Articles

Premarital Agreements—For Better or Worse

Premarital agreements are legal contracts by which parties entering into marriage attempt to settle the interest of each in the property of the other during the course of the marriage and upon its termination by death or divorce.  Indiana courts will generally enforce premarital agreements as long as they are freely entered into without fraud, duress or misrepresentation and are not, under the particular circumstances of the case, unconscionable.

The basic requirements for premarital agreements are set forth in Indiana’s Uniform Premarital Agreement Act.  The agreement needs to be in writing and signed by both parties.  The Act acknowledges the parties’ right to contract with respect to buying or selling property, modifying or eliminating spousal maintenance, making a will or trust and any other matter not in violation of public policy or criminal law.  A premarital agreement may not adversely affect child support.

Since premarital agreements are favored by the courts, it is important to carefully read and fully understand such agreements.  A premarital agreement is enforceable even though it leaves most of the assets to one spouse.  However, a premarital agreement may be unenforceable if it would leave one spouse in the position of being unable to support himself or herself.

A premarital agreement is construed in accordance with general contract principles.  A court first considers the parties’ intent as expressed in the language of the contract.  If the language is unambiguous, the intent of the parties will be determined from the contract.  If the language is ambiguous, then other evidence such as the parties’ statements could be sued to interpret the contract.  A contract is ambiguous only when reasonably intelligent persons would honestly differ as to the meaning of the contract terms.  A contract is not ambiguous merely because the parties disagree as to its proper construction.

Specifying the triggering events in a premarital agreement is also important in case of one spouse’s death.  Premarital agreements may provide that surviving spouses waive certain statutory rights provided upon the death of their spouse, such as the right to a spousal allowance and the right to elect against their spouse’s will.  Such waivers will be enforced with the agreement is clear that the spouse waived these rights.

The party who requests that the court invalidate a premarital agreement bears the burden of proving by a preponderance of the evidence that the agreement is invalid.  This is often a formidable burden as demonstrated by cases which have held an agreement valid even though the wife was given a list of her husband’s assets the day before the wedding, and another which enforced an agreement that the wife accepted the benefits of even though the wife was given only an asset summary by her husband.  Both cases reflect Indiana’s position that there is no current duty upon spouses to fully disclose the value of all of their assets.  However, full disclosure is the better practice.

It is essential that individuals considering a premarital agreement understand that the terms of the agreement will likely be enforced.  Carefully considering the consequences of the agreement before signing it should provide protection even if there is a change of heart.