7 Reasons Why a Premarital Agreement May be Invalid

7 Reasons Why a Premarital Agreement May be Invalid

A premarital, or prenuptial, agreement is a legal document that a couple that is about to get married might sign in order to change the normal legal rules that govern marriage.  Most specifically, when a couple gets divorced all their marital (or community) assets are typically pooled together and then split roughly in half.  Couples can take a warning from one of the biggest divorce settlements in history, which was paid out in recent years by oil man Harold Hamm.  He built a multi-billion dollar fortune from nothing over a 50-year period, and his wife had very little involvement in his company.  Nonetheless, Mr. Hamm was ordered to pay his ex-wife $1 billion upon their divorce.

A premarital agreement will most commonly be used by wealthy individuals (like Mr. Hamm if he ever gets married again) that may want to protect their assets from being split up over a short-lived marriage.  So for example, a rich singer might sign an agreement that says all her singing earnings are the result of skills she developed before marriage and therefore they should not be divided upon divorce.  Different states have different rules on what can be included, and the law is changing rapidly because the concept was not embraced by courts until recently.  There are a number of things that could go wrong an invalidate a premarital agreement in almost every state, however, and these things should be avoided:

1. Oral premarital agreement

Very few oral premarital agreements have ever been enforced.  To have a real chance of working, any prenuptial agreement must be written down, preferably in clear and simple terms.  

2. Incomplete disclosure by parties

Premarital agreements require complete and honest disclosure by both parties regarding income, assets, and liabilities.  The agreement will likely be disregarded by a court if one spouse lies about their assets because they are hiding information that might prevent the other partner from signing.

3. Improper execution

The premarital agreement usually must be signed by both sides.

4. Pressurizing

This can come in many forms.  For example, a potential spouse can be deceptively handed a prenup in a stack of papers including the wedding license and other simple paperwork.  A spouse can also feel threatened by embarrassment if the marriage is called off over a prenup.  

5. Insufficient time for consideration

In an effort to avoid spouses from feeling pressured, many states have required that each side must have a copy of the agreement for a certain amount of time before it can be signed. 

6. No independent counsel

This is another effort by states to avoid pressure.  Many states will be skeptical of an agreement where both sides did not have access to counsel.  Some states even require a separate lawyer to look over the agreement for each side.  

7. Unconscionability

Different courts have different views on what this means, but most courts are going to strike down deals that are so grossly unfair that one partner was allowed to thrive while the other will wind up facing financial hardship.  

So the key is to work all this out long before the big wedding day, so that both sides have plenty of time to share all the relevant information and then really think about the consequences of a prenup.

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