Recently updated on June 14th, 2022 at 04:00 pm
Covid numbers are down. Weddings are happening again. Love is in the air. For many engaged couples, the thought of discussing or negotiating a premarital agreement may seem unromantic and unnecessary. However, these pre-marriage contracts, which protect a couple financially in case of divorce, are often important – especially logically. People may think of prenuptial agreements as only for the rich and famous, but premarital agreements are no longer advisable for only wealthy individuals. Today, many couples can benefit from entering into a premarital financial agreement. These contracts are particularly important for many couples who are marrying later in life, often for a second time, where there are family assets or children from an earlier marriage. “Gray divorces” are increasing in number, signaling an increased need for prenuptial agreements. Indeed, we have seen an uptick in the number of clients we have been assisting to implement premarital agreements. For our clients, it adds a layer of reassurance that allows them to embrace the martial relationship without unnecessary worry regarding what will happen if the relationship later breaks down. It is important to remember that there are requirements to ensure the validity of a prenuptial agreement.
Why Seek a Prenuptial Agreement?
A premarital agreement (also known as a “premarital” or “antenuptial” agreement) is a legally binding contract between two individuals who are planning to get married. Through a premarital agreement, couples can enter into various agreements about how their separate and joint property, assets, and income will be handled during the marriage and in the event of a divorce or the death of a spouse.
Couples seek a premarital agreement for a variety of reasons, including:
- They have children from prior relationships and want to safeguard their assets for their children in case of a divorce.
- One person may have significantly more assets than the other person and may want to protect those assets in case of a subsequent divorce.
- One person may have an interest in a business that cannot be disturbed or interrupted in case of a divorce.
- One or both of them may have gone through a previous divorce and may wish to avoid the emotional and financial expense of litigating another divorce.
- One or both of them may stand to inherit significant assets from parents or relatives and may want to protect the inheritance in case of a divorce. In some cases, the parents or relatives may refuse to leave a family asset to an individual where the asset is not protected by a prenuptial agreement.
The most fundamental reason why people enter into premarital agreements is for security and reassurance. People feel more secure knowing what will happen in the event of death or divorce. For example, personal and financial decisions are much harder to make during a stressful divorce without a premarital agreement. In the absence of a prenuptial contract, if you cannot come to an agreement with your spouse, the court will decide for you. A premarital agreement removes the uncertainty of a court decision and ensures that all important decisions were made by you and your spouse.
Contents of Premarital Agreements
In Connecticut, premarital agreements are governed by the Connecticut Premarital Agreement Act, which is codified in Sections 46b-36a to 46b-36j of the Connecticut General Statutes. This law applies to all premarital agreements executed on or after October 1, 1995.
Under the Connecticut Premarital Agreement Act, the parties to a premarital agreement may contract with respect to the following:
- The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
- The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
- The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
- The modification or elimination of spousal support;
- The making of a Will, Trust or other arrangements to carry out the provisions of the agreement;
- The ownership rights in and disposition of the death benefit from a life insurance policy;
- The right of either party as a participant or participant’s spouse under a retirement plan; and
- Any other matter, including their personal rights and obligations.
However, the law contains three important exceptions. First, parties may not include in their agreement any provision in violation of public policy or of a statute imposing a criminal penalty. Second, the right to child support cannot be adversely affected. Any provision relating to the care, custody, and visitation of a child is subject to judicial review and modification. Third, the court may invalidate any provision of a premarital agreement that modifies or eliminates spousal support and causes one of the parties to become eligible for support under a program of public assistance.
A premarital agreement becomes effective upon marriage unless otherwise provided in the agreement. After marriage, the agreement can only be amended or revoked by a written agreement signed by both parties. If the marriage is held to be void or voidable, an agreement that would otherwise have been a premarital agreement shall be enforceable only to the extent necessary to avoid an inequitable result.
