Prenuptial Agreements - An Overview

by Shae Irving, J.D. & Attorney-Mediator Katherine E. Stoner

What you need to know if you're considering a prenuptial, or premarital, agreement.

A prenuptial agreement ("prenup" for short) is a written contract created by two people before they are married. A prenup typically lists all of the property each person owns (as well as any debts) and specifies what each person's property rights will be after the marriage.

Terminology

In some states, a prenuptial agreement is known as an "antenuptial agreement," or in more modern terms, a "premarital agreement." Sometimes the word "contract" is substituted for "agreement," as in "prenuptial contract." An agreement made during marriage, rather than before, is known as a "postnuptial," "postmarital," or "marital" agreement.

Who Needs a Prenup?

Contrary to popular opinion, prenups are not just for the rich. While prenups are often used to protect the assets of a wealthy fiancee, couples of more modest means are increasingly turning to them for their own purposes. For example, a marrying couple with children from prior marriages may use a prenup to spell out what will happen to their property when they die, so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse might have the right to claim a large portion of the other spouse's property, leaving much less for the kids.

Couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during marriage. Or they may want to avoid potential arguments if they ever divorce, by specifying in advance how their property will be divided and whether or not either spouse will receive alimony. (A few states won't allow a spouse to give up the right to alimony, however.) Prenups can also be used to protect spouses from each other's debts, and they may address a multitude of other issues as well.

If You Don't Make a Prenup

If you don't make a prenuptial agreement, your state's laws determine who owns the property that you acquire during your marriage, as well as what happens to that property at divorce or death. (Property acquired during your marriage is known as either marital or community property, depending on your state.) State law may even have a say in what happens to some of the property you owned before you were married.

Under the law, marriage is considered a contract between bride and groom, and with that contract comes certain automatic property rights for each spouse. For example, in the absence of a prenup stating otherwise, a spouse usually has the right to:

       share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death

       incur debts during marriage that the other spouse may have to pay for, and

       share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.

If these laws -- called marital property, divorce, and probate laws -- aren't to your liking, it's time to think about a prenup, which in most cases lets you decide for yourselves how your property should be handled.

Making a Valid Prenup

As prenuptial agreements become more common, the law is becoming friendlier toward them. Traditionally, courts scrutinized prenups with a suspicious eye, because they almost always involved a waiver of legal and financial benefits by a less wealthy spouse and they were thought to encourage breakups.

As divorce and remarriage have become more prevalent, and with more equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside. Because courts still look carefully at prenups, it is important that you negotiate and write up your agreement in a way that is clear, understandable, and legally sound. If you draft your own agreement, which we recommend, you'll want to have separate lawyers review it and at least briefly advise you about it -- otherwise a court is much more likely to question its validity.

How to Draft Your Own Agreement

Nolo's Prenuptial Agreements: How to Write a Fair & Lasting Contract, by Katherine E. Stoner and Shae Irving, shows you how to create a draft agreement yourselves, and how to bring the agreement to separate lawyers for review. It provides worksheets to help you and your fiancee determine what your prenup should cover and clauses for preparing an agreement that suits your needs, as well as lots of examples and samples to make your job easier.

Premarital Agreements FAQ

Understand what a premarital agreement is, how it works and whether or not you need one.

What is a premarital agreement?

A premarital agreement is a written contract created by two people planning to be married. The agreement typically lists all of the property each person owns, as well as their debts, and it specifies what each person's property rights will be after they tie the knot. Premarital agreements often specify how property will be divided -- and whether spousal support (alimony) will be paid -- in the event of a divorce. In addition, an agreement may set out the couple's intentions about distributing property after one of them dies. (This is especially useful for second marriages when one or both spouses wants to preserve property for children or grandchildren from a former union.)

In some states, a premarital agreement is known as an "antenuptial agreement," or in slightly more modern terms, as a "prenuptial agreement" or "prenup."

What is the difference between a living together agreement and a premarital agreement?

Couples who want to live together but have no intention of getting married may benefit from signing a living together agreement. It creates a framework for non-married couples to handle money and property issues while they live together and in case they separate. See Living Together Contracts.

If a couple makes a living together contract and later decides to marry, they should rewrite their contract as a premarital agreement. Premarital contracts are enforceable only if they are made when a couple is contemplating marriage.

Are premarital agreements legal?

As divorce and remarriage have become more prevalent, and with growing equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair, that seems to promote divorce or that otherwise fails to meet state requirements will still be set aside. And courts won't uphold agreements of a non-monetary nature. For example, you can agree on how you will divide your property if you divorce, but you can't sue your spouse for failure to take out the garbage, even if your premarital agreement says that he or she must do so every Tuesday night. Premarital Agreements FAQ

Should my fiancee and I make a premarital agreement?

Whether you should make a premarital agreement depends on your circumstances and on the two of you as individuals. Most premarital agreements are made by couples who want to circumvent the mandates of state law in the event of a divorce or at death. Often this happens when one partner has property that he or she wishes to keep if the marriage ends -- for example, a considerable income or a family business. Perhaps most frequently, premarital agreements are made by individuals who have children or grandchildren from prior marriages. The premarital agreement allows the partner to ensure that the bulk of his or her property passes to the children or grandchildren rather than to the current spouse.

Are there rules about what can or cannot be included in a premarital agreement?

A law called the Uniform Premarital Agreement Act provides legal guidelines for people who wish to make agreements before marriage regarding ownership, management and control of property; property disposition on separation, divorce and death; alimony; wills; and life insurance benefits.

States that haven't adopted the Act (or that have made some changes to it) have other laws, which often differ from the Act in only minor ways. A few states have taken the significant step of not allowing premarital agreements to modify or eliminate the right of a spouse to receive court-ordered alimony at divorce. Other states have their own quirky laws -- Maine, for example, voids all premarital agreements one and one half years after the parties to the contract become parents, unless the agreement is renewed in writing. Premarital Agreements FAQ

Can my fiancee and I make our premarital agreement without a lawyer?

You and your fiancee can go a long way toward making your own agreement by evaluating your circumstances, agreeing on what you want your agreement to cover and even writing a draft of the contract. But if you want to end up with a clear and binding premarital agreement, you'll eventually have to enlist a good lawyer to help you. In fact, you will need two lawyers -- one for each of you. That may sound like surprising advice from advocates of self-help law. But it's true.

The laws governing marriage contracts vary widely from state to state. Unless you want to invest your time learning the ins and outs of your state's matrimonial laws, you'll want to find a lawyer who fully understands them. She can help you put together an agreement that meets state requirements and says what you want it to say.

This explains the desirability of having one lawyer, but why two? Premarital agreements can still be closely scrutinized by the courts. If you want your agreement to pass muster, having an independent lawyer advise each of you can be an important factor. While most courts don't require that each party to a premarital agreement have a lawyer, the absence of separate independent advice for each party is a red flag to courts.

Finally, on a practical note, having separate legal advisors can help you and your fiancee craft a balanced agreement that you both understand and that doesn't leave either of you feeling that you've been taken advantage of.

