What are Prenuptial Agreements?

In the past people believed that Prenuptial Agreements were only for wealthy individuals, however, prenuptial agreements (which are also known simply as Prenups) are used quite extensively.

A prenuptial agreement is a contract between two individuals before they are married. These contracts address the property rights of the former spouses after divorce or death. The Pennsylvania Supreme Court held that there are two requirements for a valid prenuptial contract:

1. The usual rules of contract law about invalidating contracts for fraud, misrepresentation, or duress

2. “a full and fair disclosure of the financial positions of the parties is required.” The court justified this required disclosure because the parties “do not quite deal at arm’s length”, but instead “stand in a relation of mutual confidence and trust.”

Most commonly, prenuptial agreements are signed when:

• One of the parties is significantly wealthier than the other, and they want to protect some or all of their wealth in the event that the two should ever divorce.

• If one or both of the parties own a business or they are involved in a family business and wants to protect the business, and subsequently, the other family members that are involved in that business from potential future spousal claims.

• One or both of the parties have a child or children from a prior marriage or relationship and they wish to pass certain property to such children upon their death.

If a couple is married and they do not have a prenuptial agreement, then they if they divorce Pennsylvania state laws will govern how their property that was acquired during the marriage will be divided.

Asset Division Upon Divorce

Pennsylvania is an equitable distribution state, which means that the courts will divide the marital property based upon the principles of equity or fairness. Many people falsely assume that this means that property will be divided down the middle, however, that is not always the case. In Pennsylvania, a property is characterized as either separate property or marital property.

Separate property includes:

• Property acquired prior to the marriage (or in exchange for such property).
• Property excluded from the marital estate by a prenuptial or postnuptial agreement. Gifts and inheritances received during the marriage.
• Property acquired after separation.

Marital property generally includes those assets that were acquired during the marriage and appreciation or income that is derived from those assets and from separate property.

What are Postnuptial Agreements?

Postnuptial agreements, which are also known as post-marital agreements, are agreements that the spouses enter into after the marriage has already taken place. Postnuptial agreements can be drafted when the parties anticipate that they will file for separation or divorce.  Similar to premarital agreements, one of both of the parties that are seeking a postnuptial agreement are attempting to protect their assets or income. Some couples will draft a postnuptial agreement to outline how certain non-marital assets such as inheritances or pre-marital property will be utilized during the marriage.

Marriage Settlement Agreements

Marriage Settlement Agreements are another type of agreement that can be utilized by couples who want to reach an agreement for the division of marital assets and marital debts, payment of support, and additional issues that arise during the course of a divorce proceeding. These agreements are also sometimes referred to as called Property Settlement Agreements. At their core, these agreements are a contract.  However, before either spouse signs a Marriage Settlement Agreement, the Agreement should be reviewed by their own independent attorneys. Both spouses should not utilize one attorney to draft a Marriage Settlement Agreement and should not presume that one attorney will look out for both spouses’ interests. These agreements, like prenuptial and postnuptial agreements, are considered to be binding upon the spouses except in very rare circumstances and they will be enforced even if one spouse unknowingly signs away rights they would have otherwise been entitled to receive as part of the equitable distribution process.

Arguments Against Enforcing Agreements

When a couple decides to file for divorce a common issue is that one of the spouses attempts to claim that their prenuptial agreement should not be followed. Generally, the court is reluctant to do this, however, the Pennsylvania Family Code 23 Pa.C.S. §3106(b) provides for certain reasons why a prenuptial agreement should be set aside.  It should also be noted that § 3106 only applies to agreements that were executed prior to the date of marriage, not post-nuptial agreements  (not post-nuptial agreements). The burden of proof to set aside a premarital agreement shall be upon the party who challenges the agreement. 23 Pa.C.S. § 3106(a). To prevail, the challenging party must prove by clear and convincing evidence that:

(1)    The party did not execute the agreement voluntarily; or

(2)    The party, before execution of the agreement:

1. was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
2. did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
3. did not have an adequate knowledge of the property or financial obligations of the other party.23 Pa.C.S. § 3106 (enacted 2004)

The above are some reasons why a prenuptial agreement may not be enforced and are reasons why some divorce proceedings can take an extensive amount of time regardless of whether or not there is a prenuptial agreement

Contact the Family Law Attorneys at Sadek & Cooper

If you have questions about creating, enforcing, or trying to set aside a prenuptial agreement, or if you would like to draft a postnuptial agreement, Sadek & Cooper may be able to help. To schedule a free and confidential legal consultation, call our Philadelphia law firm at 215-814-0395. We have offices conveniently located in Center City, Delaware County, Bucks County Northeast Philadelphia, and Moorestown, New Jersey.