When drafting a prenuptial agreement, one or both parties to the agreement may want to include language that is not likely to be enforced by a court, or that a court will find to be unenforceable. Even when working with a laywer, a party may be tempted to disregard the lawyer's advice and omit important information from the prenuptial agreement or financial disclosures.
One big mistake that people make when negotiating and entering prenuptial agreements is to fail to disclose important information about their assets, usually by omitting information in order to make their premarital estate appear to be smaller than it actuall is.
The problem with omissions is two-fold:
- If you do not make a good faith disclosure of your assets, you risk having a court later find the entire prenuptial agreement to have been negotiated in bad faith, and invalidating the agreement;
- If you fail to properly disclose property that, if disclosed, could be treated as a separate asset at the time of divorce, you run the risk that the asset will be treated as part of the marital estate.
Sometimes, items of property that have little financial value may have considerable sentimental value. If you are bringing property into the relationship that you want to be treated as separate property when you divorce, so that the property comes back to you, make sure that you specifically include the property in your prenuptial agreement as seprate property.
Keep in mind that in the eyes of the law, property goes beyond heirlooms, keepsakes, and other items of physical property to which you may have an emotional attachment. If you are bringing a pet into the relationship, your pet should also be listed as separate property.
If you own your own business, or shares of a small business that you operate, you will likely want to address the business in your prenuptial agreement. If the business significantly increases in value but you do not address ownership in the prenuptial agreement, that increase may become part of the marital estate and be subject to division if you divorce.
Social Media Accounts
If you have important social media accounts, whether for business or personal use, you should address your ownership of the accounts in your prenuptial agreement. You can also address rights to any social media accounts that you create during the marriage, including who will be able to use or control the accounts if you break up, or if certain accounts must be closed.
Finally, make sure that you address responsibility for premarital debts. If you don't dislose debts, and include provisions about who is responsible for future payment of the debts, there is a chance that upon divorce you will find that a debt is regarded as having merged into the marital estate, or that you are otherwise ordered to contribute to or repay a portion of your ex's debt.
When drafting a prenuptial agreement, it is easy to lose track of the many laws and regulations that may come into play when the marital estate is divided. But there are some significant laws that you should consider.
For example, you may include a provision in a prenuptial agreement that provides that upon divorce, each spouse keeps his or her retirement benefits. While the distribution of lifetime benefits may generally be included in a prenuptial agreement, if the retirement plan falls under federal law, specifically the Employee Retirement Income Security Act of 1974 (ERISA), the other spouse may have a legal right to claim survivor benefits under the plan despite the language of the prenuptial agreement. Parties should consider statutory rights of the other spouse to pension or retirement benefits when negotiating prenuptial agreements, and when a problem is found should discuss possible options with their lawyers.
Additional clauses that may be legally unenforceable include the following:
- Incentives to Divorce: Any clause that a court regards as being an incentive to divorce is likely to be held invalid. For example, a court might be skeptical of a clause that awards money to a spouse based upon the number of years of marriage, with the amount being increased each year, as at a certain point the spouse may be tempted to seek divorce based upon the anticipation of receiving a large sum of money.
- Attempts to Modify Divorce Law: Any clause that defines a basis for divorce that is not supported by a state's divorce law will be unenforceable, as a prenuptial agreement cannot expand upon the law. Depending upon the laws of the state in which divorce occurs, a clause that attempts to limit the reasons why a spouse may seek divorce, such as by requiring a no-fault divorce in a state that allows for divorce based on fault, may be subject to review on a case-by-case basis or may be declared void.
- Limits on Temporary Spousal Support: Attempts to limit a spouse's ability to claim temporary spousal support during the pendency of a divorce are likley to be held unenforceable. While courts are likely to enforce a prenuptial agreement's provision that bans spousal support or alimony after a divorce is complete, as long as the marriage continues a married couple has a duty of mutual support. Many courts have invalidated waivers of temporary spousal support based upon its being against public policy to relieve a married spouse of the duty to reasonably support the other.
It is important to consider both the law of the state in which the premarital agreement is executed and, if different, the state in which the parties later reside or where they might divorce. Some states have unusual restrictions on spousal rights and obligations, and a provision that would be enforceable in most states may run afoul of a law or unexpected public policy finding in another state.
Most attempts to regulate the behavior or activity of the other spouse will not be enforceable through a prenuptial agreement. You should expect provisions that attempt to define how much time a spouse must spend cooking or cleaning, who is responsible for grocery shopping, the cleanliness or order of the household, the division of parenting tasks, or sexual access of one spouse by the other, to be held unenforceable.
Although there is next to no case law addressing provisions in premarital agreements that prohibit the parties from having children during their marriage, there are strong public policy reasons why such a provision will be held unenforceable. Courts are not going to enforce language that might make a spouse feel pressured to terminate a pregnancy.
In unusual circumstances it may be possible to ask a court to review and enforce a provision in a prenuptial agreement during the parties' marriage. For example, a prenuptial agreement may require that one spouse purchase a life insurance policy for the benefit of the other spouse, or that a spouse include a specific provision in his or her will or estate plan for the benefit of the other spouse. A court may be willing to enforce that type of language as a matter of contract law.
However, when it comes to day-to-day activities, courts have no interest in trying to enforce regulation of the marital relationship.
Although a couple may include provisions that relate to child-rearing in their prenuptial agreement, and in some cases having a discussion of those issues before marriage may help a couple be better prepared for parenthood, when a court ultimately reviews issues of child custody and child support it will focus on the best interest of the children, not the language of the prenuptial agreement.
A court will not enforce provisions in a prenuptial agreement that attempt to define who receives custody of children born or adopted by a couple during their marriage, that attempts to limit or prevent child support claims, or that relate to post-divorce child-rearing, including the children's religious upbringing and the schools they will attend. A court's decisions on child-rearing issues will be made in accord with what the court sees as the best interest of the children.
Any good prenuptial agreement should include a severability clause, language that provides that a finding by a court that one clause of the agreement is unenforceable will not affect the enforceability of the rest of the agreement. Even with such a clause, a court may find that the provision or provisions that are stricken from the agreement render it inappropriate to enforce the remainder of the agreement. And with or without such a clause, if a court strikes a portion of the agreement and enforces the remainder, one or both spouses may end up with a very different outcome from the divorce than they expected when they entered into the agreement.
Where the problem is one of non-disclosure, allegations of fraud or material omission may result in the wronged party's being able to set aside the prenuptial agreement. If the parties' financial situation has changed, the wronged party may be able to choose between enforcing the prenuptial agreement or having it set aside, based upon which choice provides the greater financial return.