Is a Prenuptial Agreement Right for You?

by Shae Irving, J.D. & Attorney-Mediator Katherine E. Stoner

These steps will help you decide whether a prenuptial agreement makes sense for you.

Whether to have a prenup is as personal and unique a decision as whether to marry in the first place. Here are a couple of things you can do to figure out whether a prenup is what you need.

Consider the Pros and Cons

Before getting to the specifics of your own situation, it can be helpful to look at the general pros and cons of making a prenup. We'll look at the good news first, then a few downsides.

Prenup Benefits

Making a prenup can:

  • protect your separate property
  • support your estate plan
  • define what property is considered marital property or community property
  • reduce conflicts and save money if you divorce
  • clarify special agreements between you, and
  • establish procedures and ground rules for deciding future matters.

In addition, creating a prenup may actually strengthen your relationship. While people often focus on the fact that negotiating a prenup is potentially divisive, it is easy to lose sight of the fact that communicating about money matters can actually improve the quality of your marriage. Even if you don't end up signing a written agreement, just sitting down and hashing out the basics about money and property can eliminate misunderstandings that might otherwise derail your marriage. Remember that sooner or later you and your intended will be talking about money. If you think you can handle it, most psychologists and legal experts would tell you there's no time like the present.

Disadvantages of a Prenup

While there is a lot to be said for a carefully considered, clearly written prenup, there are some downsides to consider.

It's not romantic. Let's face it, a prenup is not romantic. Being engaged conjures up images of candlelit dinners and walks in the moonlight. Although marriage is a financial partnership as well as a romantic one, if you feel that discussing something as mundane as property and finances, as well as the possibility of divorce, will mar an otherwise beautiful time of your lives, you may not be candidates for a prenup.

Is a Prenuptial Agreement Right for You?

The time may not be right. The need for a prenup is partly a question of timing. The issues covered in a prenup will probably arise sooner or later in your marriage: money management, property rights, responsibility for debts, estate planning. And if your marriage doesn't work out, you'll certainly need to deal with divorce decisions.

But making a prenup forces you to confront many of these issues now, at a time when your relationship may still be new and untested. Discussing what goes into a prenup could be unpleasant and stressful, leaving one of your with bad feelings about the relationship. (If now is not the time to make a written agreement, you may be able to make a contract after you marry (a "postnup"); but be advised that postnups have their own disadvantages, including stricter legal rules.)

State law may protect you without a prenup. The laws of your state may do a fine job of accomplishing what you want. For example, you may live in a community property state where assets owned before marriage are separate property and those accumulated during marriage are community property that is owned fifty-fifty. If this is essentially what you would want in your prenup, or maybe even better than what you expected, why go through the work of negotiating a prenup? Still, you'll want to be sure that you're not facing any special circumstances where your state law is unclear. Proceed to the next step and take a careful look at your situation.

Examine Your Situation

Now that you have an overview of the pros and cons, you can focus on the specifics of your circumstances and figure out whether a prenup is what you need.

Step One: Take a Prenup Quiz

If you or your fiancee can answer yes to any of the following questions, there is a good chance a prenup would be helpful. If you answer no to every question, you might still benefit, but having a prenup might not be as critical.

  • Do you own any real estate?
  • Do you own more than $50,000 worth of assets other than real estate?
  • Do you own all or part of a business?
  • Do you currently earn a salary of more than $100,000 per year?
  • Have you earned more than one year's worth of retirement benefits or do you have other valuable employment benefits, such as profit sharing or stock options?
  • Does one of you plan to pursue an advanced degree while the other works?
  • Will all or part of your estate go to someone other than your spouse?

Is a Prenuptial Agreement Right for You?

Step Two: Identify Important Issues

Jot down on a piece of paper a list of the things you might want to include in a prenup, such as separate property identification, decisions about how you will handle money and property while you are married, whether alimony will be paid or waived in the event of divorce, retirement benefit agreements, and agreements about how you want to leave property at your death.

Common Prenup Topics

Here's a quick list of some of the issues that can be included in a prenup:

  • separate vs. joint property
  • estate planning issues, such as providing for children from prior marriages or leaving family property
  • how to handle a separate business
  • retirement benefits
  • nonresponsibility for the other person's debts
  • who gets what, including alimony, if you separate or divorce
  • procedures for filing tax returns, including allocating income and deductions
  • who pays household bills -- and how
  • whether to have joint bank accounts and, if so, how to manage them
  • agreements about specific purchases or projects, such as buying a house together or starting up a business
  • how you will handle credit card charges
  • agreements to set aside money for savings
  • agreements for putting each other through college or professional school
  • provisions for a surviving spouse in your estate plan or through life insurance coverage
  • how to settle any future disagreements, such as with the help of a mediator or by a private arbitrator acting as judge.

Step Three: Assess Your Comfort Level

Next, ask yourself this question: On a scale of one to five, how comfortable am I with the idea of having a prenup? If you give yourself a one or a two, try to identify the reasons for your discomfort. If it is because you are uncertain how the terms of a prenup might compare to your legal rights without one, you may want to investigate the laws of your state before making a decision. If you are pretty sure you want a prenup and your discomfort comes from fear of starting an argument or offending your fiancee, then you might take this as an opportunity to practice talking about difficult matters in a loving way. You may even find it helpful to work on communication and negotiation skills with a counselor who specializes in premarital counseling. The same is true if you don't think you want a prenup and you feel that your fiancee is pressuring you to make one. This is a good time to practice communicating -- clearly and kindly -- about stressful issues. Whether or not you eventually make a prenup, you're sure to learn more about what you each need and want.

If you scored a three, four, or five on the comfort scale, you are ready to start talking specifics with your fiancee. Even so, bear in mind that every good conversation involves some give or take. Don't assume that you and your fiancee will see eye-to-eye on everything, especially when you first start talking. Allow plenty of time to talk -- and be willing to get help if you need

 

Pros and Cons: Premarital Agreements ("Prenuptials")

PROS

  • A premarital agreement can protect the inheritance rights of children and grandchildren from a previous marriage.
  • If you have your own business or professional practice, a premarital agreement can protect that interest so that the business or practice is not divided and subject to the control or involvement of your former spouse upon divorce.
  • If one spouse has significantly more debt than the other, a premarital agreement can protect the debt-free spouse from having to assume the obligations of the other.
  • If you plan to give up a lucrative career after the marriage, a premarital agreement can ensure that you will be compensated for that sacrifice if the marriage does not last.
  • A premarital agreement can address more than the financial aspects of marriage, and can cover any of the details of decision-making and responsibility sharing to which the parties agree in advance.
  • A premarital agreement can limit the amount of spousal support that one spouse will have to pay the other upon divorce.
  • A premarital agreement can protect the financial interests of older persons, persons who are entering into second or subsequent marriages, and persons with substantial wealth.

