Premarital agreements are contracts made by prospective spouses in contemplation and consideration of marriage. They date back to sixteenth-century England, where prospective spouses used them in attempts to modify the legal rules that would otherwise govern their property rights during and after marriage. By the mid-seventeenth century, premarital agreements were so important that Parliament required them to be in writing. By 1700, they were so commonplace as to be the subject of jokes in the English popular theater. Today in the United States, these agreements are still useful; the rich and famous make them, as do other people. The emerging statutes and cases dealing with their validity recognize the differences between them and other contracts and, therefore, treat them differently.
Most countries enforce premarital agreements if they comply with specified procedural requirements. If, however, the agreement conflicts with some important public policy that overrides the parties' freedom to contract, the agreement will be modified or denied effect. For example, divorce courts in England do not consider themselves bound by premarital agreements regulating the economic incidents of divorce. English law takes the position that the courts' power to do economic justice at divorce is so important that it may not be limited by premarital agreement of the parties. Several Canadian provinces agree. Reliable information about specific rules in countries other than England and Canada is not available.
Premarital Agreements in the United States
The first difference between premarital agreements and ordinary contracts is their subject matter. Premarital agreements typically deal with one, or a combination, of three things: (1) property and support rights during marriage and on its dissolution by death of a spouse or divorce; (2) personal rights and obligations of the spouses during marriage; and (3) the education, care, and rearing of children who may later be born to the marrying couple. These subjects are of greater interest to the state than are those of ordinary contracts. The state wishes to protect the welfare of the couple and their children during and after marriage and to preserve the privacy of the family relationship. It passes laws to achieve these goals.
The second difference between premarital agreements and ordinary contracts is the relationship of the parties to each other. Prospective spouses are in a confidential relationship. They are often unevenly matched in bargaining power. The possibility, therefore, that one party may overreach the other is greater than in the case of ordinary contracts.
The third difference between premarital agreements and ordinary contracts is that premarital agreements are to be performed in the future, in the context of a marriage that has not yet begun, but which may continue for many years after the agreement is executed and before it is enforced. The possibility that unforeseen events may make enforcement of the agreement unwise, unfair, or otherwise undesirable, is greater than in the case of ordinary contracts.
These differences create a dilemma for the law. Prospective spouses have an interest in making their own bargains. As freely made bargains settling rights that might otherwise become a source of litigation, premarital agreements should be encouraged and enforced. To the extent, however, that these agreements vary or diminish the state-prescribed protections for the couple, their children, or their marital status; are likely to be the product of overreaching; or may become unfair by the time they are sought to be enforced, the law is wary of giving them validity. This built-in conflict makes premarital agreements less stable than ordinary contracts and explains why ordinary contract rules alone are insufficient to regulate them.
Like ordinary contracts, premarital agreements must be voluntary, made by competent parties, supported by consideration (the impending marriage is sufficient to satisfy this requirement), and consistent with public policy. However, they are subject to a more stringent review for procedural and substantive fairness than that accorded ordinary contracts. Courts review the fairness of ordinary contracts only at the time of execution but review premarital agreements for fairness at the time of enforcement as well.
Subjects of Effective Agreement
The state's interest in the subject matter of premarital agreements makes them more vulnerable to attack than ordinary contracts on the ground that they conflict with public policy. The net result is to limit the subjects on which prospective spouses can effectively contract.
Property and support rights. When a marriage dissolves by death of a spouse, state laws attempt to protect the financial interests of the survivor in a number of ways, including provisions for forced shares of each other's estates, homestead rights, exempt property, and family allowances. In most states, couples may alter these protections by premarital agreements. Some states consider certain protections more important than others and thus make it more difficult, or impossible, to waive or alter them—for example, widow's allowance or homestead rights when there are minor or dependent children, intestate shares, or rights to community property.
State law attempts to protect spouses on divorce as well, by providing for property division and for continued support in the form of alimony or maintenance. Premarital agreements altering these protections have been slower to win approval than those altering protections on death of a spouse and, before 1970, were almost universally held contrary to public policy. Courts thought they promoted divorce and commercialized marriage and that enforcing them would turn economically dependent spouses into public charges.
Since 1970, premarital agreements altering the incidents of divorce have gained wider acceptance. Divorce has become a common occurrence, and many married women have joined the labor force. Courts and legislatures now see these agreements, setting forth the parties' expectations and responsibilities, as devices for promoting marital stability and, accordingly, encourage them.
