Changing Law on the Prenuptial Agreement

More couples are marrying later in life, either the first, second or, even, third or fourth time. These husbands and wives to be are entering marriage with assets, children or both and there is increasing concern over what will happen should the marriage end in divorce.

A prenuptial agreement is, in theory, a contract which sets forth the property and/or alimony each spouse will receive in the event of divorce. The phrase “in theory” is added because prenuptial agreements are a minefield of uncertainty. Under Florida’s old law, there were a host of reasons for challenging a prenuptial agreement which could result in getting the agreement thrown out of court.

Florida recently adopted the Uniform Premarital Agreement Act, which makes it far more difficult to challenge a prenuptial agreement. The Act, which went into effect last October, eliminates the requirement that the agreement must be fair and reasonable to both parties. Under the new law, one spouse can leave the other spouse with nothing- a previously unheard of outcome- provided that certain requirements are met.

The new law allows parties to contract away certain rights which previously could not be addressed in a prenuptial agreement, such as temporary support (alimony during the divorce) and temporary attorneys fees. The act also allows parties to include almost any requirement in a prenuptial agreement- from providing life insurance to prohibiting one spouse from gaining weight - except those things which are against public policy, such as waiving the right to child support.

The law now requires agreements to be in writing. It goes without saying that any contract should be in writing, but those who rely on the spoken word should be forewarned that, under the new law, there is virtually no chance that the oral agreement will be enforced.

While it would seem that the new Act would make the prenuptial drafting process less cumbersome and costly, the result is quite the opposite. Under the old law, parties could avoid full disclosure of all assets by proving that they made “adequate disclosure” to one another. This left courts with the daunting challenge of figuring out how much disclosure was adequate. The new law allows one party to waive any disclosure of the assets of the other party. While this may not be advisable, it is permissible, provided that it is spelled out clearly in the agreement.

A party can no longer challenge a prenuptial agreement by claiming that the other party did not disclose assets. In other words, the burden is now on the party, or, rather, his or her lawyer, to find out about all assets and their fair market value before his/her client signs the agreement. There is an increased cost associated with determining, rather than estimating the value of each property, account or other item of value, not to mention locating and identifying these assets. But the new law can adversely affect the less wealthy spouse to be if he/she fails to insist upon all financial disclosure prior to signing. The message is clear: find those assets before you sign.

The new law and a well drafted agreement may favor the party who owns multiple properties and/or accounts. But there is a catch. The agreement must clearly spell out that the spouses to be are waiving their right to financial disclosure. If this waiver is not clearly stated, or the waiving party does not want to wave full disclosure, it is extremely important that the agreement contain an inventory of each and every property, account or other asset and their fair market value. If it is not on the list, it is not included in the agreement. This also includes the passive appreciation of these assets. The agreement must clearly spell out that the non-owning spouse waives all appreciation and list the assets to which this waiver applies.

Keep in mind that this law applies to an agreements signed after October 1, 2007 and that it does not apply to any agreements signed before this date. This does not prevent any couple who signed a prenuptial agreement before October 1 from reviewing and revising the agreement. If you have a prenuptial agreement, you may want to check with your attorney and find out whether it’s as strong as you intended for it to be.