1 Introduction

• Library: Premarital Agreements: Drafting and Negotiation (ABA) (2017 Ed.)

1 Introduction

§1.01 Definitions and Terminology

A premarital agreement is a contract between prospective spouses made in contemplation of marriage.¹ Older cases generally use the term "antenuptial agreement" or "prenuptial agreement." Some statutes refer to them as marriage contracts or marriage settlements.² Modern authorities generally use the term "premarital agreement," consistent with the terminology of the Uniform Premarital Agreement Act (UPAA) and the Uniform Premarital and Marital Agreements Act (UPMAA).³

A postmarital agreement is "an agreement entered into during marriage to define each spouse's property rights in the event of death or divorce."⁴ In some states, such an agreement can also fix or waive spousal support.⁵ Some authorities call an agreement of this type a "postnuptial agreement." The Uniform Premarital and Marital Agreements Act (UPMAA) uses the term "marital agreement."⁶ Unlike a marital settlement agreement executed incident to an existing or planned marital separation, a postmarital agreement is an agreement between spouses who have no present intent to separate or divorce.

§1.02 Overview

This book focuses on the following aspects of representation regarding a premarital or postmarital agreement:

• The law of validity and the steps to create a valid agreement;
• The ethical components and the practical techniques of negotiating the terms of the agreement;
• Postmarriage issues; and
• The content of the agreement and drafting techniques to carry out the objectives of the parties.

Part I of this book covers the law relating to the creation of a valid agreement. Chapter 2 summarizes the criteria for validity of premarital agreements, and Chapter 3 summarizes the criteria for validity of postmarital agreements.⁷ These chapters include a discussion of the Uniform Premarital and Marital Agreement Act. Chapter 4 provides an extended treatment of the elements of a valid agreement and the legal theories that have been used to attack validity. For example, Chapter 2 identifies voluntariness as a requirement for validity of a premarital agreement in every state, and Chapter 4 discusses, in detail, the case law interpreting voluntariness and the related concepts of duress and undue influence. Spousal support and lawyers' fees are covered separately in Chapters 5 and 6. Even when a premarital agreement is valid, a court may separately consider validity of specific terms addressing these issues.

Parties to a premarital or postmarital agreement sometimes want to include terms that are not enforceable or the enforceability of which is impractical. Chapter 7 briefly addresses some such terms—for example, terms regarding children, including parentage and custody. Chapter 7 also addresses financial terms to benefit children as well as some nonfinancial issues regarding the ongoing marriage.

Chapter 8 discusses a number of issues that can arise after the marriage. For example, a spouse may not comply with an obligation to make cash gifts or a transfer of title during the marriage, make disadvantageous use of his or her assets, or leave employment in the misguided belief that the other party will be more generous than the agreement requires. An understanding of the ways in which postmarriage conduct can affect a party's rights can aid the lawyer at the drafting stage by suggesting terms to better protect the client. Such an understanding can also suggest advice the lawyer should consider giving the client to secure the rights he or she bargained for.

Part II of this book focuses on the process of negotiating and drafting the agreement. Chapter 9 delves into a variety of ethical issues presented in the drafting and negotiation of premarital and postmarital agreements, and Chapter 10 covers the more practical aspects of negotiating the terms. Chapters 11, 12, and 13 are concerned with the text of the agreement. Chapter 12 consists of the text of a model title controls agreement with discussion of each part of the agreement. The discussion is designed to aid the drafter in tailoring the agreement to the needs of the client. Chapter 13 provides alternative model terms for an agreement under which parties share the fruits of their labor.

§1.03 Role of counsel

This book is written for the lawyer hired to negotiate and draft a premarital or postmarital agreement.⁸ The goals of the lawyer for the proponent will generally include the following:

• An agreement that serves the interests of the client by meeting his or her need to protect property rights and income from a spousal claim without creating unnecessary antagonism that may alienate the other party;
• An agreement that will withstand an attack on validity after death or dissolution;
• An agreement that a putative opponent will be discouraged from attempting to have declared unenforceable; and
• An agreement that clearly and understandably defines the parties' rights and obligations upon death or dissolution.

It is a common misconception that premarital agreements are easy to challenge successfully. There are many reported cases involving challenges to validity. Few were successful at the appellate level. The threshold for validity in most states is quite low. However, the prevailing proponents were forced to litigate the validity of their agreements through an appeal, incurring the cost of litigation and the risk of failure. Unreported are the claims that settled with the proponent making financial concessions and the adverse results that were not appealed.

The lawyer hired to draft an agreement has an opportunity. Careful drafting, attention to the procedural steps leading to execution, and appropriate advice can significantly reduce the likelihood of a later challenge to validity as well as the risk that such a challenge will be successful.

The only realistic opportunity the lawyer for an economically weaker party has to achieve a good result is at the negotiation and drafting stage. It generally takes a combination of egregious circumstances to persuade a court to hold a premarital agreement invalid.⁹ Even when there are egregious circumstances, there can be no assurance a court will invalidate the agreement.¹⁰ The presence of counsel for a weaker party before execution dramatically reduces the likelihood a court will declare an agreement invalid.¹¹ Assuming a court will someday relieve an unhappy party of the consequences of a foolish bargain or a badly drafted agreement is folly.

§1.04 History of the Law of Premarital Agreements

(a) Premarital Agreements Before Posner v. Posner

Historically, public policy favored premarital agreements when fairly made because they were thought to be conducive to marital harmony by enabling future spouses to settle, prospectively, property rights arising upon the death of a spouse. Courts upheld premarital agreements as long as the provisions were fair and reasonable, but they limited enforcement to those agreements made in contemplation of the death of a spouse.¹² Courts generally refused to enforce agreements that determined property and support rights upon divorce. These agreements were thought to destabilize the institution of marriage by making divorce too easy, and thus were contrary to public policy.¹³ Moreover, because the state is a third party in actions relating to the marital relationship, courts held that a prospective wife, who was considered to be in an unequal bargaining position, should not be bound by a premarital waiver of support that could leave her a ward of the state.¹⁴

(b) Posner v. Posner and Premarital Agreements at Divorce

In 1970 the Florida Supreme Court, in Posner v. Posner,¹⁵ held that premarital agreements determining disposition of assets upon divorce were no longer void ab initio as contrary to public policy. The contemporary view is that premarital agreements that settle questions of property and support rights upon divorce promote and facilitate marriage rather than encourage divorce. As one court observed:

This society's staggering divorce rate can only place any reasonable person on notice that divorce is as likely an outcome of any given marriage as a permanent relationship. Modern laws that allow alimony to be awarded in no-fault divorces, and that provide for the equitable distribution of all property acquired by joint efforts during the course of a marriage fulfill a

...