The states that enforce premarital agreements altering the incidents of divorce divide on provisions altering support rights. Some consider support a subject that couples cannot control by premarital agreement. Others allow premarital agreements altering support rights but refuse to enforce them if they are oppressive or unconscionable.
Employee benefits. Employee benefits, including pension rights, can be the subject of premarital agreements between prospective spouses except for those emanating from plans covered by ERISA (the Employee Retirement Income Security Act of 1974, as amended by the Equity Retirement Act of 1984). This act of Congress preempts state laws and requires covered employee benefit plans to pay benefits to both the worker and his or her nonparticipating spouse unless the spouse waives them in the manner prescribed by the act. There is doubt about the validity of such waivers in premarital agreements, which are executed before the parties marry, because ERISA requires waiver by a "spouse."
Structure of marriage. Sometimes the contracting couple, instead of, or in addition to, agreeing to alterations of property and support rights on death or divorce, uses a premarital agreement to structure the relationship by spelling out their personal rights and obligations. Courts have held such agreements unenforceable on the ground that it is improper for the judiciary to intervene in married couples' daily affairs.
Children. Minor children are, of course, subjects of special interest to the state, which stands in the role of parens patriae to them. As subjects of premarital agreements, children retain their special status. A number of states have statutes that prohibit couples from making premarital agreements adversely affecting their children's support rights. Provisions for children's custody, care, or education also get careful scrutiny from the courts. Those in derogation of the child's best interests will not survive challenge.
Rules of Fairness
To be upheld, premarital agreements must satisfy local tests of procedural and substantive fairness. As always, procedure and substance are closely related, and legislatures and courts considering the validity of premarital agreements often fail to separate the two. If the substantive terms of an agreement seem fair to the reviewing court, operating with or without statutory guidance, procedural niceties become less important. Conversely, if the agreement seems unfair, the procedures surrounding its execution become more important. The inquiry into procedure is made as of the time the agreement was executed. The question is whether the agreement was fairly procured. The inquiry into substantive fairness may be made at execution or reserved to, or repeated at, the time of enforcement. It is impossible to reduce the search for substantive fairness, whenever it is made, to a single question; the standards vary considerably from jurisdiction to jurisdiction and sometimes from case to case within a single jurisdiction.
Procuring the agreement. According to most courts, parties to premarital agreements are in confidential relationships. In addition they are often ill-matched in terms of bargaining power. Before courts will uphold the validity of premarital agreements, therefore, they must be satisfied that the agreements were fairly procured. As courts and state legislatures describe them, fairly procured agreements are those that the parties enter into voluntarily after making financial disclosure to each other.
The requirement of financial disclosure is closely related to that of voluntariness and follows from the nature of premarital agreements calling for waivers of, or alterations in, property rights prescribed by the state. These rights take on, or lose, value on the bases of spouses' earning power and assets. A waiver of, or alteration in, such rights can hardly be voluntary and therefore fair, if the waiving spouse does not know the other's financial status. Accordingly, most jurisdictions require some kind of financial disclosure before the agreement is signed. They describe its extent variously: fair, full, full and fair, full and frank, or fair and reasonable. An agreement that the court finds substantively fair and reasonable may overcome a lack of disclosure; so may a spouse's actual knowledge of the other's assets or a spouse's waiver of the right to disclosure. The extent of required disclosure or knowledge varies from case to case, depending upon the relative sophistication of the parties, the apparent fairness or unfairness of the substantive terms of the agreement, and other circumstances unique to the parties and their situation. In every case, disclosure should be enough to give each contracting party a clear idea of the other's property and resources. The best device for proving disclosure is to attach schedules of assets and income to the agreement itself. A mere recital of disclosure in the agreement does not preclude a showing that there was none in fact.
Substantive terms of agreement. In passing on the validity of premarital agreements, courts state that they will not substitute their own notions of what is right for the provisions of the parties' freely made bargains. However, neither courts nor state legislatures, whose mandates they are obliged to follow, are oblivious to the substantive fairness of these agreements. This is an amorphous concept, which courts determine on a case-by-case basis. Unequal provisions for the parties do not alone make an agreement substantively unfair and therefore invalid.
