts of Prenups
Prenuptial agreements are becoming more and more popular with couples as a way to help protect their financial situation, and to prevent an ugly divorce. Prenuptial agreements are a special type of contract that two people enter into before getting married. That means to be valid, they have to follow certain rules. Just because you both agree to something doesn’t mean that a court will enforce that agreement later on.
Understanding Goals of a Prenuptial Agreement
Before you understand what can and cannot be in a prenuptial agreement, it is important that you are clear on the purposes for having an agreement in the first place.
Prenuptial agreements have three primary purposes:
- Protect assets of one or both spouses;
- Prevent the need for a costly divorce process later on if the marriage should not work out; and
- Deal with alimony.
A prenuptial agreement can be used to protect assets, especially in community property states, so that in the case of a divorce one spouse with significant assets does not risk losing half, or even more, of those assets.
These agreements can also work as a kind of pre-divorce settlement agreement. By setting out who gets what in the event of a divorce, the couple can avoid a long, costly, and contentious divorce proceeding.
Prenuptial agreements can also be used to deal with how alimony is dealt with after separation and divorce.
The Role of the Court in Prenuptial Agreements
Ultimately, it is up to the courts to decide what is acceptable in a prenuptial agreement and what is unacceptable. Agreements should be written with a few general principles in mind. Courts in most states are inclined to enforce prenuptial agreements as long as they meet three requirements:
- The agreement is not overly coercive;
- The agreement does not violate public policy; and
- The agreement was fairly entered into.
If a court believes any of these issues are present it may ignore the agreement completely, or it may just refuse to enforce certain clauses.
What Courts Will Not Enforce
If the court believes that the agreement was entered into in a way that one of the parties was forced or compelled to sign the agreement, or if the court believes the agreement “punishes” one side too severely, it will refuse to enforce the agreement.
A court will also refuse to honor any clauses that deal with child custody or child support as a general rule. The court will find this is against public policy and will decide these issues independently of the agreement.
If a court gets the sense that one side benefited from an attorney and the other side was somehow taken advantage of, or didn’t also have legal representation, the court may find that it would be “unequitable” or unfair to enforce the prenuptial agreement.
What Courts Will Enforce
Courts generally will enforce prenuptial agreements that deal with divisions of the marital assets, even if the division is very one-sided. For example, if the prenuptial agreement divides the marital assets 90% for one spouse and 10% for the other spouse, a court will likely enforce this so long as both sides were voluntarily agreed to the split, understood it, and this division doesn’t leave one side destitute.
Courts will also usually enforce clauses relating to alimony, as long as the support is sufficient to keep the other spouse from being a drain on public resources.
Prenuptial agreements allow couples to be creative when forming an agreement. The primary things to avoid are the appearance of unfairness or forcing one side to sign an agreement and any attempt to circumvent the court’s power to decide child custody and child support.
Submitted by Prenup.ca - your online resource about prenuptial agreements.