I

n America today, the probability

of a marriage ending in divorce

is grea ter than SO percent. U.S.

Census Bureau figures reveal that 10

percent of the adult population is

divorced, up more than 7 percent from 1970. Prenuptial agreements

also are on the rise.

fOfm required by the j urisdiction.

One prenuptial agreement in New

York state was thrown Ollt because

the notary did not date the signa­

ture.)

1. Timing The timing of a prenuptial agreement

is critical. Circumstances surrounding

its negotiation and execution should

be free from duress, overreaching, or

coercion. An agreement presented

just before or on the wedding day

may be inval id due to duress.

Encourage your clients to play it

safe by presenting the prenuptial

agreement before the wedding invi­

tations go out.

2. Disclosure Bo th parties should present complete

financial sta tements, detailing all assets

and liabi lities. T hese statements

should be made as closely as possible

to the time of marriage to ensure cur­

rent figures at th e tim e of the agree­

ment's execution. The financial state­

ment should cover bank accou nts,

income tax returns, security accounts,

real estate and mortgage information,

a list of automobiles and other vehi-

cles, and any outstanding loans.

Sin ce 1970, the median age of first

marriages has increased from 20 .3 to

24.8 for women and from 22.8 to

27.1 for men . When these older and

more financially savvy (wenty-to­

thirty somcthings arc ready to marry,

they have individual investJ11cnts and earni ngs to protect. In addition, their

parents are insisting on prenuptial

agreements before bequeathing the

parents' hard earned savings. Occasionally, disclosures are

more complex. If your client

What to Include

Prenuptial agreements can

address almost anyth ing,

fro m avoiding the

default rule in com-

Prenuptial Prerequisites

munity property juris­

dictions (which div­

ides all marital prop-

owns a business, he o r she

sho uld disclose the name

and nature of the busi­

ness, the value of his or

her interest in it, and

the valuation method

used to calcu late the

erty equa lly upOli divorce) to waiving

alimony or other sup-

POrt. C ustody and child­

suppOrt ma([ers may be

addressed, but courts are

likely to set them aside,

reserving the right to decide

the best interests of children .

The 4 essential elements of an

inviolable agreement

value. Th e value of

retirement benefits

also should be dis­

closed. A C PA will be

helpful in determining

wh ich valuation meth­

ods to lise for the business

or retirement benefits as

well as in preparing a firs t-

To draft a va lid prenuptial agree­

ment, first investigate your jurisdic­

tion's statutory law. Twenty-six states

have adopted some form of the

Uniform Premarital Agreement Act

(UPAA). (See M organ, page 12.)

Whereas C01111110n law requires

prenuptial agreements to be proce­

durally and substa ntively fa ir, the

UPAA proteCts against uncon­

scionability.

Most jurisdictions manda te four

basic prerequisites to a va lid prenup­

tial agreement: ti ming, disclosure,

independent counsel, and fairness .

(Note: Some say there is a fifth man­

date: properly acknowledged in the

BY M A RK A. CHINN

A ND

CH A RLES GREER

However, in Fletcher P. Fletcher, 68 Ohio S.3d 464 (Ohio 1994), the

Supreme Court of Ohio held that an

agreement signed one day before the

marriage was valid when all other

prerequisites were satisf:1ctor ily met.

The COLIrt noted, however, that pre­

sellting a prenuptial agreement short­

ly before a weddi ng ceremony would

"create a presllmption of overreach­

ing or coercion if postponement of

weddi ng would ca use significant

hardship, embarrassment, or emo­

tional distress."

rate financial sta tement.

Some courts have ruled that dis­

closure statements may approximate

net worth. In lWegginson v. Megginson, 367 IU. 168 (Ill . 1937), a wife w ho

was trying to inva lidate a prenup~

agreement admitted that her h ·'s~d had disclosed owning two, rms but

denied knowing the ature and

extent of hjs property. n llPhOIYing

the agreement, the ( premc Co ' of Illinois sta ted:

" " ""',. '''' "wo>, oom,,~ (

and extent of the intended hus­band 's property, an antenuptial agreement releasing statutory rights in the latter's estate in con­sideration of th e covenan ts of the intended husband will be held valid if the parties had legal capac­ity to contract. . The court went on to say that the

husband's description of his real property was sufficient to enable the wife, by the application of ordinary intelligence. to verify his sta tement.

Case law does not provide signifi­cant insight into what is f.:'lir and rea­sonable disclosure. Nevertheless, a court will likely view a detailed finan cial statement accompanying the premarital agreement to be fa ir and reasonable disclosure.

If your state has adopted the UPAA. you may be tempted to allow your client's spouse to waive full dis­closure as the act permits. T he better practice is to insist that both parties present a detailed and thorough financial statement as a means of avoidi ng an attack based on conceal­ment or even fra ud.

