Pre-Nuptial Agreement (Both Financially Independent) - Basic Terms

Pre-Nuptial Agreement (Both Financially Independent) - Basic Terms

This is the part where I say that I'm not your lawyer. I don't represent you. This is not legal "advice," but merely legal "information." So, you cannot and should not rely on anything said herein as "advice," and you should neither take or refrain from taking any action based on anything contained herein.

Now that that little formality is out of the way, we can begin taking a look at the kinds of terms that's the stuff of pre-nuptial agreements between persons who are both financially independent.

1. Recitals. The recitals are generally not contractual in nature. Recitals can be thought of conceptually as "representations." A party to a contract can "rely" on the recitals as a basis for entering into the contract, but they recitals are not actually a "promise" creating "duties" or "rights." Nevertheless, the recitals generally place the entire agreement into context. So, when a court or judge is reviewing the agreement (in the event of litigation), the recitals can often shape the direction of a court's analysis of the agreement (given the circumstances under which it came into being).

Whereas, each of the Parties has assets and earnings, or earnings potential, sufficient to provide for his or her own maintenance and support in a proper and acceptable standard of living without the necessity of financial contributions by the other, and each of the Parties is aware of the hazards and risks of the continuance of earnings and of the changes in assets and liabilities of the other and of the possibility of substantially changed financial circumstances of the other with the result that the earnings or net worth of one party is or may be substantially different from those of the other party.

2. Complete Financial Disclosure: Most states require "complete" financial disclosure during a divorce action. In turn, because the pre-nuptial agreement can be understood as a settlement of the property rights of the parties in advance of an action for a divorce, it only makes sense that all parties are entitled to "complete" financial disclosure in deciding how to settle their financial affairs ahead of time. Yet, unlike an action for divorce, a pre-nuptial agreement is not "ongoing." Once the agreement is agreed-to, the need for disclosure stops. Lastly, "fraud" is a basis to invalidate any agreement (including a pre-nuptial agreement). Sometimes, parties like to cling onto the false hope of what lawyers call "sandbagging." This is when the husband, for example, "knows" that the disclosure made by the wife on paper is not accurate. He knows this because he does all of the wife's accounting. He nevertheless enters into the pre-nuptial agreement with her, thinking (falsely), "If the pre-nup ends up benefiting me, I'll enforce it against her; but if it ends up screwing me, I'll argue fraud!" Sorry, the case law doesn't allow for sandbagging, and in case there was any doubt, lawyers are very careful to clearly crystalize that the parties intend to be bound and put all excuses regarding the "enforceability" of the contract aside.

Each party has been appraised of the right to obtain further disclosure of the financial circumstances of the other party, is satisfied with the disclosures made and has directed that there be no further disclosure. Each party expressly waives the right to any further financial disclosures and acknowledges that said waiver is made with ample opportunity to seek independent legal counsel (and a wholly independent and voluntary election to either do so or forego from doing so) and knowledge of the legal consequences thereof, and that neither party properly cannot, and shall not, subsequently assert that this Agreement should be impaired or invalidated by reason of any lack of financial disclosure or lack of understanding or of fraud, duress, coercion, mistake, procedural or substantive unconscionability.

3. Property: Think of property as the water that's already occupied the space in a bathtub. Income is the water that's running; property is the water that's already there. Generally, people who have pre-nupts want to keep their stuff separate. Otherwise, they wouldn't care about the default rules of the marriage contract. Yet, sometimes, there are instances where property is intended to be owned jointly. Even if property is not intended to be owned jointly, there needs to be a tie-breaker rule in order to incentivise people to determine whether property is separate, otherwise, it will be joint.

Present Property. All of the property, real, personal and mixed, which each party has previously acquired and now holds in his or her name or possession or control (described in more detail in Exhibit A attached herein) shall be and continue to remain the sole and separate property of that person, together with all future appreciation, increases and other changes in value of that property and irrespective of the contributions (if any) which either party might have made or may hereafter make to said property or to the marriage, directly or indirectly.

Future Property. All of the property, real, personal or mixed, which each party may hereafter acquire in his or her own name or possession shall be and remain the sole and separate property of that person, together with all future appreciation, increases and other changes in value of that property and irrespective of the contributions (if any) which either party may make to said property or to the marriage, directly or indirectly.

