High Asset Divorce: Prenuptial & Postnuptial Agreements
Individuals with significant assets coming into a marriage may want to protect these assets in the event of a divorce. Fortunately, the law allows couples to enter into a contract prior to or even after marriage to address the disposition of assets should the marriage end in divorce.
A prenuptial agreement is a certain type of contract that couples may enter in contemplation of marriage to address how to classify or distribute assets in the event of divorce. A postnuptial agreement works just like a prenuptial agreement except the parties enter it after they have been married.
Courts take a cautious view with respect to prenuptial and postnuptial agreements. On the one hand, courts favor individuals resolving disputes amicably in advance. On the other hand, courts worry that the spouse with fewer assets coming into the marriage may be irreparably and unfairly harmed by a one-sided prenuptial agreement.
To address these issues, the law has certain requirements before a court may enforce a prenuptial or postnuptial agreement. First, both parties must make a complete and full disclosure of all assets and liabilities, all income and expenses, all relevant financial information. Second, the agreement must be made freely and willingly under conditions that allow for sufficient investigation and reflection. So, presenting your spouse with a prenuptial agreement hours before the wedding will generally send a bright red flag to the court. Third, each party must have the benefit of separate counsel prior to and at the time of entering the prenuptial agreement. And finally, the terms of the agreement must be “not unconscionable,” an odd legal phrase that means it cannot be so one-sided that it can be considered completely unjust. However, a one-sided agreement can be enforceable under the right conditions.
The flip side of enforcing prenuptial and postnuptial agreements is trying to “break” these agreements at the time of divorce because they are somehow unconscionable. Well-crafted prenuptial and postnuptial agreements can be difficult to set aside, but it can be done under the right circumstances with a skilled advocate representing your interests.