CONS

  • The agreement may require you to give up your right to inherit from your spouse's estate when he or she dies. Under the law, you are entitled to a portion of the estate even if your spouse does not include such a provision in his or her will.
  • If you contribute to the continuing success and growth of your spouse's business or professional practice by entertaining clients and taking care of the home, etc., thus allowing him or her to focus on professional endeavors, you may not be entitled to claim a share of the increase in value if you agree otherwise in a premarital agreement. Under the laws of many states, this increase in value would be considered divisible marital property.
  • Starting a relationship with a contract that sets forth the particulars of what will happen upon death or divorce can engender a sense of lack of trust.
  • As mentioned above, a contract can take the wind out of your emotional sails.
  • It can be difficult to project into the future about how potential issues should be handled, and what may seem like an inconsequential compromise in the romantic premarital period may seem more monumental and burdensome in reality.
  • A low- or non-wage-earning spouse may not be able to sustain the lifestyle to which he or she has become accustomed during the marriage if the agreement substantially limits the amount of spousal support to which that spouse is entitled.
  • In the "honeymoon" stage of a relationship, one spouse may agree to terms that are not in his or her best interests because he or she is "too in love" to be concerned about the financial aspects and can't imagine the union coming to an untimely end.

Criteria for a Valid Agreement

The laws governing the validity of premarital agreements vary from state to state. In general, the agreements must be in writing and signed by the parties.

In most states, the parties (particularly the wealthier party) must disclose their income and assets to the other party. This way, the parties will know more about what they might be giving up. In some states, it may be possible to waive a full disclosure of income and assets, but the person waiving that right should do so knowingly, and it is best if each party has at least a general idea of the other's net worth.

Sometimes it is difficult to make a precise statement of a party's net worth. If for example, the husband or wife owns a business that is closely held (meaning shares of the company's stock are not traded on a public stock market), it may be difficult to ascertain the value of the business. In that circumstance, it usually is best to acknowledge the difficulty of precise valuation in the agreement and then state the minimum net worth or the range of possible net worth of the party.

In order to be valid, an agreement must not be the result of fraud or duress. An agreement is likely to be invalid on the basis of fraud if one person (particularly the wealthier one) deliberately misstates his or her financial condition. For example, if a man hides assets from his future wife so that she will agree to a low level of support in case of divorce, a court probably would declare the agreement invalid. Similarly, if one person exerts excessive emotional pressure on the other to sign the agreement, a court also might declare the agreement to be invalid because of duress.

In order to avoid an appearance of duress and to give the parties ample time to consider the agreement, the agreement should be reviewed and signed well before the wedding. Most states do not set a specific time at which premarital agreements must be signed, but the greater amount of time the parties have to consider the agreement, the greater the likelihood a court would find the agreement to be voluntary.

If the wealthier person presents the agreement to the prospective spouse for the first time one day before the wedding, a court may later find that the agreement was invalid because of duress. A last-minute premarital agreement is not automatically invalid, but timing may be a significant factor in determining whether the agreement is valid.

An agreement might be valid even if both parties were not represented by lawyers, but using lawyers is a good idea in order to help make sure the agreement is drafted properly and that both parties are making informed decisions.

The lawyer for the wealthier party usually prepares the initial draft of the agreement. The less wealthy party and that party's attorney, if there is one, should review the agreement carefully and ask questions about any matters that are uncertain. The likelihood of having a valid, enforceable agreement increases if the less wealthy party's interests are well represented and some back-and-forth negotiations take place.

In order to demonstrate that the parties truly know what they are agreeing to, some attorneys favor taking additional steps to illustrate the knowledge of each party about the agreement. In addition to signing the agreement, the parties also may place their initials on pages with key provisions, such as the provisions of the agreement pertaining to disclosures of assets, distribution of property, and support.

The parties, particularly the less wealthy party, might be asked to prepare a handwritten statement, in the parties' own words, reflecting understanding and consent to the agreement. Alternatively, the signing of the agreement might be videotaped (or audiotaped) with the parties providing oral statements of their understanding and consent to the agreement (in addition to their written consent).

Sidebar:   When an Agreement is Enforceable

Mary and John are in their late forties. They plan to marry in five months. Each has been married before. Before getting married, however, they wish to clarify their financial relationship. Mary has assets of about $400,000; John has assets of about $200,000. They both work and are capable of self-support. They each wish to protect the assets that they will bring into the marriage.

After disclosing their assets to each other and consulting with their individual attorneys, they sign an agreement that provides:

  • Their future earnings will remain their respective separate property as long as the earnings are kept in accounts bearing only the name of the person who earned the money;
  • The savings, investments, and retirement accounts that they bring into the marriage, along with any growth in those assets, will remain separate property after the marriage as long as the assets are held in the name of only one of the parties;
  • Each party waives any right to future alimony or inheritance, although either party is free to include the other in his or her will;
  • The parties, if they wish, may make joint investments, such as in a house, condominium, or car, in which case, title will be held jointly with a right of survivorship (which means if one of them dies, the other will receive the property that was jointly held); and
  • They will share payment of common expenses, including housing, utilities, and food, in proportion to their incomes.
  • Since the agreement appears to be fair and not made under duress, it is likely to be valid and enforceable.

 

Top 10 Reasons a Premarital Agreement May be Invalid

  1. NO WRITTEN AGREEMENT.  Premarital agreements must be in writing to be enforceable.
  2. NOT PROPERLY EXECUTED.  Both parties must sign a premarital agreement before the wedding in order for the agreement to be considered valid.
  3. YOU WERE PRESSURED.  A premarital agreement may not be valid if one of the spouses was pressured by the other (or by his or her lawyer or family) to sign the agreement.
  4. YOU DIDN'T READ IT.  If your spouse-to-be puts a bunch of papers in front of you, including a premarital agreement, and asks you to sign them quickly, the premarital agreement may not be enforceable if you sign it without reading it.
  5. NO TIME FOR CONSIDERATION.  A prospective spouse entering into a premarital agreement must be given time to review it and think it over before signing it.  If the groom hands the contract and a pen to the bride just before she says, "I do," the agreement is probably invalid.
  6. INVALID PROVISIONS.  Although a premarital agreement can cover just about any financial aspect of the parties' relationship, it cannot in any way modify the child support obligations that either spouse would have if the marriage should end in divorce.  Any other provisions of the agreement that violate the law would also be invalid.  It is possible, however, that the court would strike the illegal clauses and enforce the remainder of the agreement.
  7. FALSE INFORMATION.  A premarital agreement is valid only if it is entered into after full disclosure by both parties -- as to their income, assets, and liabilities.  If one prospective spouse provides the other with information that is not true, the agreement is invalid.
  8. INCOMPLETE INFORMATION.  Failing to provide pertinent information is as bad as providing false information, and it renders a premarital agreement unenforceable.
  9. NO INDEPENDENT COUNSEL.  Because their separate interests are at stake, both parties to a premarital contract should (and in some states must) be represented by their own attorneys, or the agreement will not be enforced.
  10. UNCONSCIONABILITY.  It's true that you can agree to give up your right to inherit from your spouse, which you would otherwise be entitled to do upon your spouse's death, even if he or she left you out of a will.  You can sign away your right to spousal support if you should end up in divorce court, even if your spouse makes ten times as much money as you do.  You can even agree that your spouse gets all of the property and you get all of the bills, if that is what you want to do.  But if the agreement is so grossly unfair that one party would face severe financial hardship while the other prospered, the court is unlikely to enforce it.  "Unconscionable" contracts are generally found invalid, and premarital agreements are no exception.