Joint Property. Any property, real, personal or mixed, which shall now or hereafter be held in the joint names of the Parties shall be owned in accordance with the kind of joint ownership as title is held, and if there is no other designation, shall be presumed to be held equally by the Parties with such survivorship rights (if any) as may be specifically designated by the title ownership or as may be implied or be derived by operation of law other than the operation of the so-called equitable distribution law or community property or any similar law of any jurisdiction involving marital property, community property, quasi-community property or any other form of marital or community property.

Tie-Breaker Rule: (a) Individual Ownership. If property of any kind has no express title designation, but the ownership or title of such property can be determined through the default rules of the common law (e.g., claims for causes of action for unjust enrichment, copyrights to authored works, etc.), then the party who would lawfully be deemed the owner of such property (as if the Parties were unmarried) shall be deemed to have exclusive title to such property, and such property shall be deemed the separate property of such party. (b) Joint Ownership. If property of any kind has no express title designation, but the ownership or title of such property cannot be determined through the default rules of the common law (e.g., personal property in the joint possession of the Parties that was neither a gift to one party exclusively, nor the separate property of one of the Parties), then such property shall be deemed jointly owned by both Parties, with the rights of survivorship thereto.

Debts. Neither party shall at any time contract any debt, charge or liability whatsoever for which the other party may be or become liable, except as they may hereafter otherwise agree in a writing signed by both Parties. If any party hereto desires to mortgage, pledge, hypothecate, sell, exchange or convey all or any portion of his or her separate assets, the other party shall join in such deed or instrument of conveyance or mortgage as may be necessary to make the same effectual; provided, however, that neither party shall be liable in any manner for the indebtedness of the other, nor shall either party be obligated under this paragraph to join in any instrument which would cause either party to be so liable.

Equitable Distribution. Other than with regard to the obligations arising from this Agreement, and except as otherwise expressly provided herein, each party hereby forever releases and discharges the other party from any and all claims, causes of actions, suits, demands, or rights, of any and every kind and nature, in law or in equity (including, but not limited to, claims for equitable distribution, a distributive award, or claims against the separate property of the other party), which he or she now has or may hereafter have, whether known or unknown, suspected or unsuspected, for any reason whatsoever against the other, relating to, arising out of, or having any connection whatsoever with, the “marriage” (i.e., the legal and contractual marital relationship) between the Parties; provided, however, that nothing herein contained shall be deemed to prevent either party from enforcing the terms of this Agreement or from asserting such claims as are reserved by this Agreement to each party against the estate of the other; provided, however, that the claims so asserted arise out of a breach of this Agreement.

4. Post-Nuptial Earnings: Remember, the water that's flowing into the bathrub is income. Unless your pre-nuptial agreement clarifies that "earnings" are also separate, then everyone's income goes into the same hodgepodge.

Any and all property, money, or things of value earned by either party in exchange for such party’s services or labor shall be the separate property of such party, together with all future appreciation, increases and other changes in value of that property and irrespective of the contributions (if any) which either party may make to said property or to the marriage, directly or indirectly.

5. Support & Maintenance: Support is money you give your spouse while you are still married. Maintenance is money you give your spouse when you are no longer married.

No Dependency. Unless otherwise agreed to in a writing signed and acknowledged by the Parties in the same manner required to record a deed conveying real property, the Parties shall not voluntarily cause their income to be reduced, and shall use their best efforts to remain employed or obtain employment commensurate with his or her education, experience, skills, and other qualifications; provided, however, that the foregoing obligation shall not apply to the Wife during: (a) the last six (6) months during her first pregnancy, and (b) the first six (6) months following her giving birth to her first child. Furthermore, neither Party will voluntarily cause himself or herself to become: (a) incapable of self-support, (b) require public assistance or become a public charge, or (c) earn income below the “poverty income guideline” or “self-support reserve” amount for a single person as reported by the United States Department of Health and Human Services. This Section shall not apply to any party who becomes permanently disabled with a serious disability (as defined under the law of Worker’s Compensation or the Labor Law), or is sixty two (62) years of age or older.

Spousal Support. To the maximum extent permitted and not expressly prohibited by law, each party irrevocably waives all rights to spousal support in any form, now and forever.

Spousal Maintenance. Each party irrevocably waives all rights to maintenance in any form, whether permanent, temporary, or otherwise, now and forever.

