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David Centeno

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10 Common Prenup Pitfalls

Posted: 11/04/2013 6:50 pm

Signing a prenuptial agreement can be emotionally challenging, but finding out your prenuptial agreement is invalid (if you ever decide to untie the knot) will be more than just emotionally challenging. It may prove to be financially challenging as well. Many people, including celebrities and other high net worth individuals, have had their prenuptial agreements invalidated due to simple mistakes. Here's a list of the 10 most common mistakes made by couples when executing a prenuptial agreement:

1) No Independent Legal Representation - Both parties must have independent and separate attorneys. Each attorney will make sure his/her client fully understands the prenuptial agreement and the signing is done voluntarily. One of the most famous divorces involving the invalidation of a prenuptial agreement is that of Steven Spielberg and Amy Irving. They did have a prenuptial agreement, but it was written on a napkin. Yes, a napkin! What was Steven Spielberg thinking? Furthermore, neither party had legal representation. The agreement was thrown out by the Court and Steven Spielberg was ordered to pay his ex-wife $100 million. Ouch.

2) Duress - If one party is pressured into signing the agreement or had no mental capacity to sign the agreement (such as been drunken or under the influence of drugs), the agreement will likely be invalidated by the Court if challenged. The divorce of Mr. William Holder and Mrs. Nataliya Holler is an excellent case-law example highlighting this point. The facts were as follows: the visa of the then pregnant Ukrainian wife-to-be (in United States) was about to expire and her American husband-to-be demanded that she sign the agreement if she wanted to get married before her visa expired. At their divorce, the Family Court of South Carolina disregarded the prenuptial agreement finding that it was signed under duress amongst other factors.

3) Too Soon Before Wedding - Couples frequently postpone the signing of their prenuptial agreement to the very last minute. In many cases, the invitations have already been sent out when the prenuptial agreement is signed. In the event of divorce, one party can successfully argue he/she was coerced into signing the agreement. This can be avoided if the agreement is signed at least one to three months before the wedding date. The spouse-to-be should be given enough time to deliberate on the provisions of the agreement before signing it. In the above example (of the divorce of William and Nataliya), another reason why their prenuptial agreement was invalidated on the basis of duress is that it was signed just 6 days before the wedding.

4) No Full Disclosure - When executing a prenuptial agreement, if one party doesn't fully disclose all of his/her assets, properties and debts, the Court may invalidate the agreement. Therefore, make sure you and your spouse-to-be fully discloses all relevant information in the prenuptial agreement.

5) Child Support Provisions - A prenuptial agreement cannot have any provisions relating to the children of the marriage, such as custody and child support. These sorts of agreements are deemed to be counter to public policy and thus unenforceable. The Court will disregard all such provisions and pass judgment in the best interests of the children. The Court may also decide to invalidate the whole agreement if such provisions are present.

6) Unconscionable - Although it is acceptable for a prenuptial agreement to be biased towards one party, it cannot be so one-sided that it renders the prenuptial agreement unconscionable. Unconscionable is often defined as "shocking the conscience." If your prenuptial agreement is unconscionable, it will likely be deemed unenforceable by the Court. Also, if enforcing your prenuptial agreement results in one party becoming dependent on State welfare, the court may tweak the agreement to take that person out of welfare. Here again, the divorce of William and Nataliya is a good example. The third reason the court invalidated their prenuptial agreement is because the Court deemed it to be unconscionable.

7) Unenforceable Provisions - If your agreement has any unusual provisions in it, such as one person should do the dishes or he/she should maintain a certain hair color, those provisions (and usually those provisions only) may be deemed unenforceable. If such provisions are present, they may weaken the whole agreement.

8) Oral Agreement - Courts disregard oral prenuptial agreements except in select circumstances. The prenuptial agreement should be in written form. Ideally, you should sign four copies: one copy for each partner and the other to be kept with each party's independent attorney.

9) Ambiguous Writing - The enforceability of any legal agreement depends on the exact wording of the agreement; a prenuptial agreement is no different. If your agreement is not clear or has ambiguous wording, it may get successfully challenged in court. You should seek counsel of a competent attorney to help you draft a sound agreement.

10) Promises made, but not kept - Don't make promises to your significant other that you are not willing to keep. If you make such promises, the Court may interpret that as fraud and throw out the prenuptial agreement. For example, in the divorce of millionaire Peter Petrakis and Elizabeth Petrakis, Elizabeth claimed that her husband-to-be promised to tear up the agreement as soon as their first child is born. The court ruled that Elizabeth had been "fraudulently induced" to sign the agreement and hence, the agreement was invalid.

These are some of the most common pitfalls of a prenuptial agreement, but please remember it is not meant to serve as an exhaustive list. As always, seek the advice of a competent attorney before executing a prenuptial agreement.

 

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