The standard of substantive fairness, like the extent of required disclosure, is described variously: for example, reasonableness in the circumstances, not so outrageous as to come within unconscionability principles as developed in commercial contract law, fair and equitable, equitable, fair and reasonable at the time of the making of the agreement, not unconscionable at the time of judgment, and not unconscionable at execution or enforcement. Some states apply different standards to property provisions than those they apply to support provisions. Some distinguish between short marriages and long ones.
The states divide on the appropriate time for measuring substantive fairness—at execution of the agreement, at enforcement, or both. Measuring the substantive fairness of premarital agreements as of the time they were made gives maximum effect to the parties' freedom to contract but does not protect against unforeseen changes in circumstances that may affect the parties' financial status and put one or the other of them at risk if the agreement is enforced. Accordingly, an increasing number of states are assessing the fairness of premarital agreements at the time of enforcement. Provisions waiving or altering support rights are particularly vulnerable under this kind of review. Those that leave a spouse unable to provide for reasonable needs, at a drastically reduced standard of living, or a public charge or close to it, will not be enforced; neither will those that are otherwise unconscionable. This does not lead to a wholesale rewriting of agreements, but it does protect parties against onesidedness, oppression, or unfair surprise.
The Uniform Premarital Agreement Act
The Uniform Premarital Agreement Act (UPAA), some version of which has now been adopted in twenty-five states and the District of Columbia, lists eight subjects that may be included in premarital agreements. Six deal with property and support rights, a seventh deals with choice of law, and the eighth includes personal rights and obligations and other matters not in violation of public policy or a statute imposing a criminal penalty. It is not clear whether courts will read this provision as overriding earlier judicial decisions refusing to enforce agreements structuring couples' marriages.
UPAA provides for review of procedural and substantive fairness at the time of execution. Under it, an agreement is not enforceable if it either lacked voluntariness or was unconscionable and if the challenging party did not get fair and reasonable disclosure, or waive it, or have adequate actual knowledge of the other's finances. UPAA provides as well for a review of the substantive fairness of spousal support provisions at divorce or separation and empowers courts to modify any such provisions that cause parties to be eligible for support under a public assistance program. This review does not extend to other provisions of the agreement, nor does it extend to agreements effective on the death of a spouse.
Principles of the Law of Family Dissolution
The American Law Institute Principles of the Law of Family Dissolution take a position consistent with that of the UPAA and most U.S. jurisdictions. In a nutshell, it is that premarital agreements are generally enforceable if they comply with ordinary contract rules, meet specified procedural requirements, and do not work substantial injustice at enforcement.
See also:Family Law
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"Premarital Agreements." International Encyclopedia of Marriage and Family. 2003. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3406900337.html
"Premarital Agreements." International Encyclopedia of Marriage and Family. 2003. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3406900337.html
A contract made in anticipation of marriage that specifies the rights and obligations of the parties. Such an agreement typically includes terms for property distribution in the event the marriage terminates.
A premarital agreement, also known as a prenuptial or antenuptial agreement, is a contract between two persons who intend to marry. All states recognize premarital agreements through statutes or court decisions.
A premarital agreement is an unusual contract. It is an agreement between marrying persons that, at least in part, contemplates the breakup of the marriage. The subject matter of the agreement is unique: no other contract can address such matters as child custody, child education, and spousal maintenance. The relationship of the parties is special: the contract is made not by two parties operating at arm's length, but by two persons who are preparing to marry. The contract is enforceable without consideration or the exchange of value, whereas most contracts require consideration. Finally, the contract may not be enforced until years after it was first formed. Although they are exceptional, premarital agreements have become increasingly popular in the United States.
The practice of making premarital agreements is ancient. Marrying Jews have made marital contracts called ketubahs for more than two thousand years. The modern secular premarital agreements that exist in the United States can be traced back to sixteenth-century England. Many of the first premarital agreements were used by women as a way of protecting their own property. Until the nineteenth century, women were considered the property of their husbands, and what was the premarital property of a wife became the property of her husband. A premarital agreement became the only way for a woman contemplating marriage to retain control and possession of her own property.
Initially, the rights of women in premarital agreements were limited. Women had few contractual rights, and courts often struck down premarital agreements that favored women. This situation changed in the mid-to late nineteenth century, when states began to enact Married Women's Property Acts to protect women's property rights. After that time, the number of premarital agreements created in the United States steadily increased.
Premarital agreements can cover a variety of topics. The most common include property and financial support rights during and after marriage, personal rights and obligations of the couple during marriage, and the education and rearing of children to be born to the couple. A typical premarital agreement is used by one spouse or both spouses to keep personal property and income separate during the marriage or to protect certain property before one spouse embarks on a risky investment or new career.
