If you and your spouse-to-be decide that a prenuptial agreement makes sense in your case, it is not enough simply to scribble your understanding down on a scrap piece of paper. Rather, you must follow certain established rules when negotiating and memorializing your agreement. What To Do Before I Do explains the seven most important rules for a rock-solid prenuptial agreement. If you ignore these rules, you could end up with a prenuptial agreement that would never stand up in court.
Rule #1: Put your prenuptial agreement in writing and make sure you and your spouse-to-be both sign it.
You might think it is unnecessary to have a formal prenuptial agreement in place, specifying each spouse's rights in the event of debt, divorce, and death. Why can't you and your loved one simply sit down and reach an understanding on your own without going through all the bother and expense of having lawyers put it in writing? The answer is simple. Most courts will not enforce a prenuptial agreement unless it is in writing and signed by both spouses.
Rule #2: Hire a lawyer to advise you on your prenuptial agreement and make sure that your spouse-to-be does the same.
You might be tempted to save on legal fees and enter into a do-it-yourself prenuptial agreement with your loved one. Though you might consider this biased advice (since it is coming from someone who makes her living practicing matrimonial law), not hiring a lawyer for the purposes of your prenuptial agreement is penny-wise and pound-foolish.
Lawyers serve several important purposes in the context of prenuptial agreements. Your lawyer will:
- Explain your legal rights to you and help you understand how your prenuptial agreement will affect those rights
- Keep you from signing an agreement that is overly lopsided in favor of your spouse-to-be
- Provide you with bargaining power by negotiating better terms on your behalf
- Help you comply with the financial disclosure requirements (see Rule #3)
- Make sure that you receive appropriate financial disclosure from your spouse-to-be
- Take all necessary steps to ensure that your prenuptial agreement will stand up in court
Not only should you go out and retain a lawyer, but you should make sure that your spouse-to-be does the same. If your spouse-to-be cannot afford a lawyer, you should cover the legal bills yourself. (Trust me, this is a very wise investment.) The last thing you want is for your spouse to challenge the agreement down the line on the grounds that he or she did not understand the legal consequences of your prenup. You should make certain that your spouse-to-be hires a lawyer who is just as competent as your own, and that his or her lawyer is completely independent of you.
Rule #3: Provide your spouse-to-be with the complete details of your personal finances and ask for the same in return
Comprehensive financial disclosure is perhaps the most important prerequisite to a valid prenuptial agreement. This is because you and your spouse-to-be need to have a thorough understanding of one another's financial situation before you can negotiate the terms of your prenuptial agreement in fairness. For example, you probably would not agree to waive all spousal support claims if you knew that your soon-to-be spouse was a millionaire and not the starving artist he claimed to be. Or you would not agree to be jointly responsible for all debts incurred during the marriage if it turned out that your spouse had a secret gambling problem and had already accumulated tens of thousands of dollars in casino debts. The fact of the matter is that unless you and your spouse-to-be provide one another with thorough details of your personal finances, your prenup will not be enforceable.
You and your spouse-to-be should each disclose:
- Your income
- Your assets and liabilities
- Any other pertinent financial information, such as an expected inheritance or a financially significant impending business deal
Should you be concerned that your spouse-to-be might share some of this information with friends or family, you could ask your lawyer to have a confidentiality agreement in place before handing over your financial disclosure statement. A confidentiality agreement can provide that your spouse-to-be may only share your financial disclosure statement with certain people, such as his or her lawyer and accountant.
If you fail to provide your spouse-to-be with complete financial disclosure, a court could later invalidate your prenuptial agreement.
Rule #4: Do not force your spouse-to-be to enter into a prenuptial agreement
Your prenuptial agreement will only stand up in court if you and your spouse-to-be both enter into the agreement voluntarily and with a full understanding of the consequences of the agreement. If you coerce your soon-to-be spouse into signing a prenup, you will likely end up with an unenforceable prenuptial agreement and a very unhappy spouse-to-be. Putting unacceptable pressure to enter into a prenup by emotionally or physically abusing your spouse-to-be until he or she breaks down and signs the agreement allows the court to throw out the agreement. Refusing to marry your loved one without a prenuptial agreement in place, however, is perfectly acceptable behavior.
A prenuptial agreement must be a two-way street. Either you must both enter into it voluntarily or you must take your chances without one.
Rule #5: Take care of your prenuptial agreement well in advance of your wedding.
Do not wait until after you have paid the deposit for the caterer and sent out all your wedding invitations to pop the next big question. When all the wedding arrangements have been made, there is a great deal of pressure for even the most self-assured bride or groom to sign whatever legal document the other proposes just to make it to the big day. You do not want to put your spouse-to-be in the awkward position of considering a prenuptial agreement when friends and family have already purchased plane tickets and wedding gifts.
The better approach by far is to bring up the issue of a prenuptial agreement well in advance of your wedding. This way, you and your spouse-to-be can both focus on the nitty-gritty terms of the prenup without worrying whether the negotiations will delay the wedding. If you do not give your spouse-to-be enough lead time before the wedding to consider the significant legal and financial issues raised by a prenuptial agreement, your spouse-to-be could later challenge the validity of your prenup by arguing that he or she felt pressured to sign the agreement.
Rule #6: Make sure that your prenuptial agreement is fair to your spouse-to-be.
Both to ensure the enforceability of your prenuptial agreement and for the sake of your upcoming marriage, make sure that your prenup is fair to your spouse-to-be. Do not ask your loved one to sign away basically all his or her property rights in order to have the privilege of being your spouse. Just remember, you love your soon-to-be spouse and you owe it to him or her to strike a fair deal. If your prenup is totally lopsided in your favor, a court may very well overturn your prenup in the event it is ever challenged. Courts do not like to enforce agreements that are fundamentally unfair to one side.
Rule #7: Update your prenuptial agreement regularly during your marriage.
Do not consider your prenuptial agreement as written in stone for all the years of your marriage. You should revisit your prenuptial agreement regularly to make sure that its terms still make sense in light of the circumstances of your life. A prenuptial agreement that works well when you are in your early years of marriage and still getting to know one another's hidden quirks might not fit well after you have had two children and your spouse has given up his or her career to be a full-time parent.
If fairness alone does not move you to update your prenuptial agreement from time to time, concerns about the continued enforceability of your prenup most definitely should. Courts are increasingly considering whether the terms of prenuptial agreements are fair as of the time of the divorce when deciding whether or not to enforce them. When circumstances have changed a great deal between the time the prenup was signed and the time of a divorce, courts recognize that the terms of a prenup may no longer be just or appropriate.
Excerpted from What To Do Before I Do by Nihara Choudhri. © 2004 Source Books.