General Prenuptial
Agreement Guidelines - To Ensure Validity
To get an idea of how courts may look
at a prenuptial agreement, it may be helpful to examine a particular case as an
example. In past court cases, the prenuptial agreement gave a disproportionately
small amount to the wife, especially considering the substantial property and
income of the husband. The husband did not make full disclosure of his financial
situation to the wife, although she did know that he had substantial business
and property interests. The wife also did not have the advice of independent
legal counsel before she signed the agreement.
The court did not address the
particular agreement, but sent the case back to the trial court with
instructions for the trial court to review the case again considering the
following criteria:
- Does the
agreement make fair and reasonable provisions for the spouse with lesser
financial resources? If it is fair and reasonable, then the agreement is
valid. Whether the agreement is fair and reasonable should be determined by
looking at the parties' relative situations, such as their ages, health,
experience in financial matters, property held by each, and the needs of
each spouse. After a divorce, each spouse must be able to live in a similar
manner to what he or she enjoyed before the marriage. The question of
whether the agreement is fair and reasonable is determined with reference to
the time at which the agreement was signed.
- If the agreement
is not fair and reasonable, then the court should ask if there was full
disclosure of each spouse's financial situation and if each spouse had an
understanding of her or his rights. If there was full disclosure and an
understanding of rights, the agreement is valid.
- If the agreement
was not fair and reasonable, and there was not full disclosure, then the
court should ask if each spouse had actual knowledge of the other?s
property, or if he or she should have had a general knowledge of it. If he
or she had, or should have had, such knowledge, the agreement should
probably be declared valid.
As courts now consider the above
points in many prenuptial agreement matters, they will also look at whether each
spouse had competent and independent legal advice, although such advice is not
absolutely necessary to declare the agreement valid.
The previous case is an example of
how one state court looked at prenuptial agreements, but the same or similar
factors are used in most states. For example, in an Ohio case, the wife
voluntarily chose not to have independent legal counsel advise her about the
prenuptial agreement. The Ohio Court of Common Pleas decided that her choice was
irrelevant, that she must have legal counsel even if she did not want it (due to
the size and complexity of the husband's estate), and that the prenuptial
agreement was therefore invalid. In this case, one party signs a prenuptial
agreement after declining legal advice, then uses her voluntary action to have
the agreement set aside. This is a perfect example of how unpredictable courts
can be.
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