Amount of Support

State laws do not set a specific amount of support that must be provided in premarital agreements.

If, after a divorce, the parties are capable of self-support, based on their assets, income, and job skills, a court could uphold an agreement that provided no property or support to the less wealthy spouse.

If, on the other hand, the less wealthy spouse cannot be self-sufficient and the agreement provides little or no property or support, courts in most states are likely to step in and order some distribution of property or support in favor of the less wealthy spouse. That amount will vary from state to state. In some states, the amount needs to reach only a subsistence level--enough to keep the less wealthy spouse off the welfare roles. Many courts will apply broader notions of fairness and require support at a level higher than subsistence.

A standard used by some courts is unconscionability. That refers to agreements that are unusually harsh and unfair. Some courts define an unconscionable agreement as one that no sensible person would offer and no sensible person, not under duress or delusion, would accept. Since the standard of unconscionability is subjective, courts have interpreted the term in different ways, but if a court finds an agreement to be unconscionable, the agreement will not be enforced.

To promote fairness and avoid unconscionability, many lawyers drafting premarital agreements favor including an escalator clause or a phase-in provision that will increase the amount of assets or support given to the less wealthy spouse based on the length of the marriage or an increase in the wealthier party's assets or income after the agreement is made.

If the wealthier party is concerned that his or her assets could drop sharply at a later time, the wealthier spouse may wish to include a provision to provide protection in such a circumstance. If the agreement provides for a fixed dollar amount to the less wealthy spouse, the wealthier party might add a provision that says in no event shall the amount of property given to the other spouse exceed half (or some other percent) of the wealthier party's assets. Alternatively, the payment of assets at time of divorce (or death) could be set as a percent of the wealthier party's assets at the time of divorce (or death).

What You Can (and Can't) Do With a Prenuptial Agreement

by Shae Irving, J.D. & Attorney-Mediator Katherine E. Stoner

Understand what you can accomplish by making a contract before you marry.

If you're trying to decide whether or not to make a prenuptial agreement, you'll need to understand what this type of contract can -- and can't -- do for you.

What You Can Do With a Prenup

Prenuptial agreements are most often used for the following reasons:

Keep finances separate. Every state has laws designating certain kinds of assets accumulated during marriage as marital property or community property, even if these assets are held in the name of just one spouse. If a couple divorces, or when one spouse dies, the marital or community property will be divided between them, either by agreement or by a court. If you want to avoid having some or all of your individual accumulations during marriage divided up, you can do so with a premarital agreement.

Protect each other from debts. Some of us bring debts, as well as assets, to a marriage. If there's no prenup, creditors can sometimes turn to marital or community property to satisfy the debts of just one spouse. But if you want to make sure that saying "I do" does not mean saying "I owe," you can use a prenup to limit your liability for each other's debts.

Provide for children from prior marriages. A prenup is helpful (perhaps essential) if either of you has children from another relationship and you want to make sure that your children inherit their share of your property. In a prenup, one or both spouses can give up the right to claim a share of the other's property at death, perhaps in exchange for an agreed upon amount of property.

Keep property in the family. If your property includes something you want to keep in your birth family, whether it be an heirloom or a share in a family business, you and your spouse can agree that it will remain in your family, and you can specify that item in your prenup. This can even include property that you expect to receive in a future inheritance.

Follow through by making your estate plan. In addition to using your prenup to waive inheritance rights and state your intentions for passing on your property at death, it's vital that you prepare the estate planning documents -- a will, living trust, and so on -- that actually transfer your property as you intend.

Define who gets what if you divorce. Without a prenup, state law will specify how your property will be divided if you ever divorce. These laws may dictate a result that neither of you wants. You can use a prenup to establish your own rules for property division and avoid potential disagreements in the event of a divorce. In most states, you can also make agreements about whether or not one or both of you will be entitled to alimony. Some states forbid or restrict agreements about alimony, however. (See "What You Can't Do With a Prenup," below.)

Clarify responsibilities during the marriage. In addition to the reasons listed so far, there are countless other uses for a prenup, depending on your circumstances. Here are some examples of other matters people include in their prenups:

       whether to file joint or separate income tax returns or to allocate income and tax deductions on separate tax returns

       who will pay the household bills -- and how

       whether to have joint bank accounts and, if so, how you will manage them

       agreements about specific purchases or projects, such as buying a house together or starting up a business

       how you will handle credit card charges -- for instance, whether you will use different cards for different types of purchases, what kinds of records you will keep, and how you will make payments

       agreements to set aside money for savings

       agreements for putting each other through college or professional school

       whether you will provide for a surviving spouse -- for example, in your estate plan or with life insurance coverage, and

       how to settle any future disagreements -- for example, you might agree to hire either a mediator or a private arbitrator.

What You Can't Do With a Prenup

There are some things you just can't -- or shouldn't -- do with a prenup. State laws differ as to what matters are considered off-limits. However, as a general rule, any agreement to do something that is illegal or against state-defined public policy will be considered unenforceable -- and may even jeopardize other valid aspects of the premarital agreement. Here are some things that you can't do, at least in some states:

Restrict child support, custody, or visitation rights. No state will honor agreements limiting or waiving future child support. The same holds true of agreements limiting future custody and visitation rights. This is because state lawmakers consider the welfare of children to be a matter of public policy and do not enforce any private agreements that would impair a child's right to be supported or to have a relationship with a parent in the future.

Give up the right to alimony, in a few states. A handful of states similarly limit your ability to waive alimony -- also called spousal support or separate maintenance -- if there is a divorce. Other states permit such waivers, so you will need to know what your state laws say if you are considering this kind of agreement.

"Encourage" divorce. At one time, many courts viewed any prenup specifying how things would be divided up in case the couple splits as void and unenforceable because it promoted divorce. The modern approach allows such agreements, but judges in some states still take a hard look at them. If the agreement appears to offer a financial incentive for divorce to one party, it may be set aside.

Make rules about nonfinancial matters. For practical reasons, you should keep personal agreements out of your prenup. Here is a partial list of nonfinancial matters that sometimes find their way into prenups, but are better dealt with separately. Of course, the possible issues are endless and you may well think of many that aren't mentioned here:

       responsibility for household chores -- from laundry to cleaning to car care

       use of last names after you marry

       agreements about having and raising children, such as birth control, having children, children's names, child care responsibilities, and education

       how you will relate to in-laws or stepchildren, and

       whether you will have any pets and who will be responsible for them.

