n America today, the probability fOfm requ ired by the j uri sdiction. Encourage your clients to play it
I of a marriage ending in divorce
is grea ter than SO percent. U.S.
Census Bureau figures reveal that 10
York state was
the notary did
agreement in New
thrown Ollt because
not date the signa-
safe by presenting th e pren uptial
agreem ent before the wedding invi-
tations go out.
percent of th e ad ult populati o n is
divorced, up more than 7 percent
from 1970. Prenu ptial agreements
Bo th parties should present complete
also are on the rise. The ti min g of a prenuptial agreem ent financial sta tem ents, detailing all assets
Sin ce 1970, the median age of first is critical. Circumstances surrounding and liabilities. T hese statements
marriages has increased from 20 .3 to its negotiation and execu tion should should be made as closely as possible
24.8 for women and from 22.8 to be free from duress, ove rreac hing, or to the time of mar riage to ensure cur-
27.1 for men . Wh en these older and coercio n. An agree men t presented rent figures at th e tim e of the agree-
more financially savvy (wenty-to- just before or on the wedding day ment's exec ution. The financial state-
thirty so mcthin gs arc ready to marry, may be in val id due to duress. ment shou ld cover bank accou nts,
they have individual investJ11cnts and incom e tax return s, sec urity accounts,
earni ngs to protect. In add ition, their real estate an d mortgage information,
parents are insisting on prenuptial a list of automobiles and other vehi-
agreem ents before bequeathi ng the cles, and any outsta nding loa ns.
parents' hard earned savin gs. Occasionally, disclosures are
What to Include
Prenuptial agreeme nts can
address almost anyth ing,
Prenuptial more complex. If your client
owns a business, he o r she
sho uld disclose the name
and nature of the busi-
fro m avoiding
default rule in com-
munity property juris-
Prerequisites ness, th e valu e of his or
her interest in it, and
th e valuation method
dictions (which div- used to calcu late the
ides all marital pro p- va lue. Th e value of
erty equa ll y upOli
divorce) to wa iving
The essential retirement benefits
also should be dis-
alimony or oth er sup-
POrt. C ustody and child-
elements of an closed. A C PA will be
helpful in determining
suppOrt ma([ers may be
add ressed, but courts are inviolable agreement wh ich valuation meth-
ods to lise for the business
likely to set them aside, or retirem ent benefits as
reservin g the right to decide BY M A RK A. CHINN well as in preparing a firs t-
the best interests of children . A ND rate financial sta tem ent.
To draft a va lid pren uptial agree- CH A RLES GREER Some courts have ruled that dis-
ment, first investigate your jurisdic- closure statements may approximate
tion's statutory law. Twenty-six states net worth. In lWegginson v. Megginson,
have adopted so m e form of the However, in Fletcher P. Fletcher, 68 367 IU. 168 (Ill . 1937), a wife w ho
Uniform Premarital Agreement Act Ohio S.3d 464 (O hio 1994), the was trying to inva lidate a pre nup~
(UPAA). (See M organ, page 12.) Supreme Court of Ohio held that an agreeme nt admitted that her h ·'s~d
Whereas C01111110n law requires agreement signed one day before the had disclosed owning two, rms but
prenup tial agreements to be proce- marriage was valid when all other denied knowing the ature and
durally and substa ntively fa ir, th e prerequisites were satisf:1ctoril y met. extent of hj s pro perty. n llPhOIY
UPAA pro teCts against uncon- The COLIrt noted, however, that pre- the agreem en t, th e ( premc Co '
scionability. sellting a prenuptial agreement short- of Illinois sta ted:
Most jurisdictions manda te four
basic prereq uisites to a va lid prenup-
ly before a weddi ng cerem ony wou ld
"create a presllmption of overreach-
" " ""',. '''' "wo>, oom,,~ (
tial agree ment: ti min g, disclosu re, ing or coe rcion if postponement of
independent co unsel, and fairness . weddi ng would ca use significant
(Note: Some say there is a fifth man- hardship, embarrassment, or emo-
date: properly acknowledged in the tional distress."
