Prenuptial Agreement Guidelines

Prenuptial Agreement Guidelines

To get an idea of how courts may look at a prenuptial agreement, it may be helpful to examine a particular case as an example. In past court cases, the prenuptial agreement gave a disproportionately small amount to the wife, especially considering the substantial property and income of the husband. The husband did not make full disclosure of his financial situation to the wife, although she did know that he had substantial business and property interests. The wife also did not have the advice of independent legal counsel before she signed the agreement.

The court did not address the particular agreement, but sent the case back to the trial court with instructions for the trial court to review the case again considering the following criteria:

  • Does the agreement make fair and reasonable provisions for the spouse with lesser financial resources? If it is fair and reasonable, then the agreement is valid. Whether the agreement is fair and reasonable should be determined by looking at the parties' relative situations, such as their ages, health, experience in financial matters, property held by each, and the needs of each spouse. After a divorce, each spouse must be able to live in a similar manner to what he or she enjoyed before the marriage. The question of whether the agreement is fair and reasonable is determined with reference to the time at which the agreement was signed.
  • If the agreement is not fair and reasonable, then the court should ask if there was full disclosure of each spouse's financial situation and if each spouse had an understanding of her or his rights. If there was full disclosure and an understanding of rights, the agreement is valid.
  • If the agreement was not fair and reasonable, and there was not full disclosure, then the court should ask if each spouse had actual knowledge of the other’s property, or if he or she should have had a general knowledge of it. If he or she had, or should have had, such knowledge, the agreement should probably be declared valid.

As courts now consider the above points in many prenuptial agreement matters, they will also look at whether each spouse had competent and independent legal advice, although such advice is not absolutely necessary to declare the agreement valid.

The previous case is an example of how one state court looked at prenuptial agreements, but the same or similar factors are used in most states. For example, in an Ohio case, the wife voluntarily chose not to have independent legal counsel advise her about the prenuptial agreement. The Ohio Court of Common Pleas decided that her choice was irrelevant, that she must have legal counsel even if she did not want it (due to the size and complexity of the husband's estate), and that the prenuptial agreement was therefore invalid. In this case, one party signs a prenuptial agreement after declining legal advice, then uses her voluntary action to have the agreement set aside. This is a perfect example of how unpredictable courts can be.