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When Is A Premartial Agreement Invalid?

When Is A Premartial Agreement Invalid

Prenuptial agreements are valid and enforceable in Utah. It is advisable for clients to have one in place if they have children from a prior relationship or this marriage will not be their first. Also, if the parties have significant separately owned assets acquired before their marriage they may want to consider having one in place. Prenuptial agreements can take the guess work out of determining spousal support and property division in the event of a divorce or upon a spouse’s death. A properly drafted “prenup” will typically provide a formula for determining spousal support (or may contain language waiving spousal support altogether) and have provisions detailing how the parties wish to divide separately owned property and jointly owned property. The agreement should always have a schedule attached to it that accurately lists each parties separate property and any jointly owned property that they have acquired prior to their marriage.

Prenuptial agreements can ensure that each party’s separate property, which can be property owned prior to the marriage or acquired during the marriage (such as a large inheritance from that spouse’s family), passes to that party’s separate children or other heirs or beneficiaries free of any claim by the future spouse. It’s best if both parties also do their estate planning at the same time they are working on a prenup. Usually both parties have separate attorneys representing them and these attorneys have a good grasp on each party’s assets and their distribution goals.
However, oftentimes the parties will forego estate planning until a later date. The problem with waiting is that most people put off estate planning until after they are married. Five or six years down the road, the couple will be happily married and remember that they need to do estate planning. They talk with their financial planner who refers them to a new attorney; or worse, the parties create a will or joint revocable living trust using an online legal service. During this process the parties forget to disclose the existence of the prenuptial agreement. The existence of it isn’t mentioned in the wills or trust and the estate planning documents potentially destroy the effectiveness of the prenup.

For example, the couple executes a joint revocable living trust which states that all of their joint property is listed in a schedule following the trust. The schedule lists all of the couple’s property, including their separately owned property. The property is re-titled in the trust’s name. By doing this, the parties may have destroyed the prenuptial agreement and made it ineffective. Years down the road, the parties may decide they want to divorce. By moving all of their property to the trust and titling the property in the name of the trust, the parties may have inadvertently converted separately owned assets into jointly owned assets.

In other words each spouse could have a 50 percent interest in the other spouse’s separately owned property – something that the prenuptial agreement was made to protect against. There is Centreville case law that can help to avoid this result but those cases are fact specific and there is no clear law in this area. At the very least the couple will have an expensive divorce fighting over whether property is separate or joint.

Here are some steps to continue to preserve ownership of property identified as separate property in a prenuptial agreement:

1. Accurately identify all separate and jointly owned property in the prenup.

2. Do estate planning at the same time that the prenuptial agreement is being created.

3. Don’t use self-help legal services to create a prenup or estate planning documents. Enforceable prenups must meet several legal requirements that will most likely be overlooked if you try to draft one on your own. Execution of simple estate planning documents may save money in the beginning, but will most likely result in an expensive legal proceeding in the future.

4. Make sure you tell your attorney that you have a prenuptial agreement. After you are married you may want to get rid of it altogether or change certain provisions in it to benefit your spouse.

5. Ensure that all separately owned property is always titled in that spouse’s name who owns the property and that the property is not integrated or commingled with other assets in the marital estate.

6. Don’t use a joint revocable living trust unless safeguards are put in place that reference the prenuptial agreement, dictate what happens to separate property upon divorce or death, and accurately identifies and labels all separate and jointly owned property.

As stated above, cases involving the enforceability and application of prenuptial agreements are fact specific. It’s virtually impossible to create an “iron clad” prenup since attorneys cannot control their clients after it is signed. Although the above steps and other steps may not avoid expensive litigation, they can help successfully defend claims by one spouse against the other spouse’s separate property in situations where a prenuptial agreement is in place.

Why Use a Prenuptial Agreement?

There are several reasons why one party (or even both parties) may want to sign a valid prenuptial agreement prior to getting married. Generally, prenups protect assets that may otherwise be subject to marital property laws.