and extent of th e intended hus- If your state has adopted th e
band 's property, an antenuptial UPAA. yo u may be tempted to allow
agreement releasing statutory your client's spouse to wa ive full dis-
rights in the latter's estate in con- closure as th e act permits. T he better
sideration of th e covenan ts of the practice is to insist that both parties
intended husband will be held prese nt a detailed and thorough
valid if the parties had legal capac- financial statement as a means of
ity to contract. . avoidi ng an attack based o n conceal-
The court went on to say th at th e ment or even fra ud.
husband's d esc ripti o n of his real
property was sufficient to enable the
wife, by the application of ordinary
3. Independent counsel
In many instances, independent
intelligence. to verify his statement. counsel has been a key facto r in
Case law does not provide signifi- d eterminin g the overall Llirness and
cant insight into what is f.:'lir and rea- enforceability o f a prenuptial agree-
so nable disclosure. Ne verth eless, a m ent. Beca use both parties must
court will likely view a detailed enter th e contra ct know ledgeably
finan cial statement accompanying the and volu ntarily, each should consult
premarital agreement to be fa ir and with independent co unsel. However,
reaso nable disclosure. no state mandates such consultation
The Uniform Premarital Agreement Act
What the law say., and how courts are interpreting it BY LAURA W. MORGAN
~nte followi llg is adapted from Attacking Virginia. Moreover, many states have m arriage itse lf. California courts h ave
and D efending Marital Agreements adopted laws that explicitly recog- consistently interpreted this as a
§ 8.02 (A BA 200'1) . The book may ni ze and regulate antenupti al agree- statute-of-frauds provision, holding
be purchased from the ABA website at ments much like th e UPAA. tl1at partial performance may render
http://llllvw.abaHet. orglstore/order.html. Section 1 of th e UPAA states even an oral agreement enforceable.
(See page 19.) The full text of the explicitly that it applies only to Hall v. Hall, 271 Cal. Rptr. 773 (Ct.
Ul1iform Premarital Agreeme1lt Act as antenuptial agreements an d nOt to App. 1990). The traditional defenses
passed by the Ulliform U/l.1) COII/missioll- cohabitation, midnuptial, or separa- based on lack of capacity, however.
ers is at http://www.law.upenn.edu/ tio n agreeln ents. UPAA Prefatory are ex pressly preserved. UPAA § 2
bll/ulc/fnact99/1980s/upaa83.htm. Note (1983) . Nonetheless, in states comment.
that have adopted the UPAA, cOllrts Section 3 states that the parties arc
he modern view that have applied UPAA ptinciples to free to contract about any rights that
antenuptial agreements are midnuptial agreements as weU. arise by operation of marriage, includ-
generally enforceable has Although the UPAA is limited in ing property rights at divorce, death,
bee n codified in th e Uniform Pre- scope, Section 1 expands the defini- or any other contingency (UPAA §
marital Agreement Act (UPAA), 9B tion of " property" to include income 3(a)(1-8», and the modification or
Uniform Laws Annotated (Master and earnings. By this definition , the elimination of spousal suppo rt (VPAA
Editio n) 369 (1987), promulgated by Commissioners have expanded tradi- § 3(a)(4». The parties also are free to
the National Conference of Com- tional property fights to include choose th e law governing the agree-
missioners on Uniform State Laws in those defined in divorce actions. See ment, UPAA § 3(a)(7). By allowing
1983. As of October 2001, 25 states O'Briel! v. O'Brien, 489 N.E. 2d 712 the parties to waive spousal support
and th e District of Columbia have (N. Y. 1985) (defining property to and property rights, the VPAA
approved and adopted the UPAA. include increased earnin g capacity.) resolves a split on this issue and clear-
(See book for complete listing. ) Section 2 ofUPAA dispenses with ly favors enforcem ent of the \:vaiver of
The UPAA has been introduced aU formalities of execution except a all ri ghts. The only limitation is that
in [he 2001 legislative sessions in signed writing by the parties. No the parties may not waive child sup-
Mississippi, Rhode Island, and consideration is necessary, except the port, UPAA § 3(a)(7).
