Drafting An Enforceable Prenuptial Agreement
The first step in drafting an enforceable prenup is to ensure you are open and honest with your financial disclosure. The number one argument a party will use in an attempt to toss out a prenuptial agreement is all assets were not disclosed at the time the agreement was reached. You must have full disclosure and attach the appropriate documentation to the agreement.
It is also important to have the document drafted and ready to be signed at a time when there is no pressure. Having the agreement signed the night before the wedding can make it appear as if coercion was involved. It would be best to have everything completed before wedding invitations are even sent out, as that demonstrates both parties are aware it is a condition preceding the wedding.
Additionally, you want to ensure the other party has their own attorney, as it is inviting a judge to overturn an agreement if the party did not have legal advice.
Another aspect that will help ensure enforceability is if the records show there was active negotiation and changes are made at the suggestion of the wife. When a party just signs an agreement compliantly, they could argue that they had no negotiating power and that it was an adhesion contract. You should be willing to make concessions here and there, as it shows the other party had a true understanding of the terms being discussed.
Finally, courts will look at the overall terms of the agreement to determine whether the deal was conscionable. If the agreement essentially leaves a party nothing after a divorce, this can be a factor to overturn the prenup. The safest option is to avoid being greedy in the agreement and simply be generous, which will help avoid having a judge actively looking for reasons to sympathize with the other party and overturn the deal.
Remember to also consider whether the state where the divorce is taking place has adopted the Uniform Premarital Agreement Act, which includes provisions for whether a premarital agreement is enforceable.
These provisions include whether the parties were in voluntary agreement, that there was fair and reasonable disclosure of property and several other key factors. Currently, 27 states have adopted a version of the UPAA, which makes enforcing or not enforcing a prenup much easier.
A Financial Advisor’s Role In Prenuptial Agreements
The financial advisor for a high-net-worth individual will provide key insight into the drafting of a prenup by assisting with gathering supporting documentation and advising their client on the financial implications of the disclosures.
The financial statements need to be presented in a way that is organized and comprehensible to the other party and their attorney. These documents can be complex when there are many different forms of assets involved, so the information must be presented in a manner that is clear and understood by all sides involved.
Additionally, a financial advisor is in a better position than the party’s attorney to project future scenarios for reasonable needs for various situations, such as having children at some point in the marriage.
A prenuptial agreement is a valuable tool for high-net-worth individuals to protect their accumulated wealth if their marriage dissolves. While it is not necessarily an airtight solution, a properly drafted prenup can help to reduce conflict and time spent in expensive litigation while ensuring all parties have sufficient means to continue on after the divorce.
Joseph E. Cordell is the principal partner of Cordell & Cordell, a domestic litigation firm focused on representing men in divorce. Since co-founding the firm with his wife, Yvonne, in 1990, he and his team of almost 200 attorneys spread across more than 100 offices in 29 states and the United Kingdom have helped tens of thousands of men going through divorce.