Prenups offer potential protection, but they aren’t ironclad. While they’re becoming more common, it’s essential to understand the situations where a court might declare a prenup invalid. Here are four key reasons why prenups sometimes fail to hold up:
- Lack of Proper Disclosures
- Unconscionable Agreements
- Not Following Proper Procedures
- Conflicting Provisions
For example, courts may invalidate prenups with terms so grossly unfair they shock the conscience (unconscionable agreements). In a landmark California case (In re Marriage of Facter, 212 Cal. App. 4th 967), a highly-paid attorney’s prenup was thrown out because it left his unemployed wife, who had been a single mother when they met, with virtually nothing after divorce. So, as you can see, by understanding these potential pitfalls, you can make better decisions about whether a prenup is right for you and take steps to increase its chances of being upheld.
Situation 1: Lack of proper disclosures
Nearly every state requires some form of financial disclosure when drafting a prenuptial agreement. This process involves both spouses openly sharing their assets, debts, and income with one another. Here’s why it’s so important:
- Informed Decision-Making: Full disclosure gives each partner a clear picture of their spouse’s financial situation, allowing them to make educated decisions about what they might keep separate or agree to share during the marriage.
- Protection from ‘Hidden’ Assets/Debts: Leaving out financial information is a major red flag. A lack of transparency could lead to disputes and potentially invalidate the entire prenup later on.
What Happens if Disclosure is Incomplete?
Judges are serious about enforcing financial disclosure rules. Here’s what could happen if assets or debts aren’t revealed:
- Challenging the Prenup: Your spouse might successfully claim they couldn’t make a fair agreement without full knowledge, leading the court to toss out the prenup.
- State-Specific Consequences: Laws vary, but you could end up forfeiting more than you bargained for in the event of a divorce.
Expert Insights
- California: Attorney Raymond Hekmat highlights instances like undisclosed stock options or hidden investments as major grounds for invalidating a prenup.
- Michigan: Attorney Max Emmer emphasizes the importance of complete and accurate disclosure, stating that omissions undermine the very purpose of a prenuptial agreement.
Situation 2: Unconscionable agreements
A prenuptial agreement can be invalidated if it’s deemed “unconscionable.” This means the terms or the circumstances surrounding the agreement are extremely unfair, potentially leaving one spouse without enough resources to support themselves. Keep in mind each state has its own laws around what it considers unconscionable.
What Does Unconscionable Look Like (Generally)?
- Extreme Financial Disparity: A prenup that gives almost everything to one spouse while leaving the other nearly penniless is likely to be challenged.
- Necessitating Public Assistance: If the prenup creates a situation where one spouse might need government support after divorce, the court would likely find it unconscionable.
- State-Specific Variations: While the core idea of fairness applies, exact definitions of “unconscionable” differ slightly by state.
Expert Insights
- California: Attorney Raymond Hekmat explains that spousal support limits might be considered unconscionable if they leave one person unable to support themselves post-divorce.
- New York: Attorney Lisa Zeiderman defines unconscionability as “the inequality of a prenup being so strong that it literally shocks the conscious and confounds anyone of common sense having entered into the prenup.”
Key Takeaway: Prenups aren’t a license for one-sided agreements. Courts exist to protect spouses from potentially exploitative terms. If you’re concerned about fairness, always consult with legal professionals.
Situation 3: Not following state proper procedures
Every state has its own procedures for creating a valid prenup. What works in New York might not fly in California! Here’s the breakdown:
- Common Requirements: Most states insist on basics like signatures, notarization, witnesses, and voluntary agreement (no coercion).
- State Variations: Even with the above, subtle differences exist between states.
- What is “Voluntary”? A prenup signed under pressure (duress) may be invalid. This can include threats, manipulation, or even presenting the prenup right before the wedding (in certain limited situations). State laws on this topic vary.
Examples:
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California’s “7-Day Rule”: California mandates a 7-day waiting period between receiving the final prenup draft and signing. Attorney Raymond Hekmat explained that duress may be something like an immigration issue (getting immigration status after getting married) or forcing someone to sign a prenup in order to get marriage benefits.
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New York’s Focus on Notarization: Attorney Lisa Zeiderman told us that, in her experience, “the biggest reason why prenups are not held up is defective signature acknowledgments. For example, in the seminal case of Matisoff v. Dobi, a prenuptial agreement must be signed and duly acknowledged in the same form as is required to file a deed in the state of New York. Sometimes, we see improper versions of this acknowledgment where the actual acknowledgment language is not the same as is required to file a deed, or worse yet; someone has simply notarized the document without the proper acknowledgment language. In those cases, the prenup is not enforceable. In the case of Galetta, one party did not have an acknowledgment whereby the notary confirmed the identity of the person executing the document, and the agreement was unenforceable. We see these types of errors frequently, and in fact, when I examine a prenup from someone seeking a divorce, the first thing I look at in reviewing the document is the acknowledgments to be sure that the document is enforceable.”
Key Takeaway: Don’t assume you know the rules just because you live in a certain state. Each prenup process carries unique requirements, and getting proper legal help is essential to avoid costly mistakes.
Situation 4: Conflicting provisions
Conflicting provisions in a prenuptial agreement can create confusion and uncertainty, making it difficult for the spouses and the judges to determine the existing rights and obligations of the couple.
If the agreement contains provisions that are conflicting or can be interpreted in a number of ways, those provisions could be set aside based on the fact that the Court does not know how to follow the agreement.
Raymond Hekmat, California Family Law Attorney, gave us an illustration of what this might look like. A conflicting provision would be if the prenup says certain property is separate property (not subject to division in a divorce), but in another section says that the property is also community property (subject to division in a divorce), the court could become confused by the contradiction and possibly throw the whole agreement out.
Conclusion
Don’t be too stressed about these four scenarios; prenups are also often upheld in courts. Prenups are a good thing, and courts understand that. Prenups can offer peace of mind to couples by protecting their assets and clarifying expectations.
However, it is important to understand the reality that there are situations where they may not hold up in court. Whether you spend thousands on a high-end attorney or write it yourself, your prenup can be thrown out by a judge. Of course, you can increase your likelihood of upholding your prenup by working with experienced divorce lawyers or prenup platforms like HelloPrenup.
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: [email protected]
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