Let’s start with the horror stories. I’m sure you have a few of your own, but the classics are still worth recalling. Most, but not all, states have some form of dissolution entitlement, whether “community property” of presumptive 50/50 allocations of marital assets, a divorcing spouse is entitled to a share of the marital estate (which can be everything that is owned by both parties at the time of their marriage) no matter how such assets were accumulated or by whom. Thus, in the first classic tale, the marriage is of such short duration that it hardly counts…three weeks. However, since it was “consummated,” there was no great chance for an annulment and thus, when the divorce papers were filed, the marital estate consisted of over $3M contributed from the savings and assets of the husband and $120K in debts contributed by the wife. While the court gave some consideration to the length of the marriage, the division of the marital estate in a “presumptive 50/50” jurisdiction resulted in the wife having her debts paid and a distribution of nearly $1M from the husband’s accumulated assets. Not bad for a three-week marriage! But wait! There’s more! The elderly wife with a significant estate was wooed by a younger man, and following their marriage, the husband convinced the wife that she should allow him to serve as her “conservator.” With access to her assets and no accountability, he proceeded to transfer significant sums to his own accounts, and then, having also convinced her to sign a living will declaration that nominated him to serve in the capacity of her alter ego, he had her placed in a nursing home! AND, while there are far more stories to tell, this article is intended to give a rational alert to senior lawyers who, because of divorce or death, find themselves thinking about a “late in life” marriage.
Prenuptial Agreements
The prudent person contemplating a second or “late in life” marriage will educate themselves on the benefits and detriments, if any, of entering into an agreement known as a prenuptial or premarital agreement. All states have some statutory recognition of the right of the parties to enter into a pre-marriage agreement that is designed to overcome the otherwise statutory presumptions about the distribution of the marital estate upon death or divorce. Many states (28 + DC) have adopted the Uniform Premarital Agreement Act (UPAA), which provides for consistency and enforceability from state to state. Pursuant to the UPAA, parties seeking to enter into a premarital agreement need to broadly meet the following general criteria:
a. Both parties must voluntarily enter into the prenuptial agreement. The wise lawyer representing a party to a prenuptial agreement will think of and plan for ways and means to demonstrate just exactly why and how the process was “voluntary.”
b. Ethically, each party should be represented by their own counsel and not a “joint representation.” We all know that you just can’t ethically represent two sides of an issue.
c. The parties must make a full and complete disclosure of all of their assets. If there is a loophole that frequently causes problems, it is a failure to make a full and complete disclosure of assets. A common feature of many prenups is an independent determination and valuation of the marital estate.
d. The agreement must be “procedurally and substantively fair.” In this context, that usually means that each party had the capacity to understand the consequences of the agreement, that it was not a product of duress, fraud, or undue influence, and that any post-marriage conditions that would allow for the termination of the agreement are reasonable. “Adultery” is a typical such condition. “Fair” is a subjective concept in this context, and, again, the wise lawyer (or party) will think of ways of demonstrating in language or exhibiting the “fairness” of the agreement.
Typically, the “prenup” will address a variety of issues beyond simply defining the nature and extent of the assets of each individual spouse that are to be protected. These include fixing the amount of alimony or post-dissolution financial obligations for each of the parties; estate planning either as part of the premarital agreement (not recommended) or simply a reference in the document to the right of each party to independent estate planning so long as it is consistent with the terms of the premarital agreement; custody of minor children; division of or protection of assets; and other issues that may be unique to the parties. Dividing access times for the vacation condo and allowing for the continuation of club memberships are not infrequent additional subjects found in premarital agreements.