3 . Independent counsel

In many instances, independent counsel has been a key factor in determining the overall Llirness and enforceability of a prenuptial agree­ment. Because both parties must enter the contract knowledgeably and voluntarily, each should consult with independent counsel. However, no state mandates such consultation

The Uniform Premarital Agreement Act What the law say., and how courts are interpreting it

~nte followi llg is adapted from Attacking and Defending Marital Agreements § 8.02 (A BA 200'1) . The book may be purchased from the ABA website at http://llllvw.abaHet. orglstore/order.html.

(See page 19.) The full text of the Ul1iform Premarital Agreeme1lt Act as passed by the Ulliform U/l.1) COII/missioll­ers is at http://www.law.upenn.edu/

bll/ulc/fnact99 /1980s/upaa83.htm.

T he modern view that antenuptial agreements are generally enforceable has

been codified in the Uniform Pre­marital Agreement Act (UPAA), 9B Uniform Laws Annotated (Master Edition) 369 (1987), promulgated by the National Conference of Com­missioners on Uniform State Laws in 1983. As of October 2001, 25 states and the District of Columbia have approved and adopted the UPAA. (See book for complete listing. ) The UPAA has been introduced in [he 2001 legislative sessions in Mississippi, Rhode Island, and

12 FAMILY ADVOCATE

Virginia. Moreover, many states have adopted laws that explicitly recog­nize and regulate antenupti al agree­ments much like the UPAA.

Section 1 of the UPAA states explicitly that it applies only to antenuptial agreements and nOt to cohabitation, midnuptial, or separa­tion agreeln ents. UPAA Prefatory Note (1983) . Nonetheless, in states that have adopted the UPAA, cOllrts have applied UPAA ptinciples to midnuptial agreements as weU.

Although the UPAA is limited in scope, Section 1 expands the defini­tion of "property" to include income and earnings. By this definition , the Commissioners have expanded tradi­tional property fights to include those defined in divorce actions. See O'Briel! v. O'Brien, 489 N.E. 2d 712 (N.Y. 1985) (defining property to

include increased earning capacity.) Section 2 ofUPAA dispenses with

aU formalities of execution except a signed writing by the parties. No consideration is necessary, except the

BY LAURA W. MORGAN

marriage itse lf. California courts h ave consistently interpreted this as a statute-of-frauds provision, holding tl1at partial performance may render even an oral agreement enforceable. Hall v. Hall, 271 Cal. Rptr. 773 (Ct. App. 1990). The traditional defenses based on lack of capacity, however. are expressly preserved. UPAA § 2 comment.

Section 3 states that the parties arc free to contract about any rights that arise by operation of marriage, includ­ing property rights at divorce, death, or any other contingency (UPAA § 3(a)(1-8», and the modification or elimination of spousal support (VPAA § 3(a)(4». The parties also are free to choose the law governing the agree­ment, UPAA § 3(a)(7). By allowing the parties to waive spousal support and property rights , the VPAA resolves a split on this issue and clear­ly favors enforcement of the \:vaiver of all rights. The only limitation is that the parties may not waive child sup­port, UPAA § 3(a)(7).

for validity. Some states require that each party have the opportunity to

consult with counsel of his or her choice, but they do nOt require actu­al consultation for the agreement to

be upheld. Other states hold that independent counsel is one facror ro be considered 111 determining whether the agreement was entered into knowledgeably or voluntarily.

Under th e UPAA, an absence of counsel does nOt make the premari­tal prenuptial agreement unenforce­able. However, a lack of counsel may be a fa ctor in detennining whether the contract was entered into volun­tarily or whether it was uncon­scionable when executed.

bl re BOllds, 83 Cal. Rptr.2d 783 (Cal. App. 1999), the appellate court

Although the parties may contract to any rights that arise by operation of marriage, Section 3 clarifies that the parties may nOt contract "in vio­lation of public policy," UPAA § 3(a)(8). What is in violation of public policy is obviously the matter of some debate. The official comment sta tes that the parties can agree as to

choice of abode, the freedom to pur­sue career opportunities, and the upbringing of children. Nonetheless, in Mellgal v. Mellgal, 103 N.Y.S.2d 992 (N.Y. FaJ11. Ct. 1951), a court held that the parties could not agree that the wife's sons from. a previous marriage could not live with the couple. Several other cases have held that the parties cannot, by prenuptial agreement, disagree about children's religious upbringing in the event 'of a divorce. Rail/Oil !J. Ramon, 34 N.YS. 100 (N.Y. FaJ11. Ct. 1942); Avitzllr v. Avilz llr, 459 N.Y.S.2d 572 (N.Y. Fam. Ct. 1983).

