A premarital agreement (also known as prenuptial or antenuptial agreement) is a contract that two people enter prior to marriage that outlines the disposition of property and support provisions upon divorce.
Reasons for Using a Premarital Agreement
Choice of Outcome
Premarital agreements are not just for the wealthy, and people of even modest means use them for various reasons. One of the primary reasons is that they would rather choose how to distribute assets and debts after divorce or death than to have the state dictate how the estate should be divided. Without a premarital agreement, state will and family laws step in to dictate how wealth and property is distributed after divorce or death.
A premarital agreement can provide for the support of a spouse upon death or divorce and also provide that children born from previous unions receive certain assets instead of a spouse.
Predictability of Outcome
While a spouse that is less wealthy than the other may be giving up something by signing a premarital agreement, he or she also gains predictability. A court's decision is not always easily predictable because while it is based on state law, it is also based on concepts of fairness.
When is a Premarital Agreement Valid?
Full Disclosure, Absence of Fraud or Duress
A premarital agreement will be upheld as valid when full disclosure of the future spouse's income, assets, and liabilities are made, and there is an absence of fraud or duress. If a spouse does not fully disclose his assets or liabilities in order to deceive the other, the court could find that the premarital agreement was based on fraud and therefore invalid. Or, if the agreement was entered into very near to the time of marriage, a court could find the agreement was invalid because the agreement was signed under duress.
As well, the agreement should be in writing and signed by both parties. Some couples go further and record oral statements on video or audiotape indicating they understand and asset to the agreement.
Child Support, Visitation or Custody
A premarital agreement as to child support, visitation, or custody is not binding. The court will not allow the rights of children to be contracted away and will apply state law to these issues. While a court may agree with the declarations of the parties regarding these issues, it is not constrained to comply with them.
A premarital agreement is becoming more common and is used when people who are about to married wish to fix the way in which property will be distributed upon divorce or death. A premarital agreement can provide for such things as the disposition of property, businesses, and provide for spousal support. However, a premarital agreement cannot force a court to comply with the parties' wishes on the issues of child custody, visitation or support.
In order for the court to uphold such an agreement as valid, the future spouses must fully disclose their assets, income, and liabilities to each other. The agreement must be in writing and signed by both parties. A court will not uphold an agreement if it was made with the intent to defraud or one party was made to sign the agreement under duress.