Prenuptial Agreement: one entered into by prospective spouses prior to marriage but in contemplation and in consideration thereof… Black’s Law Dictionary at 1063 (5th ed. West, 1979).
Note: prenuptial agreements are also commonly referred to as “premarital” or “antenuptial” agreements.
Most people in America view prenuptial agreements (or “prenups”) with skepticism, and generally see them in a negative light. This may be due to the types of case we usually see them in; embittered divorce battles between feuding celebrity or ultra-wealthy spousal couples. Fortunately for the rest of us, those situations are not real life for the majority of average Americans. However, just because the media-filled circus of a vicious divorce is not everyday life for us does not mean that we should not protect ourselves and our assets to the best of our abilities. To the contrary, most of us work extremely hard for everything we have, and so, unlike many celebrities, we cherish our savings and our assets and should therefore ensure their protection to the greatest extent possible.
Prenuptial agreements are one of many tools available to help do exactly that; provide protection for savings, assets, children from prior relationships, as well as to allow spouses the freedom to create provisions for the survivor on a voluntary basis, without concern for a post mortem claim.
There are a lot of misunderstandings when it comes to prenups, below are just a few.
1) Only the rich need prenuptial agreements.
FALSE: Prenuptial agreements can be utilized by people of every economic class in America. Prenuptial agreements can be designed to be part of an effective estate plan, as well as a back-up plan should the marriage result in separation or divorce.
2) Only people who expect the marriage to fail ask for prenuptial agreements.
FALSE: There is a common saying which applies equally well to marriage as to any other situation in life, “failing to plan is planning to fail”. You wouldn’t marry someone without knowing intimate details about them, being in love with them, and intending to spend the rest of your life with them. However, it’s a dark reality that a large percentage of American marriages end in divorce.
Some of the primary factors which lead to many divorces relate to financial issues. When you plan your marital financial matters in advance you plan for success. The discussions that naturally ensue when a premarital agreement is being negotiated may not only allow each spouse-to-be to learn more intimate and private information about the other, but may also provide each spouse-to-be with a platform from which to resolve a great deal of potentially problematic marital financial concerns.
3) A premarital agreement only serves the wealthier spouse.
FALSE: A properly drafted prenuptial agreement can, and should provide protections for both spouses and their families. There are a multitude of issues which can be resolved through premarital agreements, and regardless of wealth there are certainly matters which every spouse-to-be has concerns about.
6 Costly Myths About Prenuptial Agreements, http://www.prenuptialagreements.org/prenup-myths/.
When to Consider a Prenuptial Agreement
Premarital agreements can be useful in a wide array of circumstances. Some of the most common situations which can benefit from the consideration of a prenuptial agreement include when:
- One partner has children from a previous marriage;
- A wealthier spouse desires protection in case of divorce;
- A poorer spouse desires protection in case of divorce;
- Either spouse has a significant amount of debt;
- One spouse has prized family heirlooms or real property intended to “stay in the family”;
- A spouse owns or plans to open a business;
- One of the families has inheritance money intended to pass through generations;
- A spouse has family members who need to be taken care of but do not have the means themselves;
- Either spouse anticipates a considerable increase in income; and
- One spouse intends to be a “stay-at-home” parent.
In each of these situations a prenuptial agreement can provide protection and assurances to both spouses. The provisions of a premarital agreement can be tailored to your specific needs, concerns, and desires in order to provide you with peace of mind.
Everything You Need to Know About Prenuptial Agreements, http://www.bankrate.com/brm/prenup.asp. May 10, 2006;
8 Reasons Why You Should Get A Prenuptial Agreement, http://www.prenuptialagreements.org/why-get-prenup/.
Prenuptial Agreements in the Commonwealth of Virginia
Prenuptial agreements are recognized in Virginia pursuant to the statutes which comprise the Premarital Agreement Act.
Premarital agreements must be in writing and signed by both spouses-to-be. However, unlike many other types of contracts, consideration is not required and the lack thereof does not render a prenuptial agreement unenforceable. Upon the marriage of the signatories a prenuptial agreement becomes effective as to the rights and issues addressed therein. Virginia Code § 20-149.
One of the commonly disputed formalities involved in prenuptial agreements is the disclosure of assets. If a party to a prenuptial agreement later challenges its validity one of the considerations, and potential grounds for invalidating the agreement is failure of the opposing party to provide a “fair and reasonable disclosure” of their assets and finances. Virginia Code § 20-151. However, this consideration generally requires other factors to justify invalidating the contractual relationship between a couple who freely and voluntarily entered into a premarital agreement.
Similar formalities apply to amendments to, or revocation of, premarital agreements after the marriage, as well as to marital agreements executed by parties who have already tied the knot. Virginia Code §§ 20-153 and 20-155. In all of these situations it is highly recommended that each spouse seeks and consults with independent counsel in order to ensure that the agreement reached is mutually beneficial and is not unjustly or unfairly detrimental to one spouse in a manner which could lead to enforcement problems later in life.
Parties may contract, through prenuptial agreements, concerning a multitude of subjects. Property rights, what happens in case of separation, divorce, death or any other event, spousal support, testamentary documents, retirement accounts, and life insurance policies are all among the various matters which can be addressed by premarital agreements pursuant to Virginia law. Virginia also permits marrying couples to contract regarding any other matter, so long as it is not criminal or against public policy. Virginia Code § 20-150. This limitation effectively acts to prevent couples from agreeing to child support payments which are below statutory minimum requirements.
Premarital agreements have been made valid and enforceable by statute in the Commonwealth of Virginia. Virginia Code § 20-149. As long as all of the legal formalities and requirements are observed, and the contents of the agreement do not render the prenuptial agreement against public policy or otherwise illegal, Virginia Courts will generally uphold these contractual relationships.
It should be observed that although enforceable pursuant to the Premarital Agreement Act, prenuptial agreements can be, and sometimes are, invalidated by Virginia Courts. Seeking the advice of competent counsel when negotiating and drafting a prenuptial agreement can help ensure that the terms are permissible, the legal requirements are met, and that the contract is not counter to public policy, does not run afoul of another statute, and that all of the legal technicalities are properly observed.
Most people would not enter a short term, much less a long term, contractual relationship with a business partner without seeking the advice of a knowledgeable and competent business or corporate attorney. Yet, many Americans enter into the longest of contractual relationships (marriage) without consulting with anyone who understands or can explain the multitude of legal obligations, commitments, consequences, and default rules imposed by the act of saying those wedding vows “’till death do us part” (after obtaining the proper state licenses, of course). Marriage is intended to be a lifelong commitment, and the process of developing a prenuptial agreement may help ensure that the parties are wholly compatible and capable of keeping that commitment. But, even with the best of intentions, things can go wrong. Why take such an enormous risk? Do you really want the legislature or a Court telling you the default terms of that contract in a worst case scenario? Treat the most serious commitment a person can make as just that, the only eternal contract a person can enter. Such a commitment should not be taken lightly. The terms should be clear, contingencies should be planned for, and both husband and wife should be protected with their minds put at ease.
Richard W. Hartman III, Esquire