These kinds of nonmonetary agreements aren't binding in court, and in fact they could cause a judge to take your entire prenup less seriously. Rather than including personal matters in your prenup, you may find it helpful to simply make a list of your most important concerns and discuss them together. If you want to take it a step further, you can underscore your commitment by writing down your personal agreements in a separate document -- perhaps in a letter that each of you writes to the other, clarifying your intentions and wishes.

Sample Financial Statement

DISCLAIMER

The following form is provided by Findlaw for informational purposes only and is intended to be used as a guide prior to consultation with an attorney familiar with your specific legal situation. Findlaw is not engaged in rendering legal or other professional advice, and this form is not a substitute for the advice of an attorney. If you require legal advice, you should seek the services of an attorney. ©2000 Findlaw. All rights reserved.

Also available in PDF | MS Word

Before entering into a prenuptial or premarital agreement, each prospective spouse must make a complete and honest financial disclosure to the other. The following form, used in conjunction with the advice and counsel of your family law attorney, can be useful in putting together your own financial statement and verifying that the information you receive from your spouse is complete.

A. Gross Monthly Income

Source/Amount ________________/$________

Source/Amount ________________/$________

Source/Amount ________________/$________

TOTAL: $________________

B. Deductions from Gross Income

State Income Tax

$____________________

Federal Income Tax

$____________________

 

 

Social Security

$____________________

 

 

Self-employment Tax

$____________________

 

 

Health Insurance

$____________________

 

 

Union Dues

$____________________

 

 

Pension/Retirement

$____________________

 

 

Support Orders

$____________________

 

 

Other

$____________________

 

 

TOTAL : $_______________

C. NET MONTHLY INCOME: (gross income minus total deductions)

$_______________

D. Assets & Liabilities

 

Value

Owe

Primary Home

$_______________

$_______________

    

Vacation Home

$_______________

$_______________

    

Other Home/Property

$_______________

$_______________

    

Vehicle(s)

$_______________

$_______________

    

Recreational Vehicle

$_______________

$_______________

    

Boat(s)

$_______________

$_______________

    

Furniture

$_______________

$_______________

    

Home Furnishings

$_______________

$_______________

    

Appliances

$_______________

$_______________

    

Artwork

$_______________

$_______________

    

Jewelry

$_______________

$_______________

    

Computer(s)

$_______________

$_______________

    

Personal Property

$_______________

$_______________

    

Cash

$_______________

$_______________

    

Stocks/Bonds/Funds

$_______________

$_______________

    

Stock Options

$_______________

$_______________

    

Checking Account(s)

$_______________

$_______________

    

Savings Account(s)

$_______________

$_______________

    

Retirement/Pensions

$_______________

$_______________

    

Profit Sharing

$_______________

$_______________

    

IRA(s)

$_______________

$_______________

    

Business(es)

$_______________

$_______________

    

Professional Practice

$_______________

$_______________

    

Life Insurance

$_______________

$_______________

    

Other Assets

Description

Value







TOTAL ASSETS: $_______________

TOTAL LIABILITIES: $_______________

E. NET WORTH: (assets minus liabilities) $___________________________

F. Educational Degrees




 

Sample Premarital/Prenuptial Agreement

DISCLAIMER

The following form is provided by Findlaw for informational purposes only and is intended to be used as a guide prior to consultation with an attorney familiar with your specific legal situation. Findlaw is not engaged in rendering legal or other professional advice, and this form is not a substitute for the advice of an attorney. If you require legal advice, you should seek the services of an attorney. ©2000 Findlaw. All rights reserved.

Also available in PDF | MS Word

The following form is intended for illustrative purposes only. You and your attorney can use this sample as a guide in drafting a prenuptial agreement that best protects your interests and complies with the laws in effect where you live.

________________________________________, hereinafter referred to as Prospective Husband, and _______________________________________, hereinafter referred to as Prospective Wife, hereby agree on this _____ day of ________________, in the year ______, as follows:

  1. Prospective Husband and Prospective Wife contemplate marriage in the near future and wish to establish their respective rights and responsibilities regarding each other's income and property and the income and property that may be acquired, either separately or together, during the marriage.
  2. Prospective Husband and Prospective Wife have made a full and complete disclosure to each other of all of their financial assets and liabilities, as more fully set forth in the accompanying Financial Statements, attached hereto as Exhibits A and B.
  3. Except as otherwise provided below, Prospective Husband and Prospective Wife waive the following rights:
    1. To share in each other's estates upon their death.
    2. To spousal maintenance, both temporary and permanent.
    3. To share in the increase in value during the marriage of the separate property of the parties.
    4. To share in the pension, profit sharing, or other retirement accounts of the other.
    5. To the division of the separate property of the parties, whether currently held or hereafter acquired.
    6. To any claims based on the period of cohabitation of the parties.
  4. [SET FORTH RELEVANT EXCEPTIONS HERE.]
  5. [ADDITIONAL PROVISIONS HERE. These can range from prescribing that the children will be raised in a particular religion to allocating household chores between the parties.]
  6. Both Prospective Husband and Prospective Wife are represented by separate and independent legal counsel of their own choosing.
  7. Both Prospective Husband and Prospective Wife have separate income and assets to independently provide for their own respective financial needs.
  8. This agreement constitutes the entire agreement of the parties and may be modified only in a writing executed by both Prospective Husband and Prospective Wife.
  9. In the event it is determined that a provision of this agreement is invalid because it is contrary to applicable law, that provision is deemed separable from the rest of the agreement, such that the remainder of the agreement remains valid and enforceable.
  10. This agreement is made in accordance with the laws of the state of _________________, and any dispute regarding its enforcement will be resolved by reference to the laws of that state.
  11. This agreement will take effect immediately upon the solemnization of the parties' marriage.

I HAVE READ THE ABOVE AGREEMENT, I HAVE TAKEN TIME TO CONSIDER ITS IMPLICATIONS, I FULLY UNDERSTAND ITS CONTENTS, I AGREE TO ITS TERMS, AND I VOLUNTARILY SUBMIT TO ITS EXECUTION.

_______________________________
Prospective Husband

______________________________
Prospective Wife

Postmarital Agreements

Postmarital agreements or postnuptial agreements are agreements entered into after a marriage has taken place, but before the parties seek to end their marriage. As with premarital agreements, one or both of the parties usually is seeking to protect assets or income in the event of divorce or death.

A married couple may seek to enter into a postmarital agreement after a significant financial change or a period of marital conflict.

The law regarding the validity and enforcement of postmarital agreements is not well developed.

The standard for enforcement of postmarital agreements most likely is similar to the standards discussed earlier for enforcement of premarital agreements. Key criteria for validity of the agreements include: full disclosure of assets, absence of duress, and fairness.

When a man and woman are married (instead of just contemplating marriage), they may be held to a very high standard of fairness when dealing with each other on financial issues--perhaps a higher standard than would be the case if they were entering into a premarital agreement.

When entering into a postmarital agreement, it would be a good idea for the parties to articulate in writing why they are entering into the agreement and to be sure the agreement is fair for both parties.

