When drafting a prenuptial agreement, what are some of the key issues that will determine whether or not a judge will find it enforceable? Here are four crucial steps to help ensure the prenup will stand up in court.
By David Matthews, Trial Lawyer
In Part 1 of this series, “Prenuptial Agreement: Can You Make it Enforceable & Keep Your Client Happy?“, we discussed how to satisfy your client as well as offering an overview of issues that might impact enforcement of the agreement. Part Two focuses on the nuts and bolts of drafting the agreement. As a drafter, what are some of the key issues that will determine whether or not a judge will find the prenuptial agreement is enforceable?
Enforceable Prenuptial Agreements: 4 Steps to Follow
Step 1. Determine Whether Your State Recognizes Enforcement of Prenuptial Agreements
Even if a prenuptial agreement satisfies the baseline statutory requirements of your state, it must still meet certain judicial criteria before a court will enforce it. The first step as a practitioner is for you to determine whether your state law recognizes enforcement of prenuptial agreements. What is the history of enforcement in your state? If enforcement is doubtful, inform your client in writing before you begin work on the document. If your state recognizes prenuptial agreements, your goal should be to draft a document that clearly reflects the intention of the parties. [1]
Step 2. Ensure the Prenuptial Agreement is Procedurally and Substantively Fair
Once drafting begins, keep in mind that the prenup must be both procedurally and substantively fair. This requirement may sound obvious, but the circumstances that surround prenuptial agreements often make this issue challenging. A court will not enforce an agreement obtained through fraud, duress or mistake, much less a prenuptial agreement. In order to avoid this pitfall, it is always good practice to have the agreement executed well before the actual wedding is to take place so as to avoid the perception of last-minute duress or undue influence. Raising the issue of a prenuptial agreement is often difficult for the party who requests it, and that may lead to delay in presentation of the agreement. It can be awkward to ask your fiancé for a prenuptial agreement when things are going well. There is a fear that the subject might derail the stability of the relationship during a crucial period. As the wedding approaches and preparation for the wedding is causing stress, a party may be even less inclined to say that he or she wants a prenuptial agreement.
You, as a lawyer, should advise your client to raise the issue of a prenuptial agreement as early as possible and then present a draft to the other party well in advance of the wedding date. Having the prenuptial agreement executed the night or week before the wedding ceremony is asking for trouble down the road as the other party might argue that he or she was pressured into executing the agreement and only did so in order not to delay the wedding. The party seeking to void the agreement will argue, “I would never have signed that document if I had been afforded the time and opportunity to review it and negotiate the terms. I was forced to sign it or jeopardize the entire wedding and the travel plans of my friends and relatives.” This argument may or may not be persuasive to the judge, but why take the chance?
Step 3. Provide a Full Disclosure of All Assets – and Explain the Consequences of Hiding Assets to Your Client
Another crucial issue is making full disclosure of all assets. This issue seems to cause more trouble for clients than any other. As a practitioner, you must repeatedly instruct your client to disclose all assets. Some clients are reluctant to do so because they have never told their fiancé the entire story. Others want to water down their financial picture because they believe that such will make the concept of signing the agreement more palatable to the other side. The best way to handle this is to tell your client the truth in direct terms: if you attempt to enforce this agreement down the road and the court finds that you failed to present your full financial picture, the court will invalidate the agreement. All of the time, work, and emotional expense of the agreement would then go down the drain.
In addition to providing a complete itemization of significant assets, it is a good idea to offer three to five years of tax returns to the other side. If tax returns are disclosed, it will be very difficult for the party seeking to invalidate the agreement to argue that he or she did not have a complete financial picture. Providing corporate tax returns, if such exist, is also a good idea.
Step 4. Avoid the Argument of Unconscionability by Ensuring that the Opposing Party is Represented
Courts will not enforce an unconscionable prenup. “Unconscionability” is an odd term best defined as “enough to make the judge’s pulse quicken and cheeks redden.” Regardless of the precise definition, you want to avoid the argument of unconscionability at all costs.
One of the best ways to avoid this argument being made down the road is to ensure that the opposing party is well represented. If your client is the one requesting a prenuptial agreement, he or she should pay all attorneys’ fees. Even if the imposing party states that he or she is ready and willing to sign the agreement without representation, go the extra mile and pay for an attorney to represent the opposing party. You will be drafting the document, and the cost of opposing counsel should be very modest in comparison to the overall amount of money at stake. Try your best to make sure that the other side has proper representation.
Enforceable Prenuptial Agreements Avoid the Appearance of Fraud or Misrepresentation
In sum, if your state recognizes and enforces prenuptial agreements, you must do everything in your power to avoid any appearance of fraud, distress, mistake, misrepresentation, or nondisclosure. Take the high road and make an over disclosure of assets. Holding back will only hurt your client down the road. Moreover, make sure that the other side has adequate representation. Nobody likes paying two attorneys, but if your client has the assets to warrant a prenuptial agreement, the cost of an attorney on the other side to consummate the agreement is de minimus.
[1] Laws and enforceability of prenuptial agreements vary by state. Please consult with an attorney who has knowledge of applicable laws governing the agreement.
David Matthews is an Atlanta-based partner at Weinberg Wheeler Hudgins Gunn & Dial, a national trial firm formed in 1999. www.wwhgd.com
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