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Procedures For Signing Premarital Agreements

Previously, we have discussed judicial attitudes toward premarital agreements. In short, premarital agreements are favored by modern law, but only when they were signed using procedures that the court sees as fair.

How do the courts define a fair procedure? Three factors are important. First, the parties must sign voluntarily and not under unreasonable pressure. To take an extreme example, a premarital agreement signed under a threat of physical violence would certainly be invalid for duress. Other improper acts include threats to falsely accuse a spouse of a crime or to interfere with a spouse’s immigration status.

Threats make an agreement procedurally unfair only if the threats are improper. One recurring issue has been whether the agreement is procedurally unfair if one spouse threatens not to marry the other unless an agreement is signed. But no one is required to marry anyone. A threat to cancel an engagement unless a premarital agreement is signed is therefore generally not viewed as wrongful.

Second, while the parties must be free to make a voluntary decision whether to sign the agreement, the power to make a voluntary decision does not mean much if a spouse lacks access to relevant information. In particular, since almost all premarital agreements require the parties to give up rights in one another’s property, it is essential that each party have a reasonably accurate understanding of how much property the other owns.

It is not absolutely necessary that the couple engage in financial disclosure. Actual knowledge of the other spouse’s assets, from any source, is sufficient to avoid procedural unfairness. But disputes over knowledge tend to turn into “he said, she said” issues over who knew what, and judges will sometimes find a lack of knowledge in these cases, especially if the agreement is substantively unfair.

A better approach is to include, as appendices to a premarital agreement, full disclosure by both parties of their assets and incomes. When financial disclosure is attached to the agreement, it is clear to everyone that both spouses had sufficient financial information to make an informed and voluntary decision whether to sign the agreement.

Third, even if a spouse is free to make a voluntary decision and has full knowledge of the relevant financial facts, a spouse must also have full knowledge of what his or her rights would be without the agreement. These rights are not common knowledge. The best way to ensure that both parties know the relevant law is to make certain that both parties are represented by attorneys. Representation by attorneys is also a good way to avoid other problems, as spouses who are represented by counsel are less likely to be influenced by improper threats or pressure.

It is not absolutely necessary that both parties have counsel. In particular, if a spouse is advised to retain counsel and refuses, the refusal does not prevent the parties from signing an agreement. Courts are reluctant to allow a party who refused to obtain counsel to claim ignorance of the law. But again, questions about whether a spouse was advised to seek counsel tend to turn into unpredictable “he said, she said” disagreements.   The prudent option, when a spouse does not have counsel, is to state expressly in the agreement that the spouse was directly advised to retain counsel and voluntarily chose not to do so.

To summarize, if you are the spouse who desires an enforceable premarital agreement, there are three basic procedural requirements. You must avoid improper threats or pressure, you must disclose your assets and income in a form you can later prove (ideally in an appendix to the agreement), and you must make certain that your future spouse has counsel (or at the worst, expressly waives counsel in the agreement).