Components of a Prenuptial Agreement
Prenuptial agreements have been around since the colonial days in the Americas. In the seventeenth century, men outnumbered women six to one in the Canadian colonies. King Louis XIV often promised these poor women a more stable economic situation if they immigrated to the colonies of New France and married these lonely male colonists.
In a rare move, many of these women were able to keep the doweries and properties that were given for their betrothal. More than 80% of these forlorn men were convinced to sign prenuptial contracts.
This system faded as soon as the male-to-female ratio began to balance and women’s negotiating leverage waned. For centuries after, women lost more power to the husband-skewed coverture laws, and prenups were frowned on.
Prenups emerged again after World War II as a legal option, but they were often ignored in the courts. It took until the 1970s Posner v. Posner to see prenups slowly begin to be enforced once again.
The Modern Prenup
Since the 1970s, the prenuptial agreement has been associated with the famous and the rich. They have become common, even expected, on Wall Street and in Hollywood. And they were a popular discussion topic in newspapers and magazines.
Steven Spielberg and actress Amy Irving had an on-again-off-again romance throughout the late 70s and early 80s. When they reunited in 1985 and decided to tie the knot, the two scratched out a prenup on a cocktail napkin. When the relationship switched off again, and the pair decided to divorce in 1989, the court did not recognize the napkin under California law. Instead, Irving raked in $100 million, roughly half of Spielberg’s earnings while married.
In the 1990s, Donald Trump famously used a prenup as a marriage investment when he and his second wife, Marla Maples, signed an agreement that only allowed Maples a partial payout if the marriage failed to last at least five years.
In 2019, the public was astounded to learn Jeff Bezos, the owner of Amazon and the richest person in the world, did not have a prenup with his wife of 25 years, MacKenzie Scott. After, she sought a divorce and was awarded approximately $38.3 billion in Amazon stock, making her the richest woman in the world.
Scott soon remarried, but the marriage was short-lived – less than two years. She is currently going through her second divorce— the couple did sign an undisclosed separation.
The Post-Modern Prenup
But prenups are not just the stacked income brackets and celebrities. The American Academy of Matrimonial Lawyers reports that over the last two decades, more ordinary married couples have prenuptial agreements.
The Harris Poll conducted a little over a decade ago showed only 3% of married or engaged couples had signed a prenup. A recent Harris Poll reported that 15% of all married or engaged couples that responded had signed one.
This number increases to 40% of the married/engaged respondents between the ages of 18 and 34. As the age increased, the number of prenups dropped. The age range of 45-55 years old reported 13% who signed an agreement, and for 55 years and above, the figure registers at less than 5%.
The polls echo a current trend of young American couples getting prenups. But the reasons have changed. Instead of trying to protect one’s partner’s wealth, these prenups are shielding couples from taking on their partner’s debt. Younger Americans have accrued debt at historic levels, much of it coming from college loans and medical bills.
In a state with community property, like California, not only are income, property, and assets acquired during the marriage split 50/50 in a divorce, but debt is also. That means both spouses are responsible for the debt and vulnerable to creditors collecting debts by seizures of community property and wage garnishments.
Prenups have become a way to insulate partners from the massive and vicious American debt-collection system. But what constitutes a prenuptial agreement?
The Essential Elements of a Prenup
Individuals can draft their own prenuptial agreements in California, but to ensure it meets all the requirements dictated by the state’s Uniform Premarital Agreement Act (UPAA), it is best to find legal counsel to guide the process.
According to the UPAA, the five essential requirements of a premarital agreement are:
- A written contract—a verbal agreement or cocktail napkin will not do
- Both spouses must come into the agreement voluntarily
- A complete and fair accounting both spouses’ disclosed income, property, and debts
- A document that is not skewed toward one party or extremely unjust or unconscionable
- A signature from both prospective spouses before the marriage and witnessed by a notary public
The document should be given an effective date coinciding with the marriage date. Both spouses should be given at least one week to find independent legal counsel to review the terms before signing.
Provisions can be put in place that allows the terms of the agreement to change, or the agreement could be after a designated date or after a certain amount of time.
The stark truth is more than 40% of first marriages, more than 60% of second marriages, and more than 70% of third marriages end in divorce. The words prenuptial or postnuptial agreement does not exactly stir romance, but it can also ease both spouses’ minds to be prepared for any outcome of a marriage’s future.
The No-Nos of a Prenup
There are certain elements that should not be included in a prenup because the inclusion could invalidate it. These include:
- Any information concerning child custody or child support
- Any verbiage that alludes to a spouse performing an illegal act
- Any spousal support requirements if the spouse decides not to contact independent legal counsel before signing
- Any deceptive or exploitive terms that are deemed unfair or unjust
- Any relationship requests or demands of a spouse that are not of a financial matter like requiring a spouse change their appearance or lose weight
A prenup can be invalidated if:
- A spouse violates the terms of the agreement
- The document was not properly drawn up or not signed
It is possible to change a prenup after marriage, but both spouses will need to agree to any changes or adjustments to the terms. A postnuptial agreement that works the same as a prenup can also be drawn up with the consent of both parties.
If you are hoping to get a prenuptial agreement, get started today by contacting us online or calling 949-438-3886.