Despite popular belief, prenups aren’t written in stone. While there are certainly tips and tricks aimed at making your prenup stronger, even the most carefully crafted prenup has potential pitfalls. Knowing this before you enter into your own agreement can both set expectations and help you avoid some common issues that arise. So, with that in mind, let’s explore some of the reasons prenups fall apart.
We’re all human. And humans make mistakes. These mistakes can occur before, during, and after the creation of a prenup and may spell disaster down the road should divorce arise. One of the biggest, and most common, mistakes that parties to a prenup can make is commingling marital and non-marital funds.
Let’s say a couple has created a prenup. The process goes smoothly and the couple creates a super comprehensive agreement delineating and dividing marital and non-marital property. Of particular importance to one party is a retirement account that they have been funding for years. They make sure that this account is listed as non-marital in the prenup. In their mind, the account is protected and they no longer need to worry. Done and done.
But, down the road, they start funding the non-marital retirement account with marital funds. Uh-uh. Eventually, the couple divorces. During the divorce proceedings, despite the fact that the retirement account is listed as non-marital property, the court determines that the account is marital property because it was funded with marital funds. So, despite the fact that this couple created a solid prenup, their actions eventually unraveled the agreement.
Moral of the story: You can have the strongest prenup in the world but if you don’t act in accordance with it, it won’t be worth the paper it’s written on.
Perhaps you think that you and your fiancé checked all the boxes when creating your prenup. However, down the road during divorce proceedings, your spouse raises all kinds of defenses to the enforcement of your agreement. You are blown away! They argued that they signed under duress and didn’t fully understand the rights that they were waiving. Therefore, they want the prenup thrown out. You definitely didn’t see that coming. Perhaps at the time, you didn’t see anything wrong with signing your agreement the day before your wedding… and you didn’t think your fiancé did either. However, these arguments/defenses can be somewhat subjective and can put your entire agreement at risk.
If your spouse can successfully prove their defenses, you may be out of luck. Additionally, even if they don’t prevail and the prenup is enforced, you should still consider the litigation expenses involved in defending your prenup. While you can definitely take precautions when entering into your prenup to avoid these types of defenses, no prenup is completely immune.
At the Mercy of the Court
Ok, finally, let’s look at an example of a couple with great financial disparity and what that meant for the enforceability of their prenup. Mr. and Ms. Unlucky agreed to enter into a prenup in part due to the fact that Ms. Unlucky is worth millions. In the agreement, Mr. Unlucky waives his right to all alimony and the couple agrees that they will have no marital property. All property will be owned in their separate names. Ms. Unlucky retained the fanciest attorney in town to draft their prenup which he described as “totally rock-solid”.
After getting married, Mr. Unlucky agrees to stay home and care for the couple’s children while Ms. Unlucky runs her booming business. Eventually, the couple divorce. To the great surprise of Ms. Unlucky, the court took the opinion that the prenup was unfair and unconscionable in that it did not provide for Mr. Unlucky at all. As a result, the court threw out this “rock-solid” prenup.
If a court determines that your prenup is unconscionable, they can decide to completely invalidate your agreement and you and your spouse will be back at square one. While this may be an extreme example, what makes a prenup “unconscionable” is determined by the judge handling your case.
It’s good to keep in mind that all prenups are at least somewhat fallible. There is no way that one legal document can cover and anticipate all of the paths that your marriage can take. It is also important to remember that your actions can undo the hard work and planning that went into creating your prenup. With all that being said, prenups are still an essential tool for marital financial planning. Get started on your prenup today!
Julia Rodgers is HelloPrenup’s CEO and Co-Founder. She is a Massachusetts family law attorney and true believer in the value of prenuptial agreements. HelloPrenup was created with the goal of automating the prenup process, making it more collaborative, time efficient and cost effective. Julia believes that a healthy marriage is one in which couples can openly communicate about finances and life goals. You can read more about us here Questions? Reach out to Julia directly at [email protected].