In the absence of a premarital agreement, statutes and the courts may control the property, financial, and child-rearing issues that face a divorcing couple. Under the property distribution laws in many states, a spouse who brings a large amount of cash, property, and other financial holdings to a marriage and makes them part of the marital estate (combining them with marital assets for the benefit of both parties) may lose much of that property to the other spouse upon divorce. A spouse who brings substantially more money or property to a marriage may want a premarital agreement to protect some or all of those assets in the event the marriage fails.
Marrying couples have included a wide assortment of provisions in their premarital agreements. Some agreements identify who will wash dishes, who will dispose of trash, where the couple will shop, and what will occur in the event one spouse is unable to perform sexually. Couples are free to contract on any subject, as long as the agreement does not violate public policy or a criminal statute.
Some scholars and social critics argue that the premarital agreement itself is contrary to public policy. They maintain that government should promote marriage and that premarital agreements promote divorce because they anticipate divorce. Supporters counter that premarital agreements actually promote marriage because they give married couples the ability to fashion their own relationship.
The supporters of premarital agreements have won the argument. Courts in all states recognize that marriage is, in part, a business relationship and that couples should be free to remain autonomous within a marriage. Many states have adopted the Uniform Premarital Agreement Act (UPAA), a set of laws on premarital agreements approved by the Commissioners on Uniform State Laws. The UPAA provides a list of property-related items on which couples may agree. It also includes a provision allowing couples to agree on any matter, including their personal rights and obligations.
Although all states recognize premarital agreements, courts tend to closely examine premarital agreements that are challenged by one of the parties. In many states the spouse seeking enforcement of a premarital agreement has the burden of proving its validity. Few courts hesitate to strike terms that are contrary to public policy or unconscionably unfair to one of the parties. A court may strike down all or part of the agreement if one of the parties agreed to the terms as a result of fraud or duress. Courts closely examine asset lists and income schedules to ensure that the parties are being forthright with each other. Couples drafting premarital agreements must be careful to explain in detail any provisions that a court might consider unfair.
Courts may strike down all or part of a premarital agreement. To be upheld, the agreement
must have been procedurally and substantively fair at the time of execution, and it must be substantively fair at enforcement. Procedural fairness refers to the manner in which the contract was made. Both parties must give full and complete financial disclosure, and each party should have an opportunity to consult with his or her own lawyer. Although many jurisdictions allow one attorney to represent both parties to a premarital agreement, it is generally better for the parties to have separate counsel. Doing so prevents a later argument that the attorney for both parties was biased in favor of one side. It also gives a party who may be unsure about the agreement a chance to discuss it privately with a competent professional. Courts tend to be more comfortable with premarital agreements made by parties with separate counsel.
Substantive fairness means that the actual provisions in the agreement are fair to each party. Because a premarital agreement may be enforced many years after it was created, what seemed fair at the time of execution of the agreement may have become unfair by the time of its enforcement. Such a situation might arise where a wealthy person and a person of limited means married with the agreement that, in the event of a divorce, each would leave with what he or she brought to the marriage. If the marriage was brief, this arrangement may be upheld. However, if the marriage lasted many years and the spouse formerly of limited means invested substantial time and effort into advancing the couple's financial position, the agreement could later appear unfair.
Courts tend to closely scrutinize premarital agreements' provisions relating to children. Children have a special status under the law that gives them greater protection than adults receive, and many states prohibit couples from making premarital agreements that adversely affect a child's right to financial support. A court will strike down a provision that relates to any other important matter, such as a child's custody or education, if it is not in the best interests of the child.
Blomberg, Jill. 2001. "Unconscionability: The Heart of the Uniform Premarital Agreement Act." American Journal of Family Law 15 (summer).
Graham, Laura P. 1993. "The Uniform Premarital Agreement Act and Modern Social Policy." Wake Forest Law Review 28 (winter).
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Schlissel, Stephen W., et al. 1997. Separation Agreements and Marital Contracts. 2d ed. Charlottesville, Va.: Michie.
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"Premarital Agreement." West's Encyclopedia of American Law. 2005. Encyclopedia.com. (September 28, 2016). http://www.encyclopedia.com/doc/1G2-3437703457.html
"Premarital Agreement." West's Encyclopedia of American Law. 2005. Retrieved September 28, 2016 from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3437703457.html