Most prenuptial agreements exempt any income, property, and assets gifted to the spouse during the marriage, or bequeathed by Will, or voluntarily transferred to the other spouse. The prenuptial agreement can also exempt assets acquired jointly by the spouses during the marriage or assign a proportionate share of jointly acquired assets to the parties. A prenuptial agreement allows for the individual circumstances of the spouses and not all income, property, and assets are subject to the prenuptial agreement.
Enforcement of Premarital Agreements
It is important to note that any premarital agreement can be challenged in a divorce proceeding. Perhaps the most famous invalidation of a prenuptial agreement occurred in the divorce of Steven Spielberg and Amy Irving. The two had married in 1985 and Spielberg had written a prenuptial agreement on the back of a cocktail napkin. They divorced four years later, in 1989, and Irving was able to defeat the prenuptial agreement in Court. They divorced in California which is a “community property” state and Irving was awarded $100 million which was half of Spielberg’s reported net worth at the time. The Connecticut Premarital Agreement Act limits the ways in which a prenuptial agreement can be challenged. To have a Connecticut premarital agreement declared unenforceable, the party challenging the agreement must prove one or more of the following:
- The Agreement was not entered into voluntarily or was entered into under duress or coercion.
For example, if on the way to the church, 15 minutes before the wedding ceremony, the bride was handed the premarital agreement for the first time and was told to sign it “or the wedding was off,” an argument could be made that the agreement was entered into under duress or coercion. Since the facts are rarely this clear, courts must often struggle making these determinations.
- Before execution of the agreement, such party was not provided a fair and reasonable disclosure of the amount, character and value of property, financial obligations and income of the other party.
Each party to the premarital agreement has a duty to provide a full disclosure of the amount, character, and value of all individually owned property. The courts have clearly held that the burden is not on either party to inquire, but it is on each to inform. For example, if a husband failed to disclose owning several vacation homes prior to the execution of a premarital agreement, his wife could later challenge the agreement on the basis that she did not receive “fair and reasonable disclosure” of the character and value of his properties. The husband cannot claim that his wife should have inquired about his vacation homes, because it was his duty to disclose that information. It was not his wife’s burden to ask.
The requirement of a fair and reasonable disclosure can be easily satisfied if each party prepares and exchanges with the other signed and sworn financial statements specifically listing their income, assets and liabilities. This should be done sufficiently in advance of the signing of the premarital agreement so each party has a reasonable opportunity to ask questions about the financial statements and an opportunity to receive and review any confirming documentation. Finally, the premarital agreement itself should recite the fact that these steps were taken.
- Such party was not afforded a reasonable opportunity to consult with independent counsel.
In the first example, where the bride was handed an agreement 15 minutes before the wedding, an argument could certainly be made that she was not afforded a reasonable opportunity to consult with independent counsel. While the Connecticut Premarital Agreement Act does not require that each party be represented by independent counsel, each party nevertheless must be given a reasonable opportunity to consult with independent counsel in order to ensure that he or she is aware of his or her rights. The premarital agreement itself should recite that each party has been afforded a fair and reasonable opportunity to consult with independent counsel of his or her own choosing.
- The agreement was unconscionable when it was executed or when enforcement is sought.
The classic definition of an unconscionable contract is one “which no man in his senses, not under delusion, would make, on the one hand, and which no fair and honest man would accept, on the other.” In layman’s terms, this means that a premarital agreement is unlikely to be enforced if application of its provisions would result in one party suffering a great injustice in the eyes of the court.
What to do before “I do”
Premarital agreements can offer many benefits, but it is essential for couples to ensure that these agreements are drafted properly. If you would like to create a clear, valid, and binding premarital agreement, it is important to speak with an experienced Connecticut Family Law attorney. At McConnell Family Law Group, we can help you and your fiancé create an agreement that will provide for both of your futures, no matter what may happen in your marriage. To learn more about premarital agreements or to schedule an appointment with our office, contact us today by calling one of our offices located in Hartford (860) 266-1166, New Canaan (203) 344-7007 or by visiting www.mcconnellfamilylaw.com.