Section 4 states that the agreement becomes effective upon marriage, and Section 8 says that marriage rolls the running of the statute of limitations.

See III re CrnliJord, 730 P.2d 675 (Wash. 1986). COlllra Freiman v.

found the pren uptia l agreement invalid because the prospective wife was not represented by an attorney and thus did nOt have equal bargain­ing power in the drafting and execu-

An absence of

counsel does not

make the premarital

prenuptial agreement

unenforceable

cion of the agreement. Strangely enough, California was among the fi rst states to adopt the UPAA, which does nOt specifically require indepen­dent representation. However, the appellate court reasoned that a strict

Freill1all, 680 N.Y.S.2d 797 (N.Y. Sup. Ct. 1998) (six-year statute of limita­tions for fraud applied, because wife could have discovered fraud during marriage).

Section 6 is the key operative sec­tion of the Act. The party seeking to avoid enforcement of the agreement carri es the burden of proof. See Chiles v. Cltiles, 779 S.W2d 127 (Tex. Ct. App. 1989), to show that the agreement eirher (1) was reached involuntarily, i.e., was the result of fraud, duress, undu e influence (UPAA § 6(a)(1 )), or (2) was uncon­scionable when executed al1d resulted from lack of disclosure, UPAA § 6(A)(2). The unconscionability test is drawn from the Uniform Marriage and Divorce Act § 306. By this pro­vision, the UPAA clearly favors enforceability: An agreement is enforceable even if it was uncon­scionable when executed, as long as the moving party received a fair and reasonable disclosure or waived djsclosure or reasonably could have had adequate lG10wledge of the rele­vant information.

Indeed, in at least one state, the stakes were raised even higher, In

scrutiny test should be applied ro the voluntary requirement when one party lacks independent counsel (In

re Bonds, 24 Cal. 4th 1 (Cal. 2000). In August 2000, the California

Supreme Court overturned the appel­late ruling, stating that although inde­pendent counsel is an important fac­tor in determ.ining whether the agree­ment was entered into voluntarily, premarital agreements are not subject to strict scrutiny when the less sophis­ticated party is not represented by counsel and has not waived counsel.

The BOllds case highlights the iInportance of being well versed in the applicable law. When a spouse challenging a prenuptial agreement has obtained legal advice prior to signing, courts generally have found

Pe"halloll) v. Perilialloll; 649 A.2d 1016 (IU. 1994), the attacking party had to show that the agreement was the result of involuntariness and lack of disclosure and was unconscionable.

On the other hand, in many states that have not adopted the UPAA, and in case law of states prior to their adoption of it, the agreement must be both substantively sufficient and be the result of adequate disclosure. The only exception is spousal support: If the agreement leaves one spouse eli­gible for public assistance, then the court may require the other spouse to provide support sufficient to avoid eligibility, VPAA § 6(b) .

Section 6 of the UPAA has been strongly criticized for specifying that an agreement is unenforceable only if it is unconscionable and if one party is gu il ty of nondisclosure. See Barbara Ann Atwood, Tell Years Laler: Lillgerillg Concerlls About tile Ulliform Premarital Agreelllem Act, 19 J. Legis. 127,146 (1993).

Finally, in Section 7, the UPAA provides that the court may enforce the antenuptial agreement if the

marriage is void but was of signifi­cant duration.UPAA § 7 . •

WINTER 2002 13

the agreement fa irly executed.

Therefore, each party should have

independent legal counsel, and to

prevent the appearance of undue

influence or other impropriety, attor­

neys should avoid recommending a

particular lawyer to the other party.

4. Fairness T he last prerequisite is that the terms

of an agreement be fa ir. C ourts and

legislatures have agreed that dispro­

portionate provisions alo ne do not

invalidate a prenuptial agreement.

H owever, courts apply different stan­

dards of fai rness to provisions on

distributio n o f assets and alimony.

For example, a court may apply an

unconscio nabihty standard to alimo­

ny but not to the distribution o f

assets. Siluila rl y, provisions pertaining

to the distr ibution of assets may be

assessed for fairness o nly at the time

of executio n, whereas ahmo ny provi­

sio ns may be reviewed for uncon­

scionability at the time of enforce­

ment. Some courts also consider the

length of the marriage, w hereas oth­

ers will enforce an agreenlent that is

not fai r or conscionable if the parties

signed the cOntract voluntarily and

knowledgeably.

The time for assess ing substantive

fairness va ries from state to state.

