Nuptial Agreements

What is a Prenuptial agreement and What is a Postnuptial Agreement?

A nuptial agreement is a contractual agreement between spouses that specifies how the parties’ property is to be characterized and sometimes how finances will be dealt with during the marriage. Prenuptial agreements are agreements entered into before marriage, and postnuptial agreements are entered into during the marriage.

Aren’t I Just Dooming the Marriage Before It’s Begun?

One of the single most common objections to a prenuptial agreement is that by creating one you are dooming the marriage before it’s even begun. The theory goes that if you are contemplating the demise of the relationship as you go into the relationship, you’re not only putting a negative energy into it, but you’re not fully committing to the idea and belief that the marriage is going to last.

There are a few problems with this reasoning.

Prenuptial Agreements Protect A Couple During Marriage

First, understand that a prenuptial agreement can protect you and your spouse during the marriage by compartmentalizing property. In other words, having a prenuptial agreement can ensure that have protections without even talking about divorce. By way of illustration, imagine the following scenario:

A couple gets married. They have no prenuptial agreement. The husband gets sued. When he’s sued, the plaintiff’s attorneys recognize that Arizona is a community property state. That means that husband has a half interest in all his property acquired during the marriage, but wife also has a half interest in in the same property. Because of that, the person suing knows they need to not only sue the husband, but they will also sue his wife. A judgment is entered for a significant sum of money in favor of the plaintiff. Now everything the couple owns together has become a target for collections by the plaintiff/creditor.

In contrast, imagine the same couple properly created a prenuptial agreement before they got married. In the prenuptial agreement they separated out the property that each party had. Anything wife acquired during the marriage became her separate property. Anything the husband acquired during the marriage became his separate property. In this situation, the creditor coming in attempting to sue husband won’t be able to sue wife. The creditor also won’t be able to take away the wife’s property even if they get a judgment against husband. In effect, the prenuptial agreement would have saved a lot of their property, a massive hassle to wife by having to deal with the lawsuit, and none of this would even contemplate the idea of divorce.

Prenuptial Agreements Help Preemptively Eliminate the Very Stressors that Cause Divorce

Divorces can happen as a result of a lot of different stressors on the relationship. An extremely common one is finances. When a couple becomes very out of synch with respect to how they are going to carry on the finances in their relationship, that factor alone can cause divorce.

Another advantage of a prenuptial agreement is that the way it’s processed and the disclosures contained within it require that the parties talk about how finances are going to work during the marriage. Sitting down and actually discussing this stuff prior to jumping into a lifetime commitment with someone is extraordinarily important. It can frequently reveal things that people were ignoring or simply overlooking. And once the honeymoon is over, if you haven’t discussed those things, they can be become a thorn in the relationship that breeds conflict that can itself lead to divorce. Talking through all this ensures you are on the same page and have a clear joint vision together.

You Don’t Get Insurance Because You Plan to Destroy Your Car

Have you ever purchased car insurance? If so, did that purchase increase the likelihood that you were going to get into a car crash? Few people buy auto insurance because they plan on wrecking their vehicles. The same rationale applies to prenuptial agreements. To the extent that we are talking about divorce, you don’t get a prenuptial agreement because you’re intent on breaking up. But in such an undesirable event, it makes the divorce process much much cleaner, easier, and less stressful and costly in attorney’s fees for both parties. People who don’t have prenuptial agreements and get divorced regret it all the time. Just as people without car accidents that get into a wreck without insurance regret it.

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What’s Required to Have a Prenuptial Agreement

To form a prenuptial agreement, you must have a document in writing, that is signed by both parties, before the marriage. A.R.S. 25-202. Note that if the parties don’t actually end up getting married, the agreement does not come into effect. Additionally, the parties must have been signed it voluntarily, have provided full disclosures or waived the right to them, and can’t have an unconscionable agreement. Also important, if you intend to bind third parties (such as creditors) to your prenuptial agreement it’s imperative that you file a notice with the Recorder’s Office indicating that a prenup exists.

Can a Prenuptial Agreement Be Challenged?

Any prenuptial agreement can be challenged. Challenges can come from a few different places. For example, you might have a spouse challenge the validity of the prenup in a subsequent divorce. You might also have a third party creditor challenge the validity of the prenup, hoping to get a share of your spouse’s assets. While these challenges may happen, how well you fortify your prenup can determine whether or not such a challenge will be successful. For that reason, it’s important to talk to an attorney before you put together your prenuptial agreement.

Some of the things you can do to strengthen a prenuptial agreement include the following:

  • Full Disclosure – Make certain that you have given a full and complete disclosure of all of your finances, property owned, and debts owed to your spouse prior to signing the prenuptial agreement. Also make sure that your spouse has done the same to you. Most prenuptial agreements will include an attachment of some basic financial disclosures to ensure that there is no question such a disclosure was made.
  • Sign Long Before the Wedding – One of the ways to challenge a prenup is to say that one of the parties was coerced or under duress when signing. Creating a time cushion between the signing of the prenup and the date you actually get married can help to cut against the impression that that is happening. By way of example, consider a situation where a huge wedding is planned. The wife-to-be’s family spent thousands on the venue. Everyone in the family has shown up from out of town. They’ve all spent tons of money on airline tickets, hotel rooms, and wedding gifts to be here. Suddenly, the groom runs in and hands wife a prenup, saying, “sign this, or I’m calling it off.” At that point, the bride is going to be under a ton of pressure to sign. She may later be able to come back and say that she was coerced or under duress. If the parties signed the prenup long before the actual wedding date, it seems far less likely that this kind of coercive pressure existed.
  • Film the Signing – To further insulate against the idea that either party is being forced into signing against his or her will, you can film the signing of the prenuptial agreement. This way, you can see how the parties are acting while they sign. If everyone is happy and smiling, it’s less likely they were being coerced.
  • Make Sure Both Parties Are Represented – If one party has an attorney and the other one doesn’t, it may later look like the party that didn’t have an attorney was forced into signing. Having both parties represented makes it much harder to argue that that is what happened.
  • Make Sure Your Prenup Only Addresses Financial Issues – Generally, a good prenup will only include financial or property issues related to the parties. Throwing in other issues, can jeopardize the validity of the whole agreement. Some things you should not include are child issues. For example, you can’t ever waive child support in the future or rights to see a child in your prenuptial agreement. The family court will always retain jurisdiction over issues related to children, so it’s not legally possible to prospectively waive those rights. Also, you want to make sure that you don’t include any sort of required acts. For example, if you were to include a provision in your prenup that said something like, “Husband promises to take the trash out every week and Wife promises to perform sexual favors once a week,” you would essentially be contracting for slavery and sexual servitude. Needless to say, that could nullify the whole agreement.
  • Timely File A Notice of Signing – In order for anyone other than the parties to be bound to the separate property nature of the prenup, it’s absolutely critical that you file a notice of signing with the county recorder. Waiting to do so can provide a creditor the chance to argue that it was not on notice of the prenup and can therefore avoid being bound to anything.

Note that while doing these things can help to ensure that your prenup remains valid, the converse is also true. Lack of these things could be used to challenge one and make it be deemed invalid.