12 FAMILY ADVOCATE
for validity. Some states require that found the pren up tia l agreement sc rutiny test sho uld be applied ro the
each party have th e opportunity to invalid beca use th e prospective wife voluntary requirement whe n one
consult with counsel of his or her was not represented by an attorney party lacks independent counsel (In
cho ice, but they do nOt require actu- and thus did nOt have equal bargain- re Bonds, 24 Cal. 4th 1 (Cal. 2000).
al consultation for the agreement to ing power in th e drafting and execu- In August 2000, the California
be upheld. Other states hold that Supreme Court overturned th e appel-
independent counsel is one facror ro An absence of late rulin g, stating that although inde-
be considered 111 determining pendent counsel is an important fac-
counsel does not
whether the agreement was entered tor in determ.ining whether the agree-
into knowl edgeably or voluntarily. make the premarital ment was entered into voluntarily,
Under th e UPAA , an absence of premarital agreements are not subject
counsel does nOt make the premari- to strict scrutiny when the less sophis-
tal prenuptial agreement unenforce- unenforceable ticated party is not represented by
abl e. However, a lack of counsel may counsel and has not waived counsel.
be a fa ctor in detennining whether cion of the agreement. Strangely The BO llds case highlights the
the contract was entered into volun- enough, California was amo ng the iInportance of being well versed in
taril y or whether it was uncon- fi rst states to adopt the UPAA, which the applicable law. When a spouse
scionable w hen executed. does nOt specifically require indepen- challenging a prenuptial agreement
bl re BO llds, 83 Cal. Rptr.2d 783 dent representation. However, the has obtained legal ad vice prior to
(Cal. App. 1999), the appellate court appellate court reasoned that a strict signing, co urts generall y have found
Although the parties may contract Freill1all, 680 N.Y.S.2d 797 (N.Y. Sup. Pe"halloll) v. Perilialloll; 649 A.2d 1016
to any rights that arise by operation Ct. 1998) (six-year statute of limita- (IU. 1994), the attacking party had
of marriage, Section 3 clarifies that tions for fraud applied, because wife to show that the agreement was the
the parties may nOt contract "in vio- could have discovered fraud during result of involuntariness and lack of
lation of public policy," UPAA § marriage). disclosure and was unconscionable.
3(a)(8). What is in violation of public Section 6 is the key operative sec- On the other hand, in many states
policy is obviously the matter of tion of the Act. The party seeking to that have not adopted the UPAA, and
some debate. The official comment avoid enforcement of the agreement in case law of states prior to their
states that the parties can agree as to carri es th e burden of proof. See adoption of it, the agreement must be
choice of abode, the freedom to pur- Chiles v. Cltiles, 779 S.W2d 127 (Tex. both substantively sufficient and be
sue career opportunities, and the Ct. App. 1989), to show that the the result of adequate disclosure. The
upbringing of children. Nonetheless, agreement eirher (1) was reached only exception is spousal support: If
in Mellgal v. Mellgal, 103 N.Y.S.2d involuntarily, i.e., was the result of the agreement leaves one spouse eli-
992 (N.Y. FaJ11. Ct. 1951), a court fraud, duress, undu e influence gible for public assistance, then the
held that the parties could not agree (UPAA § 6(a)(1 )), or (2) was uncon- court may require the other spouse
that the wife's sons from. a previous scionable when executed al1d resulted to provide support sufficient to avoid
marriage could not live with the from lack of disclosure, UPAA § eligibility, VPAA § 6(b) .