States are divided on the app ropriate

time fo r measuri ng substantive fa ir­

ness. Some do so at the execution of

the agreement; others at the time of

enforcement or both. Determining

the substantive fa irness of a p renuptial

agreement at the time it was made

coincides w ith the parties' right to

contract freely, H owever, it does not

Courts and

legislatures

have agreed that

disproportionate

provisions alone

do not invalidate

a prenuptial

agreement

protect again st unfo reseen changes in

circumstances that may affec t fi nan­

cial status and place one party at

fu ture financial ri sk. Consequently, an

increasing number of states are evalu­

ating the £,i rness of prenuptial agree­

ments at the time of enforcement.

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14 fAMILY ADYOCATE

The valid agreement T he following steps may be helpful

in dt<tfting agreements that stand the best chance of being held valid .

1. Encourage the parties to execute

the agreement before selecting a marriage date o r at least sixty (60) days before the wedding.

2. With the help of an accountant,

have each party prepare a detailed

financial statement, setting forth

all assets, the account or other

identi fica tio n numbers, and the

asse ts' va lues. R emember to

include significant personal prop­

erty and to document the parties

exchange of fi nancial statements.

H ave each accountant submit a

letter certifying that he or she has

reviewed th e disclosures with the

client and fo und them adeq uate.

3. M ake sure th e opposing party is

represented by counsel o f his or

her choosing and have that attor­

ney sign an attestation , certi fying

that he o r she has reviewed each

provision with the client.

4. D o not draft a one-sided agree­ment.

5. Film the signing.

6. H ave the parties sign a ratification

of the agreement after tbe mar­

riage. T his w ill help the validi ty of

the agreement and with enforcing

pension provisio ns.

-M.A.C. & C. G.

Provisions waiving or altering alimony are particularly susceptible under such evaluation. Provisions that leave a spouse unable to meet reasonable needs, at a drastically reduced standard of Living, or a pub­lic charge or close to it, or, provisions that are otherwise unconscionable, will not be enforced . For example, the U PAA provides that if a provision causes a spouse to become eligible for welfare assistance, the court may order the other spouse to pay support sufficient to avoid that eligibility.

Ultimately, the standard of fairness and the time for measuring it will depend on the state. Clients should be encouraged to draft agreements that meet the reasonable needs of a

A sunset clause

provides that

after a specified time

the entire agreement

or a certain provision,

such as waiver of

alimony, terminates

dependent spouse and account for changes in circumstances during the marriage. This can be accomplished by allocating assets or alimony to a dependent spouse based on the length of the marriage.

Another possibility is a sunset clause, which provides that after a specified time the entire agreement or a certain provision, such as waiver of al.imony, terminates. These options may ensure that the agreement is fair and conscionable at the time of exe­cution or enforcement, thereby decreasing the likelihood of the provision's being set aside.

The following cases illustrate how the four basic prerequisites may be interpreted by courts. r n each case, the agreement would not have been set aside if the spouse seeking to

enforce it had satisfied the four basic prerequisites.

In McMullin v. McMullin, 926

S.W2d 108 (Mo. App. 1996), the Missour i Court of Appeals found a prenuptial agreement so one-sided that it was "u nconscionable" and thus unenforceable. The court ruled that the agreement failed to meet "full disclosure" requirements because it listed but did nor value the husband 's property and did not allow the prospective wife sufficient time to

seek legal counsel in reviewing the agreement prior to signing. This case is particularly interesting in that the proponent had fulfi lled his obliga­tions under the agreement and argueq that the wife should be estopped from challenging its validi­ty because she had benefited from it. (Generally, the acceptance of benefits estops a person from questioning the existence, validity, and effect of a contract.) The court held that when a prenuptial or separation agreement is unconscionable, the court is under no duty to esrop a party who has benefited from chall enging the agreement's validi ty.

[ II the Matter of the Estate of Robert J Crawford, 107 Wash.2d 493 (Wash. 1986), the Supreme Court of Washington voided a prenuptial agreement signed by a wife in the presence of her husband's attorney three days before the marriage because no provision was made for the wife in the event of divorce or

. death . The husband failed to disclose the value of his property, and the wife was not afforded an opportunity to review the agreement with indepen­dent counsel. However, the court stated that a prenuptial agreement may be valid in the absence of a fair and reasonable provision for the less advantaged spouse if there was full and fair disclosure of all mater ial facts relating to the amount, character, and value of property and the agreement was entered into voluntarily with fu ll understanding upon advice of com­petent independent counsel.

The court recognized that the dependent spouse had not entered into the contract knowledgeably or voluntarily because the value of the husband 's assets were not disclosed and she had no opportunity ro seek independent counsel. Although the court noted that independent COlIn­

sel is not an absolute requirement, it concluded that counsel is required when an agreement is patently unreasonable, as this one was . •

Mark A. Chinn practices family law in

Jackson, Mississippi. Charles Greer is a

J.D. candidate, Mississippi College School

of law, Jackson, Mississippi.

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WINTER 2002 15