19-3-62.
(a) As used in this article, the term 'marriage articles' means any antenuptial agreement between the parties to a marriage contemplating a future settlement upon one spouse. Marriage articles, whether by parol or in writing, may be executed and enforced by a court of equity at the instance of the spouse at any time during the life of the other spouse, so long as the rights of third persons, purchasers, or creditors, in good faith and without notice, are not affected thereby.
(b) An agreement perfect in itself which needs no future conveyance to effect its purposes is an executed contract and does not come under the definition of marriage articles.

 

19-3-63.
Every marriage contract in writing, made in contemplation of marriage, shall be liberally construed to carry into effect the intention of the parties and no want of form or technical expression shall invalidate the same. The contract must be attested by at least two witnesses.

 

19-3-64.
A spouse may voluntarily execute an agreement described in Code Section 19-3-62 or he may at any time during the marriage, either indirectly through trustees or directly to his spouse, convey any property to which he has title, subject to the rights of prior purchasers or creditors without notice.

 

19-3-66.
Marriage contracts and postnuptial settlements shall be enforced at the instance of all persons in whose favor there are limitations of the estate. Marriage articles, as defined in subsection (a) of Code Section 19-3-62, shall be executed only at the instance of the parties to the contract and the offspring of the marriage and their heirs; but, when executed at their instance, the court may execute also in favor of other persons and volunteers.

 

19-3-67.
(a) Every marriage contract and every voluntary settlement made by one spouse with the other, whether or not in execution of marriage articles, shall be recorded in the office of the clerk of the superior court of the county of the residence of the spouse making the settlement within three months after the execution thereof. If such a contract or settlement is made in another state and the parties subsequently move into this state, the same shall be recorded within three months from the move. If the settled property is in this state and the parties reside in another state, the record shall be made in the county where the property is located within the time specified above.
(b) A contract or settlement which is not recorded as provided in subsection (a) of this Code section shall be of no force or effect against one who, bona fide and without notice, becomes a purchaser, creditor, or surety before the actual recording of the same.

 

19-3-68.
(a) If the trustee or the spouse having possession of a marriage contract or settlement fails or refuses to have the same recorded, the other spouse or any person acting on behalf of the spouse may apply to the judge of the superior court at any time for an order compelling its recordation. The application of the spouse or other person, when entered on the minutes of the superior court, shall be a notice equivalent to the record of the marriage contract or trust deed.
(b) A trustee refusing after demand to record a marriage contract or settlement shall be personally liable to his beneficiary for all damages sustained by reason of his failure to record.

SCHERER v. SCHERER.

38539

MARSHALL, Justice

      The parties to this divorce proceeding, Robert Pauli Scherer, Jr., and Linda Hellstrom Scherer, were residents of the State of Michigan when they married in 1976. Immediately prior to their marriage, they executed an antenuptial agreement. The agreement states that it is to be construed and enforced in accordance with the laws of the State of Michigan. However, the parties subsequently became Georgia residents, and Robert filed the present complaint for divorce against Linda in the Fulton Superior Court. Both parties filed motions for partial summary judgment on issues concerning the enforceability and construction of the antenuptial agreement. The trial judge granted Robert's motion, and we granted Linda's application to appeal. The facts are:

      When Robert and Linda married in 1976, it was the second marriage for both of them. Linda had one minor child by her former


 

Page 636


 

marriage, and Robert had four minor children by his former marriage.

      By gift and inheritance, Robert owned and controlled 21.4% of the stock in R. P. Scherer Corporation, with a market valuation of approximately $20,000,000. This corporation was founded by Robert's father in Detroit, Michigan, in 1933. Although it was originally a closely-held family corporation, it later became a public corporation with its stock traded on the over-the-counter market. Robert was the chief executive officer and chairman of the board of this corporation.

      Robert desired to keep the stock in this corporation in the Scherer family, and to effectuate this he and Linda executed an antenuptial agreement on the evening before their marriage. Under this agreement, Robert's stock in the R. P. Scherer Corporation is referred to as the "Scherer stock," which is defined to include "any proceeds or other property received from any sale or exchange of such stock or any part thereof, and any proceeds from sale or exchange of such other property, and the principal of any investments from any such proceeds." Insofar as is material to the issues raised here, the provisions of the agreement provide as follows:

      "2. Robert. . . agrees, in order to provide for Linda's continued support and maintenance in the event of termination of their marriage by the death of Robert, that Linda shall be named as the beneficiary of all insurance policies currently outstanding on Robert's life . . . providing for aggregate death benefits of $531,264. Robert agrees that such policies shall be continued in full force and effect and such designation of Linda as beneficiary shall be irrevocable during their marriage, provided that Robert shall have the right to substitute in place of such insurance other provisions by Will or inter-vivos trust of not less than a like sum for Linda's support and maintenance in the event of the termination of their marriage by the death of Robert.

      "3. Linda hereby releases any and all rights and/or interests, statutory or otherwise, which may result from the marriage of the parties with respect to the Scherer Stock and agrees that the Scherer Stock shall remain Robert's sole and separate property, reserving any and all rights and/or interests, statutory or otherwise, which may result from the marriage of the parties with respect to Robert's assets other than the Scherer Stock. Robert hereby releases any and all rights /or interest, statutory or otherwise, which may result from the marriage of the parties with respect to all assets owned by Linda and agrees that such assets shall remain Linda's sole and separate property."

      "5. In the event of the termination of marriage other than by


 

Page 637


 

death, the intent and provisions hereof shall be considered and applied to the extent permitted by law.

      "6. Linda and Robert acknowledge that each of them were [sic] represented by legal counsel of their own choice in the preparation of this Agreement; that each of them has read this Agreement and has had its contents explained to them by their respective counsel; and that they fully understand the terms, provisions and legal consequences of this Agreement."

      "8. Linda and Robert agree that this Agreement shall be construed and enforced in accordance with the laws of the State of Michigan, even if subsequent to their contemplated marriage they establish residence in some other State, including a community property state."

      In 1979, a disagreement developed between Robert and other members of the Board of Directors of the R. P. Scherer Corporation concerning the management of the company. As a result, in December of 1979 certain segments of the business conducted by the R. P. Scherer Corporation were incorporated under the name Storz Instrument Company. Robert transferred all of his stock in the R. P. Scherer Corporation to that corporation, and all of the stock in Storz Instrument Company was transferred to Robert. The main offices of the Storz Instrument Company were located in Atlanta, and Robert and Linda moved to Atlanta.

      In December of 1980, Robert filed a complaint for divorce against Linda, stating that there were no minor children born of the marriage and requesting a divorce on grounds that the marriage was irretrievably broken. Linda filed an answer, admitting that the marriage was irretrievably broken and requesting, among other things, an equitable division of property as well as support for herself and her minor child. A divorce on the pleadings was granted, with the remaining issues reserved for later disposition.

      Linda filed a motion for partial summary judgment, seeking enforcement of the antenuptial agreement by requesting Robert to pay her the sum of $531,264 plus interest. Robert filed a cross-motion for partial summary judgment, seeking a declaration that the antenuptial agreement is unenforceable in this state, or, in the alternative, an interpretation of the agreement under which Linda would be entitled to no payment from Robert as a result of their divorce.