6. Estate Matters: Most states give spouses what's known as an "elective share" of a deceased person's estate. There are cases where, for example, the wife is dying from a terminal illness, and the husband is intentionally delaying the divorce. Why? Because if she dies "while they're still married," he may be entitled to one-third (1/3) of her estate, even if she intentionally left him out of her Will.

Estate Rights. Each party hereby releases, waives and relinquishes all rights and claims of every nature whatsoever in the property of the other or otherwise, now or hereafter acquired, and, without limitation, expressly forever waives all rights and claims which he or she may have or hereafter acquire, whether as the spouse of the other or otherwise, under the present or future laws of any jurisdiction: (a) to share in the estate of the other party upon the death of the other party; and (b) to act as executor or administrator of the estate of the other or as trustee, personal representative or in any fiduciary capacity with respect to the estate of the other. All rights which either party may acquire in the other’s estate by virtue of the marriage, and all causes of action and claims arising out of the wrongful death of a party are hereby waived by the other party.

7. Retirement Plans: This is a big one, especially for police officers and firefighters. The generous retirement packages given are attributable not only for the number of years worked, but also for the nature of the work (e.g., risking one's life). As a result, police officers and firefighters are usually furious about splitting their pensions or retirement plans down the middle, especially when they've been living like a hermit to accomodate the spending habits of their spouse during the marriage. Just like estates, ERISA allows for a waiver of retirement plan assets, but, "only between spouses." This one is tricky, because unlike New York's DRL Section 236, which allows for a pre-spousal waiver of a spouse's elective share, ERISA does not allow for people who are "not yet spouses" to waive their rights to something they do not yet have. Thus, any waiver of retirement plan assets must be done "after" two people are married and lawfully "spouses."

Retirement Accounts & Pensions. The Parties acknowledge that each shall hold all rights in his or her respective retirement accounts or pension plans as though unmarried and without any claim, in fact or law, which the other party may have therein; that each expressly waives all rights which may now or hereafter exist in the retirement accounts or pension plans of the other, including but not limited to preretirement benefits and joint survivor annuities or to be a participant or beneficiary in the retirement accounts or pension plans of the other or to require the consent of the other with respect to any right, option, distribution or benefit which a party may now or hereafter have or choose to exercise. It is the essence of this Agreement that after the marriage of the Parties and upon the request of either party at any time and from time to time, the other party, without charge, shall promptly reaffirm the foregoing and provide such papers and documents properly executed and acknowledged (in the same manner required to record a deed conveying real property) to carry out and implement the foregoing. Notwithstanding the foregoing, in the event that either party shall hereafter expressly designate the other party as a participant or beneficiary in any of the plans in accordance with the provisions of the retirement accounts or pension plans, said designations shall control. The designating party shall, nevertheless have the unrestricted right thereafter to designate a former beneficiary or successive beneficiaries without the consent of the other party.

8. Insurance: During a divorce, a court may ask one spouse to take out a life insurance policy, or to maintain health insurance (including dental, vision, mental, etc.) for the other spouse. Some states, New York included, require that the parties explicitly waive any right to have a court order the other party to maintain health insurance. So, a waiver of spousal maintenance may create needless complexities. The provision below is tailored towards health insurance only, although it can be modified for life insurnace as well. Indemnification takes away any point a court would accomplish in obligating a party to maintain health insurance coverage for the other party.

Health Insurance. Except as otherwise provided in this Agreement, neither party shall be obligated to purchase or maintain health insurance benefits for the benefit of the other party. Except as otherwise provided in this Agreement, if a court of competent jurisdiction orders the Husband to provide health insurance benefits for or to the Wife, then the Wife shall indemnify and reimburse the Husband for any and all insurance premiums and other related costs incurred in connection with the Husband providing the Wife with any such health insurance benefits and otherwise complying with such court order. Except as otherwise provided in this Agreement, if a court of competent jurisdiction orders the Wife to provide health insurance benefits for or to the Husband, then the Husband shall indemnify and reimburse the Wife for any and all insurance premiums and other related costs incurred in connection with the Wife providing the Husband with any such health insurance benefits and otherwise complying with such court order.

