Category: ante nuptial agreement

When is a Prenuptial Agreement Enforceable?

When is a Prenuptial Agreement Enforceable?

For years prenuptial agreements were not enforceable in Kentucky.  That all changed with two Kentucky Supreme Court decisions that were handed down in 1990.  Those decisions held that prenuptial agreements were enforceable subject to appropriate limitations.

In order to be enforceable, a prenuptial agreement must meet several requirements.  First, there must be full disclosure by both parties as to his/her financial status and holdings.  The full disclosure of assets rests primarily on the party who intends to rely on the agreement (i.e. the person with the most assets).  Courts will usually take a reasonable view of this requirement and, where it appears that a spouse was aware of the other party’s assets prior to the marriage, will deem this requirement met.

The agreement must also be freely entered by the parties without fraud, material omission, misrepresentation, duress, or mistake.  The court will usually review the agreement to determine if it is unconscionable both at the time it was executed and at the time it is sought to be enforced.  If the court finds the agreement to be unconscionable, it may modify so much of the agreement as necessary to satisfy the conscionability requirement, but should otherwise give effect to as much of the agreement as possible as long as there was no fraud or duress in its execution.

It is also wise for both parties to be represented by separate counsel during the negotiation and execution of the agreement.  This helps to show that the agreement was entered as an arms length transaction and further combat claims of fraud or duress.

Duress is a complicated issue that the court will look at based on the totality of the circumstances surrounding its execution.  As a practical matter, the agreement should be signed as far in advance of the wedding day as possible.  Courts have been concerned where agreements are presented to would-be spouses on the eve of a wedding when the church is booked, the guests are arriving, and the possible embarrassment of being “left at the altar” looms large.

Once the agreement is executed and the marriage is solemnized, the agreement may be revoked by the parties.  This may be done by physically destroying the agreement itself as with any other contract.  A court may also find that the parties through their actions and behaviors have abandoned the agreement.

A prenuptial agreement is a complicated issue that should not be taken lightly.  If you choose to enter a prenuptial agreement, be sure you understand all of its provisions and a very particular about the method in which it is executed.

Photo courtesy of Jim Hammer

Should I Get a Prenuptial Agreement?

Should I Get a Prenuptial Agreement?

Many people who have felt the sting of a divorce decide to once again take the plunge and tie the know once again.  When they do, they often want to minimize the chance of going through the divorce experience again.  That is where a prenuptial agreement comes in.

Prenuptial agreements are also called antenuptial agreements, premarital agreements, or prenups.  Prior to approximately 1990 they were not even allowed in the Commonwealth of Kentucky because it was believed that they would actually encourage divorce.  A Kentucky Supreme Court case allowed couples to determine how their assets and debts would be divided in the event of a divorce thereby bringing Kentucky into line with a number of other states on this issue.

The issue of whether you should even bother with a prenuptial agreement really depends on your situation.  If either one of the soon-to-be-spouses has significant assets that they wish to keep separate from the other spouse, a prenuptial agreement is a definite consideration.  If neither party is coming into the marriage with any significant financial holdings, there probably is no real need for one.

If you have determined that a prenuptial agreement is something that you want to consider, it is important to understand what can be covered and what cannot.  Moreover, the actual drafting and way the document is executed is important as well.

A prenuptial agreement can cover a number of issues such as:

  • What property is each party’s non-marital property
  • What property will remain each party’s non-marital property
  • How marital property will be determined in the event of a divorce
  • How each party’s property will be divided in the event of a divorce or even death
  • How debts will be divided in the event of a divorce
  • The effect commingling assets will have in the event of a divorce
  • How income and appreciation in value of assets will be treated in the event of a divorce
  • What happens to each spouse’s retirement benefits in the event of a divorce
  • Whether maintenance will be awarded and how much

A prenuptial agreement cannot deal with any issues involving child custody or the payment of child support.  Those issues will have to be decided upon either by agreement of the parties in event of a divorce with approval by the court or the court will have to make the final decision.  The reason for this is that the court is the final arbiter of child custody and, more specifically, the child’s best interest in the event of a couple’s divorce.  That decision cannot be predetermined prior to the marriage even taking place.  Additionally, child support is typically seen as a right of the child which cannot be bargained away by either parent prior to the divorce.  In fact, many judges are loathe to allow child support to be waived absent a showing of good cause in the event of an actual divorce.

In a future post, we will discuss the actual execution and enforceability of a prenuptial agreement.  For now, if you think a prenuptial agreement may be right for you, it is important that you meet with your family law attorney, estate planning attorney and financial adviser to discuss your options.

Photo courtesy of scienceatlife