Jay DeVoy is an attorney focusing on First Amendment issues and regular contributor to the award-winning law blog The Legal Satyricon.
You don’t bring a knife to a gun fight. Cliché aside, the reason is obvious: If you do, you’re dead. The same has sadly become true of modern marriage, where one cannot simply marry for love, but must date and couple defensively, paying attention to her family background, spending habits, and past relationships. These have always been factors in mate selection, but with divorce increasingly easy and now funded by outside parties, such considerations are disproportionately important.
Prenups are unromantic. They damper the fire two people have for one another, and acknowledge that maybe true love isn’t forever — or isn’t so true after all. Bad things happen that can ruin a marriage, such as illness or family deaths that nobody could predict or prevent. Given the life-ruining consequences of divorce, a prenup is an insurance policy against catastrophe. To some, this is preaching to the choir. For others, this should give reason for pause and careful consideration of taking this step before committing to marriage.
Whose Property Is It?
One of the most important considerations in a marriage is property distribution. The states are not in concert on this topic, and there are two main methods of property collection. The first is Common Law (“CL”), which assumes that spouses keep their earnings and other property acquired during marriage for themselves unless acquired jointly. Community Property (“CP”) states – Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – assume that all income and other property acquired by a spouse during marriage, unless demonstrably separate (such as a gift to the husband left by his father’s will), becomes part of the marital “community” in which each spouse has an indivisible half share. Confusing yet? The metaphysics have just begun.
If you move states, property generally is treated under the laws where it is acquired. For more complex property, such as bank accounts and savings accounts, the amount that counts as CL or CP is determined by how much of its contents were added in each jurisdiction. Where that is not traceable, it is measured by time. If you have a business, your spouse may have a share of that in California, depending on how much time and energy you and the “marital community” invested into it. While the Van Camp and Pereira tests are used to determine how the business is valued and distributed, courts have considerable discretion in using these tests. While Pereira gives the parting spouse a rate of return on the business’ worth and Van Camp values his or her contribution to the business versus how much a paid employee would have commanded in the marketplace, giving the difference in value to the spouse. In either test, the outcome is the same: A chunk of the business goes to the non-owner spouse. Entrepreneurs should consider this before marriage.
Community property also lends itself to a lot of other petty little power struggles. If you both are gifted a valuable heirloom in a CP state and have an undivided half interest in it, get ready for it to be sold at auction to capture the half value and make it divisible. After all, it’s only fair! </whine>
Process and Substance
Each state governs prenups individually. Some cohesion exists, however, among the states to adopt the Uniform Premarital Agreements Act (UPAA). Nevertheless, this is model legislation and each state likely has provisions that reflect its public policy. ”Public policy” sounds like a joke, and often was mocked in law school, but there are palpable differences in the laws of California and, say, Virginia, for this very reason.
Generally, prenups can be made about any terms the parties want. One risk of making the agreement too specific, though, is that not fully complying with it can be used against you. By failing to meet a term, however small, the other party can claim that you’ve waived it. Whether that claim has merit or would succeed is another matter, but there is a basis for the soon-to-be-ex spouse to begin attacking entire provisions of the agreement. I do not practice in family law, but as always, hit the highlights, keep it simple, and move along.
One advantage of the UPAA is that, depending on how a state has altered it, there is no longer an inquiry into the substantive fairness of a prenuptial agreement. Substantive fairness looks to whether the terms of the agreement are fair to the spouses – even if not totally equal – and had independent counsel, acted based on duress, had the sophistication to know what was being forfeited, and fully disclosed their respective assets and liabilities. Under the UPAA, if the parties agreed to the prenup’s terms, it will stand, much like a commercial contract. The problem with assuming this is the case in all states, though, is that some states may have modified the UPAA to require an inquiry into the substantive fairness of a prenuptial agreement, or allow the complaining spouse to present evidence that it was substantively unfair. Where the UPAA has not been adopted, this inquiry into substantive fairness may still be in effect.
Even without an inquiry as to substantive fairness, a prenup may be set aside for failing to adequately provide for a spouse. First, if the terms of the prenup are “unconscionable,” the agreement will be set aside and not enforced, either in part or entirely, depending on the rules of your jurisdiction (some courts might “blue line” the agreement, striking the unconscionable provision to keep the remainder of the agreement viable). Though better understood through case law, the free legal dictionary defines unconscionability as:
Unusually harsh and shocking to the conscience; that which is so grossly unfair that a court will proscribe it.
When a court uses the word unconscionable to describe conduct, it means that the conduct does not conform to the dictates of conscience. In addition, when something is judged unconscionable, a court will refuse to allow the perpetrator of the conduct to benefit.
In contract law an unconscionable contract is one that is unjust or extremely one-sided in favor of the person who has the superior bargaining power. An unconscionable contract is one that no person who is mentally competent would enter into and that no fair and honest person would accept. Courts find that unconscionable contracts usually result from the exploitation of consumers who are often poorly educated, impoverished, and unable to find the best price available in the competitive marketplace. (source.)
Under the model UPAA, this standard for unconscionability is ascertained at the time the spouses enter into the prenuptial agreement. States may have their own modifications to this rule. This creates an interesting problem for couples-to-be: How do you know what’s unconscionable at the time you’re making the agreement? Most divorces take time to occur, and the court – as well as spouses – can only look backward to see what was or was not unconscionable in the past. In the present, better-off spouses are left to guess what will be unconscionable in 3, 5, 10 or 20 years, leading to a dulling of prenuptial agreements in step with the increasing effeteness of societal norms. In some states, couples opt to seal their divorce records and keep the details of their split off the record, making it difficult to determine what courts have held to be unconscionable in the past with any accuracy.
Other conditions for setting aside a prenuptial agreement include nondisclosure and putting a spouse on public assistance. A spouse’s failure to disclose his or her assets – without obtaining the other spouse’s waiver, meaning that the spouses do not have to make such disclosures – is a basis for the prenup to be set aside completely under the UPAA, and be given no effect in determining the former spouse’s economic rights. Similarly, a prenup can be set aside and rendered ineffective if there is no provision for alimony – though alimony can be waived by the spouses in the agreement – and the agreement’s result is the negatively affected spouse becoming eligible for public assistance. As with all other provisions, individual states may have modified these portions of the UPAA.
Conclusion
Getting a prenup that will stand up to challenges by a woman scorned and court that often features elected judges is not as easy as signing on the dotted line. If parts of this article seem scary or confusing, it’s because they are. While society views marriage as disposable, with more than half of unions ended in divorce and 70% of divorce petitions filed by women, the legal system treats it as a serious and solemn bond – from an economic standpoint.
I’m of the opinion that a hit to one’s libido is worth having an intact life if the worst case scenario should come to pass. Beyond the inherent unsexiness of prenups, they’re expensive. They require asking around for a good lawyer, paying several hundred dollars an hour, and potentially even having your prospective spouse represented by counsel to ensure a fair, thoroughly negotiated agreement. But money and discomfort accepted now can prevent bigger, costlier problems in the future.