Specifically, these documents may be used to:

• Protect one party from taking on the debts of the other

• Protect specified assets of one party

• Determine the manner in which property is passed on after death

• Simplify property division in the event of divorce

• Clarify financial responsibilities of the parties

The Pros and Cons of Prenuptial Agreements

Entering into a prenuptial agreement should never be taken lightly, particularly since the very mention of a prenup suggests the possibility that the marriage may end at some point. Discussion of a prenuptial agreement also can create stress in a relationship. Therefore, deciding whether to implement certain financial conditions and designations of separate property while also planning nuptials is a personal decision. It helps to understand the pros and cons of signing such an agreement.

Pros of Prenups

• Support your estate plan without future court involvement
• Make certain financial agreements with your spouse official
• Protect the family business and its assets
• Fewer property conflicts during a divorce
• Avoid shared debt liability

Cons of Prenups

• Can create distrust and dull the relationship
• Certain elements of the prenup may already be addressed by state law
• Cannot address child support or child custody issues in a prenup
• A judge may rule parts of the prenup unenforceable, depending on the relevant facts in the case
• Non-monetary matters, such as chores and tasks, cannot be addressed in a prenup

What Makes a Prenuptial Agreement Invalid?

A prenuptial agreement may be considered invalid under a number of different conditions and scenarios. First of all, a prenup must be written and signed by both parties and properly executed. Beyond that, a prenup that was signed under duress or not even read prior to signing (as part of a package of documents requesting signatures, for instance), then it may not be considered valid. Other reasons a state may not recognize a prenuptial agreement include lack of independent counsel (for each spouse), false information, and unconscionability. Prenups can be a great tool for couple to use if they are thinking of getting married. A prenuptial agreement can help you establish the financial rights of you and your spouse in unfortunate event of a divorce including protecting a family business, or securing your personal assets. However, prenups have to be done right in order to be valid in your state.

Reasons Why A Prenuptial Agreement Might Be Invalid.

1. No Written Agreement: Premarital agreements must be in writing to be enforceable.

2. Not Properly Executed: Both parties must sign a premarital agreement before the wedding in order for the agreement to be considered valid.

3. You Were Pressured: A premarital agreement may not be valid if one of the spouses was pressured by the other (or by his or her lawyer or family) to sign the agreement.

4. You Didn’t Read It: If your spouse-to-be puts a bunch of papers in front of you, including a premarital agreement, and asks you to sign them quickly, the premarital agreement may not be enforceable if you sign it without reading it.

5. No Time For Consideration: A prospective spouse entering into a premarital agreement must be given time to review it and think it over before signing it. If the groom hands the contract and a pen to the bride just before she says, “I do,” the agreement is probably invalid.

6. Invalid Provisions: Although a premarital agreement can cover just about any financial aspect of the parties’ relationship, it cannot in any way modify the child support obligations that either spouse would have if the marriage should end in divorce. Any other provisions of the agreement that violate the law would also be invalid. It is possible, however, that the court would strike the illegal clauses and enforce the remainder of the agreement.

7. False Information: A premarital agreement is valid only if it is entered into after full disclosure by both parties as to their income, assets, and liabilities. If one prospective spouse provides the other with information that is not true, the agreement is invalid.

8. Incomplete Information: Failing to provide pertinent information is as bad as providing false information, and it renders a premarital agreement unenforceable.

9. No Independent Counsel: Because their separate interests are at stake, both parties to a premarital contract should (and in some states must) be represented by their own attorneys, or the agreement will not be enforced.

10. Unconscionability: It’s true that you can agree to give up your right to inherit from your spouse, which you would otherwise be entitled to do upon your spouse’s death, even if he or she left you out of a will. You can sign away your right to spousal support if you should end up in divorce court, even if your spouse makes ten times as much money as you do. You can even agree that your spouse gets all of the property and you get all of the bills, if that is what you want to do. But if the agreement is so grossly unfair that one party would face severe financial hardship while the other prospered, the court is unlikely to enforce it. Basically, “unconscionable” contracts are generally found invalid, and premarital agreements are no exception.

Getting Legal Help with Your Premarital Agreement

A premarital agreement can help you feel secure that your assets will be protected in the event that your marriage doesn’t work out. If you and your future spouse are considering a premarital agreement, you may want to consult with a local family law attorney or Centreville Attorney to make sure it’s in compliance with the laws of Utah.

Free Initial Consultation About Utah Prenups

It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

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