Property Division in Divorce: Prenuptial and Postnuptial Agreements

Prenuptial and postnuptial agreements refer to agreements made between the spouses before and after marriage, respectively. Among other things, these contracts enable the spouses to define their respective property rights, which can be very helpful in cases of divorce or legal separation. In general, the four standards or conditions that must be met for effective enforcement of these agreements are:

  1. there must be full disclosure by the parties;
  2. each party must have independent representation by his/her own lawyer;
  3. there must be a total absence of coercion or duress; and
  4. the agreements’ terms must be fair and equitable.

Prenuptial agreements are widely recognized and accepted in most states. The counterpart for unmarried couples is called a “cohabitation agreement.” Prenuptial agreements, also called “prenups” or “prenupts,” are most common when at least one spouse is comparatively wealthy. Prenuptial agreements typically dictate distribution of property in divorce, and may control some rights when a party dies during the marriage.

Postnuptial agreements are marriage-related agreements that the spouses make after the wedding. Such agreements generally are either: (1) separation agreements where the parties are contemplating divorce and are separated or intend to separate; or (2) contracts between spouses in an ongoing marriage where separation and divorce are not intended. In case of an ongoing marriage, the contract that the husband and wife enter for property division may be called a “property settlement agreement,” and may be called a “separation agreement” if the spouses are contemplating separation.

Property settlement agreements need not be conditioned on separation, and the parties can continue to enjoy their property rights during marriage.

Some states recognize oral prenuptial and postnuptial agreements, but many do not. Additionally, prenuptial and postnuptial agreements often require preparation by an experienced attorney because such agreements involve complex issues and are affected by the states’ individual property division schemes.

Uniform Premarital Agreement Act

A premarital agreement, also known as a prenuptial or ante-nuptial agreement, is an agreement made between the parties in anticipation of their marriage. Such agreements can cover issues such as property division upon divorce, as well as child custody, child support, and alimony. Although premarital agreements have been increasingly embraced for their ability to resolve complex property and support issues without resort to trial, the lack of uniform language included in such agreements has been noted as potentially problematic.

In response to the concern over lack of uniformity, the Uniform Premarital Agreement Act (UPAA) has been adopted by the following states: Arizona, Arkansas, California, Connecticut, Delaware, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Montana, Nebraska, Nevada, New Jersey, New Mexico, North Carolina, North Dakota, Oregon, Rhode Island, South Dakota, Texas, Utah, Virginia, and Wisconsin, as well as the District of Columbia.

Under the Act, a premarital agreement is defined as an agreement in writing between prospective spouses, both of whom are required to sign the agreement, which is made in contemplation of marriage and is to be effective upon marriage. The Act also provides guidelines for the treatment of several key items in premarital agreements, including property, life insurance, wills, and spousal support (alimony), as well as guidelines addressing the circumstances under which a premarital agreement can be amended or revoked.

Additionally, the UPAA sets forth the circumstances under which a premarital agreement will be unenforceable, including when a party to the agreement did not execute it voluntarily or when the agreement is deemed unconscionable when executed. With respect to unconscionability, the Act describes several instances in which premarital agreements may not be enforceable on that ground, including: (1) that a party to the agreement was not provided a fair and reasonable disclosure of the property or financial obligations of the other party, (2) that a party to the agreement did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided, and (3) that a party to the agreement did not have, or reasonably could not have had, an adequate knowledge of the other party’s property and financial obligations.

As it becomes more common for persons contemplating marriage to use premarital agreements to resolve certain issues prior to marriage, the provisions of the Uniform Premarital Agreement Act provides a means to achieve uniformity and certainty in the language contained in such agreements, while still retaining flexibility to address each couple’s unique needs.

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