Prenuptial agreements have been made popular by celebrity prenups that include outlandish requirements. But prenups aren't just for celebrities with huge fortunes to protect. They serve as a safety net for both partners, so that neither has to struggle to make ends meet.
A prenuptial agreement, alternately called an antenuptial or premarital agreement, is a written agreement between a couple prior to their wedding or civil union. While the agreement usually addresses the distribution of the financial assets and spousal support, it can contain a variety of clauses including a 'confidentiality clause' that many celebrity prenups include. These provisions are implemented if the marriage ends in a divorce. Two types of prenups exist; one is a contract for people who are married or about to be married, and the other is a cohabitation agreement for unmarried couples living together. Those who do not get a prenup before getting married but later rethink that decision, can get a postnuptial or postmarital agreement.
In the US, a prenup is not mandatory, and is drawn up if the couple wants one. However, it is recognized in all fifty states as well as the District of Columbia. In order for a prenup to be legally binding, most jurisdictions need it to prescribe to these five elements:
- The agreement needs to be in writing
- The agreement must be executed voluntarily by both parties
- There should be full and/or fair disclosure by both parties at the time of execution
- The agreement cannot be unconscionable
- It needs to be executed by both parties (not their attorneys) "in the manner required for a deed to be recorded", known as an acknowledgment, before a notary public.
One area that couples are not allowed to decide in advance is children. Issues that are sometimes the most difficult to resolve during a divorce, pertaining to custody and access of the children, cannot be regulated in a prenup. This is done to protect the interest of the children. Taking all circumstances into consideration, it be decided what is best for the child.
The procedure routinely followed is for the couple to present a premarital agreement for review and then wait seven days before they sign it. However, there is no regulation about the number of days prior to the marriage within which this procedure needs to be completed. Prenups may take many months to draw up, and so this job should not be left to be done at the last minute.
In most cases, courts uphold and enforce all the financial clauses ancillary to divorce. However, the duty of the court is to uphold that which is fair and just, and thus it may not enforce a clause that opposes these values. In one such case, the Appellate Division in New Jersey refused to enforce a wife's waiver to a share of interest in her husband's savings plan, as at the time of the prenup's execution, it was not foreseen that the husband would later increase his contributions toward the savings plan. Both sides can waive off disclosure beyond what is provided, and it is not required to be notarized, but it is a good practice. There are special requirements if a couple signs a prenuptial contract without an attorney. Also, the parties need separate representation if they limit alimony or spousal support.
Some aspects of the agreement are different in California law. Courts do not allow the inclusion of clauses that penalize people for infidelity or using recreational drugs. They will also not enforce that the children will be raised in a certain religion, or other trivial requirements. However, one big benefit here is that Registered Domestic Partners can also get a prenup.
Unlike all other contract laws, consideration is not required in a prenup. An important inclusion is a choice of law provision. This ensures that the prenup is enforced in accordance to the law of the state the couple got married in, and not the state that they reside in at the time of divorce. Called a 'sunset' provision, the lapsing of the agreement after a specified amount of time can also be included. This provision automatically applies in a few states. Some other states, such as Maine, allow for the agreement to automatically expire after the birth of a child, unless it is renewed. An aspect that is not viewed favorably during the time of drawing up the agreement is the payment in the case of a divorce, as this may encourage divorce.
Laws governing these agreements do not exist in all countries. England and Wales do not enforce prenups as of 2007. However, an agreement may be upheld if the presiding judge decides to enforce it. Some other countries including Canada, France, Italy, and Germany have matrimonial regimes. These may be over and above the prenups, or in place of them.
Though deemed unromantic, prenuptial agreements are a good way to protect both partners' interests. In uncertain times, whether the marriage is impulsive or planned, it is advisable to have a prenup.