couple. Several other cases have held 6(A)(2). The unconscionability test is Section 6 of the UPAA has been
that the parties cannot, by prenuptial drawn from the Uniform Marriage strongly criticized for specifying that
agreement, disagree about children's and Divorce Act § 306. By this pro- an agreement is unenforceable only
religious upbringing in the event 'of a vision, the UPAA clearly favors if it is unconscionable and if one
divorce. Rail/Oil !J. Ramon, 34 N.YS. enfo rceability: An agreement is party is gu il ty of nondisclosure. See
100 (N.Y. FaJ11. Ct. 1942); Avitzllr v. enforceable even if it was un con- Barbara Ann Atwood, Tell Years Laler:
Avilz llr, 459 N.Y.S.2d 572 (N.Y. scionable when executed, as long as Lillgerillg Concerlls About tile Ulliform
Fam. Ct. 1983). the moving party received a fair and Premarital Agreelllem Act, 19 J. Legis.
Section 4 states that the agreement reasonable disclosure or waived 127,146 (1993).
becomes effective upon marriage, and djsclosure or reasonably could have Finally, in Section 7, the UPAA
Section 8 says that marriage rolls the had adequate lG10wledge of the rele- provides that the court may enforce
runnin g of the statute of limitations. vant information. the antenuptial agreement if the
See III re CrnliJord, 730 P.2d 675 Indeed, in at least one state, the marriage is void but was of signifi-
(Wash. 1986). COlllra Freiman v. stakes were raised even higher, In cant duration.UPAA § 7 . •
WINTER 2002 13
th e agree m ent fa irl y execu t ed. The time for assess ing su bstantive
Therefore, eac h party shoul d have
independe nt legal co unsel, and to
fairness va ries from state to state.
States are divided on the app ropriate
preve nt the appea ran ce of undue
influence or other impropriety, attor-
time fo r measuri ng substa ntive fa ir-
ness. Som e do so at the execution of
neys sho uld avoid recomm ending a th e agreement; others at the tim e of T he following steps may be h elpful
particular lawyer to the other party. enfo rcement or both . Determining in dt<tfting agreements that sta n d the
T he last prereq ui site is that the terms
the substantive fa irness of a p renuptial
agreement at the time it was made
coincides w ith the parties' right to
b est chance of being held valid .
1. Enco urage th e parti es to execute
th e agreem e nt before selecting a
of an agree men t be fa ir. C ourts and contract freely, H owever, it does not marriage date o r at least sixty (60)
legislatures have agreed that dispro- days before t he weddin g.
portionate provisions alo ne do not 2. With the help of an accountant,
invalidate a prenu ptial agreem ent. Courts and have each pa rty prepare a d etailed
H owever, courts apply different stan- legislatures financial state ment, setting fo rth
dards of fai rness to provisions on all assets, th e accou nt or other
have agreed that
distributi o n o f assets an d alimony. identi fica tio n numbers, and the
For example, a co urt may apply an disproportionate asse ts' va lu es. R em emb er to
u nconsc io nab ihty standard to alimo- provisions alone include significan t personal prop-
ny but not to th e distribution o f erty and to docum ent the parties
do not invalidate
assets. Siluila rl y, provisions pertaining exc hange of fi nanc ial statem ents.
to the distr ibution of assets may be a prenuptial H ave eac h accountant submit a
assessed for fairness o nly at th e tim e letter certifying that he or she has
of executi o n, whereas ahmo ny provi- reviewed th e disclosures with the
sio ns m ay be revie wed for uncon- client and fo und th em adeq uate.
scionability at th e time of enforce- protect again st un fo reseen changes in 3. M ake sure th e opposing party is
m ent. Some courts also consider th e circumstances th at may affec t fi nan- represented by co un sel o f his or
length of th e marri age, w hereas oth- cial status and place one party at her choosing and have th at attor-
ers will enforce an agreenlent th at is fu ture financial ri sk. Consequ ently, an ney sign an attestati on , certi fying
not fai r or conscionable if the pa rties increasing nu mber of states are evalu - that he o r she has reviewed each
signed the cO ntract vo luntarily and ating the £,i rness of prenu ptial agree- provision with th e clie nt.
knowledgeably. ments at the time of enforcem ent. 4. D o no t draft a one-sided agree-
m en t.
