Importance of full disclosure and defensive drafting of premarital agreements

A prenuptial agreement could be the subject of litigation if the couple later decides to divorce. Therefore, a family law attorney’s goal in drafting a prenuptial agreement or reviewing a prenuptial agreement drafted by the other party’s attorney should be to strive for a perfect contract. The family law lawyer should draft or negotiate the agreement as if the divorce has already been filed. Family attorneys who don’t negotiate and prepare premarital agreements with the parties’ divorce, not their marriage, in mind are filling their file drawers with ticking time bombs. What happens on the death of one of the parties is also an important a concern to the family law lawyer because second marriages, particularly between older couples, are becoming increasingly common. Although every premarital agreement is unique, there are some general principles that the family law attorney should following when negotiating and drafting the agreement to increase the likelihood that it will be enforceable. Defensive drafting often requires taking steps that might not necessarily be required by law. It requires contemplating the defenses to enforcement that are going to be raised in the event of divorce, and trying to defeat them before they develop any traction with the court.

Each party needs an attorney

Each party to a prenuptial agreement should have his or her own attorney. If each party is not independently represented, problems could arise when the party who was represented tries to enforce the agreement against the one who wasn’t. The unrepresented party may claim that he or she did not execute the agreement voluntarily. An agreement that is going to be presented by one party as a take it or leave it proposition is much easier to enforce when the other party has independent legal representation. If only one attorney is involved in negotiating and writing the agreement, the attorney is placed in the uncomfortable position of appearing to serve two masters. If an attorney represents one spouse but speaks to the other, the unrepresented spouse will typically assume that the attorney is also representing her and providing her with legal advice. Therefore, no family law attorney should ever consider drafting a premarital agreement for both of the parties to the agreement, no matter how many waivers the parties execute. It is much better for the attorney to decline that engagement, than it is to virtually guarantee litigation between the parties, and even a malpractice case against the attorney as well.

Each party should fully disclose assets and debts

Parties engaged to be married are in a “confidential” relationship that requires them to fully disclose to each other all assets, income, and indebtedness. Full disclosure is particularly important when the agreement provides for disproportionate economic arrangements in the event of a divorce. A party who waives any rights in the agreement or who is economically disadvantaged by it may try to challenge the agreement. In these situations, the party asserting the validity of the agreement will generally be able to secure enforceability by establishing that the other party had full knowledge of the asserting party’s assets. This can often be done by establishing that the parties cohabitated for some period prior to the execution of the agreement. Full disclosure goes a long way to eliminating the potential that one party will claim that the agreement was procured by fraud. A careful family law lawyer will demand that his client fully and completely disclose all assets, income, and indebtedness. A good plan is for each party to provide the other with three years worth of tax returns, and a specific asset disclosure that includes not only a description of the asset, but its value and any indebtedness tied to the specific asset. Commonly this would include mortgages against real estate, car loans, 401(k) plan loans and the like. There can never really be too much disclosure. If the asset is important to the party, disclosing it is similarly important, no matter what the economic value of the asset might be. Therefore, assets with emotional value, such as family heirlooms like grandma’s wedding band, should be included in the disclosure.

The agreement should be executed well before the wedding

Even in the face of full disclosure, agreements are sometimes challenged on the grounds of duress and coercion. Duress and coercion challenges commonly arise when the marriage is conditioned on the execution of the agreement and the agreement is executed shortly before the wedding. This is true even though conditioning marriage upon the execution of a premarital agreement is neither legally or morally wrong, and generally does not constitute duress. Acts cannot constitute threats unless they are legally or morally wrong. Executing the prenuptial agreement well in advance of the date of the wedding enhances enforceability because shows that both parties had time to think and signed the agreement understanding what they were doing. Execution of the agreement a day or two before the wedding is like waving a red cape in front of the bull.