      The trial court entered an order denying Linda's motion for partial summary judgment, and granting Robert's cross-motion to the extent of ruling that the antenuptial agreement is enforceable and that Linda released any rights and/or interests which may have resulted from the marriage of the parties with respect to the Scherer


 

Page 638


 

Stock as defined by the agreement.

      1. Although the agreement itself states that it is to be construed according to the laws of the State of Michigan, in this proceeding both of the parties seek to have the enforceability of the agreement determined under the laws of the State of Georgia. In addition, as pointed out in Division 2, infra, the enforceability of antenuptial agreements is, of course, a matter of public policy. And it would appear that where the enforcement of a contract in this state draws public-policy considerations into question, those public-policy considerations will be determined according to the laws of this state. See Nasco, Inc. v. Gimbert, 239 Ga. 675 (2) (238 SE2d 368) (1977) and cits. Code Ann. 102--108. For these reasons, we determine the enforceability of this agreement under Georgia law.

      2. "In the past, there has been virtually unanimous agreement in all jurisdictions that prenuptial agreements purporting to settle alimony in the event of a future divorce are void ab initio as against public policy since they were considered to be in contemplation of divorce. Georgia has followed the majority position." Davies, Validity of Prenuptial Contracts Which Fix Alimony, 14 Ga. State Bar Journal 18 (1977) (referred to hereinafter as Prenuptial Contracts). See also Note, The Impact of the Revolution in Georgia's Divorce Law on Antenuptial Agreements, 11 Ga. L. Rev. 406 (1977) (referred to hereinafter as Antenuptial Agreements).

      Although prior Georgia decisions have upheld antenuptial agreements in which a spouse waived his or her rights in the other spouse's estate at death, Nally v. Nally, 74 Ga. 669 (1885); Holmes v. Liptrot, 8 Ga. 279 (1850), antenuptial agreements in contemplation of divorce have been held invalid on the ground that such agreements are contrary to the policy of this state to hinder facility in the procurement of divorces. Reynolds v. Reynolds, 217 Ga. 234 (6) (123 SE2d 115) (1961) and cits.

      However, with the advent of no-fault divorce laws and the changes in society which such laws represent, courts in other jurisdictions have begun re-evaluating the question of whether antenuptial agreements in contemplation of divorce should be enforced.

      As stated in the leading decision of Posner v. Posner, 233 S2d 381, 384 (Fla. 1970), and as quoted with approval in Buettner v. Buettner, 505 P2d 600, 603 (Nev. 1973):

      "'There can be no doubt that the institution of marriage is the foundation of the familial and social structure of our Nation and, as such, continues to be of vital interest to the State; but we cannot blind ourselves to the fact that the concept of the "sanctity" of a marriage --- as being practically indissoluble, once entered into --- held by our


 

Page 639


 

ancestors only a few generations ago, has been greatly eroded in the last several decades. This court can take judicial notice of the fact that the ratio of marriages to divorces has reached a disturbing rate in many states . . .

      "'With divorce such a commonplace fact of life, it is fair to assume that many prospective marriage partners whose property and familial situation is such as to generate a valid antenuptial agreement settling their property rights upon the death of either, might want to consider and discuss also --- and agree upon, if possible --- the disposition of their property and the alimony rights of the wife in the event their marriage, despite their best efforts, should fail . . .

      "'We know of no community or society in which the public policy that condemned a husband and wife to a lifetime of misery as an alternative to the opprobrium of divorce still exists. And a tendency to recognize this change in public policy and to give effect to the antenuptial agreements of the parties relating to divorce is clearly discernible. Thus, in Hudson v. Hudson, Okl. 1960, 350 P2d 596, the court simply applied to an antenuptial contract respecting alimony the rule applicable to antenuptial contracts settling property rights upon the death of a spouse and thus tacitly, if not expressly, discarded the contrary-to-public-policy rule.' "

      In Volid v. Volid, 286 NE2d 42, 46--47 (Ill. App. 1972), there also can be found a cogent statement of reasons for declining to follow the rule that all antenuptial agreements in contemplation of divorce are unenforceable:

      "It is often declared that the state has a vital interest in the maintenance of the family, but this interest does not require that persons, once married, must live together forever without regard to the breakdown of their relationship. The necessity of granting divorces is recognized, and the grounds upon which one can be granted are expanding. Where no minor children are involved. . . and where the husband and wife can function in society separately and independently, the interest of the state in the continuance of the marriage is small.

      "The most frequent argument made for holding [antenuptial agreements in contemplation of divorce] invalid is that such agreements encourage or incite divorce or separation. There is little empirical evidence to show that this assertion is well founded . . . It may be equally cogently argued that a contract which defines the expectations and responsibilities of the parties promotes rather than reduces marital stability. See dissent Fricke v. Fricke, 257 Wis. 124, 42 NW2d 500 . . .

      "When the rules regarding the husband's duty of support were first enunciated, the roles of a husband and wife were more rigid and


 

Page 640


 

defined. The husband worked and brought income into the family while the wife maintained and managed the household. The woman generally did not seek outside employment partly, because 'her place was in the home', and partly because few opportunities for meaningful employment were available. Married women nowadays are increasingly developing career skills and successfully entering the employment market. Where a woman is trained, healthy, and employable, and where a woman's efforts have not contributed to a husband's wealth or earning potential, the necessity for alimony award upon breakup of the marriage is not great.

      "The reasons given to justify the invalidation of all antenuptial agreements which limit the obligation of support upon divorce do not warrant the condemnation of all such agreements in the name of public policy. . .

      "[I]t would be anomalous to hold that the parties cannot plan and agree on a course of action in the event that the marriage is unsuccessful and ends in divorce. Particularly is this true where the parties are older and where there is little danger that either party would be without support. The incidence of divorce in this country is increasing, and consequently more persons with families and established wealth are in a position to consider the possibility of a marriage later in life. Public policy is not violated by permitting these persons prior to marriage to anticipate the possibility of divorce and to establish their rights by contract in such an event as long as the contract is entered with full knowledge and without fraud, duress or coercion."

      We agree with the statements made in the foregoing decisions. Accordingly, we now overrule Reynolds v. Reynolds, 217 Ga. 234 (6), supra, and we hold that antenuptial agreements in contemplation of divorce are not absolutely void as against public policy.

      3. In fact, in Sanders v. Colwell, 248 Ga. 376 (283 SE2d 461) (1981), we have recently abolished the "fine line of distinction" between postnuptial agreements incident to a divorce (which had been held to be enforceable) and postnuptial agreements, the object of which was the promotion of a dissolution of a marriage relation existing between the parties (which had been held to be unenforceable). Beverly v. Beverly, 209 Ga. 468 (1) (74 SE2d 89) (1953) and cits. "[W]e . . . declare that agreements in contemplation of divorce settling issues of alimony, property division, child custody, child support and visitation are not invalid. In so holding, we overrule Warren v. Warren [235 Ga. 234 (219 SE2d 161) (1975)] and its predecessors." Sanders v. Colwell, supra, 248 Ga. at p. 378. However, the question of whether a postnuptial agreement should be approved and incorporated into the parties' divorce decree remains within the


 

Page 641


 

discretion of the trial judge. Vereen v. Vereen, 226 Ga. 500, 501 (175 SE2d 865) (1970) and cits.