5. Film th e signin g.
6. H ave the parties sign a ratification
Researching of the agreem ent after tbe mar-
ri age. T his w ill help th e validi ty of
Business Valuation Issues? th e agreem e nt and with enforcing
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14 fAMILY ADYOCATE
Provisions waiving or altering enforce it had satisfied the four basic The court recognized that the
alimony are particularly susceptible prerequisites. dependent spo use had not entered
under such evaluation. Provisions In McMullin v. McMullin, 926 into the contract knowledgeably or
that leave a spouse unable to meet S.W2d 108 (Mo. App. 1996), th e voluntarily because the val ue of the
reasonable needs, at a drastically Missour i Court of Appeals found a husband 's assets were not disclosed
reduced standard of Living, or a pub- prenuptial agreement so one-sided and she had no opportunity ro seek
lic charge or close to it, or, provisions that it was "u nconscionable" and thus independe nt counsel. Although the
that are otherwise unconscionable, unenforceable. The court ruled that court noted that independent COlIn-
will not be enforced . For example, the agreement failed to meet "full sel is not an absolute requirement, it
the U PAA provides that if a provision disclosure" req uirements because it concl uded that co unsel is required
causes a spouse to become eligible listed but did nor value the husband 's when an agreement is patently
for welfare assistance, the court may property and did not allow the unreaso nable, as this one was . •
order the other spo use to pay su pport prospective wife sufficient time to
sufficient to avoid that eligibility. seek legal counsel in reviewing the
Ultimately, the standard of fairness agreement prior to signing. This case
and the time for measuring it will is particularly interesting in that the
depend on the state. Clients should proponent had fulfilled his obliga-
be encouraged to draft agreements tions under the agreement and
that meet the reasonable needs of a argueq that the wife should be
estopped fro m challenging its validi-
ty because she had benefited from it.
A sunset clause (Gene rally, the accepta nce of benefits Mark A. Chinn practices family law in
estops a person from questioning Jackson, Mississippi. Charles Greer is a
the existence, validity, and effect of a J.D. candidate, Mississippi College School
after a specified time contract.) The court held th at when of law, Jackson, Mississippi.
a pren uptial or separation agreement
the entire agreement
is unconscionable, the court is under
or a certain provision, no duty to esrop a party who has '"The best lraining I have ever had.
benefited from chall enging the ZelllJ is wonderful.'''
such as waiver of
agreement's validi ty.
alimony, terminates [ II the Matter of the Estate of Robert Training Workshops
J Crawford, 107 Wash.2d 493 (Wash. in Divorce Mediation
1986), the Supreme Court of Mediation Training Consultation Institute
depe ndent spo use and account for Washington voided a prenuptial
changes in circumstances during the agreement signed by a wife in the
marriage. This can be accomplished presence of her husband's attorney
by allocating assets or ali mony to a three days before the marri age
dependent spouse based on the because no provision was made for
length of the marriage. the wife in the event of divorce or
Another possi bility is a sunset . death . The husband failed to disclose
clause, which provides that after a the value of his property, and the wife
specified time the entire agreement was not afforded an opportunity to
or a certain provision, such as waiver review the agreement with indepen-
of al.imo ny, terminates. These options dent counsel. However, the court
may ensure that the agreement is fair stated that a prenuptial agreement
and conscionable at the time of exe- may be valid in the absence of a fair
cution or enforcement, thereby and reasonable provision for th e less
decreasing the likelihood of the advantaged spo use if there was full
provision's being set aside. and fair disclosure of all mater ial facts
The following cases ill ustrate how relati ng to the amount, character, and
the four basic prerequisites may be value of property and the agreement
For more information:
interpreted by courts. rn each case, was entered into voluntarily with fu ll
(800)535-1155 or (734)663-1155
the agreement would not have been understanding upon advice of com- www.learn2mediale.com
set aside if the spouse seeking to petent independent co unsel.
WINTER 2002 15