Making And Breaking Premarital Agreements: A Primer
Just like there is nothing romantic about a life insurance policy, there is nothing romantic about a premarital agreement. But they both help people be prepared in case something unexpected happens, whether it be an untimely death or a divorce.
Premarital agreements have benefits during the marriage as well, because they eliminate money from the equation, and money is one of the leading causes of marital friction. These pacts can also set ground rules for inheritance and succession, so insecurity and doubt cannot take root.
Before the advent of the Uniform Premarital and Marital Agreements Act, the complex web of laws meant that only the super-rich needed to bother with premarital agreements. But because of the UPMAA, the law is now much easier to understand and apply.
Making Premarital Agreements
Life insurance policies only cover one or two specific kinds of potential loss, but spousal agreements may legally cover a wide range of topics, including:
- Spousal Support: Theoretically, these contracts can contain spousal support waivers, but courts will closely scrutinize such provisions. A cap on the amount and duration of payments is more likely to pass judicial muster.
- Property Classification: Overcoming the marital v. nonmarital property presumption is one of the most expensive and time-consuming elements of divorce litigation, and a single clause in a premarital agreement can eliminate this source of conflict.
- Inheritance: Legally, stepchildren are often left out of inheritance matters if their parents divorce, and that may not be the outcome that either spouse desires.
To better carry out their wishes, many spouses draw up executory documents, like wills and trusts, when they enter into premarital agreements. Neither these executory documents nor the premarital agreements themselves can contain any provisions related to child custody or child support.
Breaking Premarital Agreements
There is a strong presumption in favor of spousal agreements in Kentucky family law, and courts almost always uphold them, unless they are:
- Involuntary: A “sign the paper or else the wedding is off” ultimatum is normally not enough, unless the ultimatum comes just a few days before the ceremony and/or the signing spouse did not have adequate legal representation.
- Unconscionable: Agreements that are so one-sided that they shock the consciousness are usually invalid; furthermore, under the UPMAA, the premarital contracts must have been unconscionable when they were made.
Most of these contracts have severability clauses, so if a judge invalidates one part the remainder is unaffected.
How It Works
Some baseball fans probably remember former Los Angeles Dodgers owners Frank and Jamie McCourt. In the early 2000s as the couple was divorcing and the team was in bankruptcy, Ms. McCourt surrendered her half of the team for about $180 million in cash and property. A few years later, Mr. McCourt sold the Dodgers for over $2 billion and his ex-wife sued to overturn the premarital agreement. But a court later ruled that the agreement was neither involuntary nor unconscionable when it was made, because “Jamie simply chose the security of a guaranteed [settlement]. . .over the uncertainty and risk presented by the valuation and sale of the Dodger assets.”
California is also a UPMAA state, so the result probably would have been the same if the Louisville Bats owners divorced, although the team would probably net less than $2 billion.
Premarital agreements are important facets of many Kentucky divorces. For a free consultation with an experienced family law attorney in Cave City, contact Gary S. Logsdon. After hours appointments are available.