      In those jurisdictions which have begun enforcing antenuptial agreements in contemplation of divorce, it has been held that such contracts, as others, should not be given carte-blanche enforcement. Rather, the cases hold that the trial judge should employ basically three criteria in determining whether to enforce such an agreement in a particular case: (1) was the agreement obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts? (2) is the agreement unconscionable? (3) Have the facts and circumstances changed since the agreement was executed, so as to make its enforcement unfair and unreasonable? See Tomlinson v. Tomlinson, 352 NE2d 785 (Ind. App. 1976); Buettner v. Buettner, 505 P2d 600, supra; Volid v. Volid, 286 NE2d 42, supra; Posner v. Posner, 257 S2d 530 (Fla. 1972); Posner v. Posner, 233 S2d 381, supra; Hudson v. Hudson, 350 P2d 596, supra; Prenuptial Contracts, supra; Antenuptial Agreements, supra.

      We hold that when a superior court in this State is presented with an antenuptial agreement in a divorce proceeding, the foregoing criteria should be employed in determining whether to enforce the agreement.

      4. The trial judge has found the agreement contained in the present case to be valid and enforceable, and under the record here we cannot say that he erred in so ruling. However, we do note that under this agreement the wife is not precluded from seeking alimony and satisfying this claim against assets of the husband other than the specified stock; nor is she precluded from seeking an equitable division of these other assets.

      In addition, we note that an antenuptial agreement is a factor which should be taken into consideration in determining what is an equitable division of property. See Tomlinson v. Tomlinson, supra. And where, as here, the antenuptial agreement does not preclude assertion of an alimony claim by the wife, the assets retained by the husband by virtue of the agreement have a direct bearing on his ability to pay alimony. Therefore, the antenuptial agreement is relevant and admissible at the hearing on the alimony and/or property-division issues.

      Judgment affirmed. All the Justices concur, except Jordan, C. J., who dissents

DECIDED June 22, 1982---REHEARING DENIED JULY 8, 1982.

Divorce, etc. Fulton Superior Court. Before Judge Williams.

Savell, Williams, Cox & Angel, Henry Angel, for appellant.


 

Page 642


 

Edward E. Bates, Jr., A. Paul Cadenhead, for appellee

 

ADAMS v. ADAMS

S04F0841

Hunstein, Justice.

      Andy (Husband) and Kay (Wife) Adams were married in July 1994. Two days before their wedding, they executed an antenuptial agreement which provided, inter alia, that in the event of a separation, Wife would receive $10,000 for every year of marriage with a cap of $100,000. Wife also waived all claims to Husband's pre-marital property and all other claims she may have growing out of the marriage and its dissolution; agreed not to make a "continued lifestyle claim"; and agreed to forfeit her rights if she engaged in "unforgiven adultery." Both parties waived claims to separately titled property whether acquired prior to or during the marriage. At the time of the marriage, Husband's assets were valued at $4,526,708, and Wife's at $30,000.

      In January 2003, Wife filed for divorce alleging adultery, cruel treatment, and an irretrievably broken marriage. She sought alimony and an equitable division of property. Husband answered, counterclaimed for divorce, and filed a motion to enforce the antenuptial agreement which the trial court granted. Husband then filed a motion for summary judgment in the divorce action. Wife failed to file a response and a divorce was granted. The trial court ordered Husband to pay to Wife a lump sum payment of $90,000 representing the agreed-upon $10,000 for each year of their marriage. Wife filed an application to appeal from the trial court's order that we granted to determine whether the antenuptial agreement is unconscionable as a matter of law and whether the trial court improperly limited the scope of the hearing on Husband's motion to enforce the antenuptial agreement. Finding no error, we affirm.

      1. In determining whether to enforce an antenuptial agreement in a divorce proceeding, a trial judge should consider whether: (1) the agreement was obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of material facts; (2) the agreement is unconscionable; and (3) the facts and circumstances have changed since the agreement was executed, so as to make its enforcement unfair and unreasonable. Scherer v. Scherer, 249 Ga. 635, 641 (3) (292 SE2d 662) (1982). In this case, the trial court specifically found that the agreement was entered into without fraud, duress, mistake, coercion, or misrepresentation; it was reviewed by Wife; and Wife was advised of her right to and was given sufficient opportunity to obtain independent legal review of the agreement before its execution. Wife does not challenge these findings. Instead, she alleges that the agreement is unconscionable when comparing the financial benefits she is entitled to receive under the agreement with Husband's financial status at the time of execution.

      A review of the record and trial court's order upholding the agreement reveals that the trial court thoroughly evaluated the relevant considerations. At the time the agreement was executed, Wife successfully ran her own business and had $30,000 in assets while Husband owned several businesses and had a net worth of approximately $4.5 million. Both parties previously had been married and divorced. It was reasonable, therefore, for both Husband and Wife to anticipate the possibility of divorce, to seek to protect their individual assets, and to establish their respective property rights by contract in the event of divorce. See id. at 640 (2) (antenuptial agreements permit persons "'prior to marriage to anticipate the possibility of divorce and to establish their rights by contract in such an event'"). That the antenuptial agreement may have perpetuated the already existing disparity between the parties' estates does not in and of itself render the agreement unconscionable when, as here, there was full and fair disclosure of the assets of the parties prior to the execution of the agreement, and Wife entered into the agreement fully, voluntarily, and with full understanding of its terms after being offered the opportunity to consult with independent counsel. Accordingly, we find the agreement into which the parties entered was fair, both at the time it was executed and in light of subsequent events,(fn1) and we find no abuse of discretion by the trial court in enforcing the antenuptial agreement.

      2. We reject Wife's contention that the trial court erred in excluding from the hearing on the motion to enforce the antenuptial agreement evidence of Husband's alleged infidelity during the marriage. While there may be rare circumstances where such evidence could be relevant to demonstrate unconscionability or changed circumstances under Scherer, supra, under the specific facts of this case, Wife's allegations were irrelevant to such determination.

      Judgment affirmed. All the Justices concur.

Decided September 27, 2004 - Reconsideration denied October 25, 2004.

      Domestic relations. Hart Superior Court. Before Judge Bryant, Senior Judge.

Phelps & Campbell, R. Chris Campbell, for appellant.

Cook, Noell, Tolley, Bates & Michael, Edward D. Tolley, Ronald E. Houser, for appellee.

__________________________
Footnotes

1.      At the time of divorce, the financial status of the parties remained substantially the same, with certain of Husband's real property holdings having increased in value and the value of certain businesses having decreased.