9. Gifts: When two people are married, they lovingly and selflessly pay for dates, run small errands, do small favors, and perform other services or make other payments for each other. Yet, the moment they get divorced, everyone turns into a CPA, combing through every little detail over the past 10 years to shove it in the other person's face, "Look how much I paid for you; look how much work I would do for you!" These next provisions put an end to that unproductive bickering in the event of a separation.

Services Deemed Gratuitous. Except as otherwise provided in this Agreement, any and all services provided by one party to either party shall be deemed a gift, and shall not be considered as performed or provided with the expectation of compensation.

Payments Deemed Gratuitous. Except as otherwise provided in this Agreement, any and all payments made to third Parties, or liabilities incurred as a result of making any payment on credit to third Parties, including without limitation, payments for household expenses or improvements, shall be deemed a gift, and shall not be considered as paid or incurred with the expectation of repayment or reimbursement by the other party.

Use of Certain Property Deemed Gratuitous. Except as otherwise provided in this Agreement, any and all use of any real property, motor vehicles, heavy machinery, appliances, or electronic devices, where either party has title or any rights or interest to shall be deemed permissive and gratuitous, and shall not be considered as a use permitted with the expectation of compensation by the other party.

Pre-Nuptial Agreement - Advanced Terms


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What Girls Said 5

  • Well I think that prenuptial agreement is a good thing. But I think it's better to apply for a lawyer with such matters. When I marry I will hire an online lawyer, they will help me with my marriage contract.

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  • Very informative!
    While nuptials are not my thing, and I feel like if you are going to enter into a marriage it is a jinks to have one, those are my opinions... and this mytake is centered around facts. I appreciate facts.

    Very interesting read, regardless of my opinions :)

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  • Having been divorced once, I fully grasp the age old saying "marriage is an institution".
    Therefore I support prenuptial agreements. The front and of marriage is love and starry eyes.
    Add back in the bed however if you have a misfortune of getting there is all business.
    Therefore one should protect his or her assets just in case.
    Drawing the terms of separation Makes for a peaceful divorce.

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    • The back end of it however*

  • The more I read about what marriage entails when it comes to property, earnings, etc, the more repulsed I get by the notion.

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  • Yikes... Props to lawyers for writing and reading things like this all day.

    I feel like I need to print this out, go over it again and start highlighting. I had no idea there's so much that goes into a prenupt. Thanks for taking the time to lay it out.

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What Guys Said 4

  • I guess there is a reason why only demons write contracts. In fact, I am convinced that all lawyers get sent to hell and they took over the place. Now it's filled with law books and contracts so long that nobody can even comprehend. Actual demons lost their legal battle and now trying for the appeal court in heavens.

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  • Too bad prenups are essentially worthless, the judge can throw them out any time he wants (which happens in every situation where you really need that prenup).

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    • If done correctly, they will hold. However, with a good lawyer, they will try to find every tiny little hole in your prenup... and if they find one, they can exploit it and potentially get it thrown out.

      However, if it is airtight with zero mistakes, there are not grounds for a judge to break a prenup. There literally has to be a very good reason for it to happen. They don't just break them for the fun of it.

    • @Mekkalyn unfortunately they do, as I have experienced first-hand.

      The judge can throw it out for any reason if he so desires (even if both the husband and wife have never ordered such a thing!).

      www.omaha.com/.../...9-5242-b428-1f907c5f37da.html

    • The link you cited to doesn't even present a case where a pre-nupt is getting tossed out or invalidated, unless you included the wrong link.

      It's showing a case where two people are still married, and medicAID is kicking in, and the state is lawfully going after the "spouse" in order to recover for expenses that medicAID paid for (as medicAID can do).

      There are a finite number of reasons a pre-nupt can be "tossed out," but whatever that reason is, it must be clearly stated "on the record" and consistent to established law. Otherwise, the entire decision is subject to appeal.

      When pre-nupts get "tossed out," and it's not because of legitimate fraud, then it's usually because a lawyer on one or both sides fucked up, or one or both parties were cheap or ignorant and thought, "You know what would be cool? If I play lawyer for a day and just wing it and draft my own pre-nupt without the help of a lawyer. I don't need a lawyer's help. Fuck overpriced lawyers."

  • Good article man but the best advice is not to get married. Some countries don't recognise pre-mumps. IT's a dangerous world out there if you are a man and want to get married!!

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  • Good read. I think Id only ever get married with a pre-nup :)

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