The validity of a premarital agreement must be proven in court if it's relevant to the outcome of a contested divorce or probate proceeding. A contest can occur when one party, for example, desires spousal maintenance in divorce and challenges the premarital provision eliminating the other spouse's obligation to pay.
The best way to make sure a court will uphold the terms of a premarital agreement is to do your homework and make sure that every procedural and substantive step is in place and followed appropriately. First, a premarital agreement must be in writing and signed by both parties. Additionally, a prenup only becomes valid after the marriage takes place, so it doesn't apply to called-off engagements. According to the Texas Family Code, a premarital agreement is not enforceable if:
- One or both spouses did not sign the agreement voluntarily
- The agreement was unconscionable when it was signed, meaning a spouse was not provided a fair and reasonable disclosure of the property or financial obligations of the other party, did not voluntarily waive, in writing, the right to disclosure of the property or financial obligations of the other party, and didn't have adequate knowledge of the property or financial obligations of the other party.
As discussed previously, premarital agreements are a unique type of contract. One particular characteristic is that consideration per se (something of value given in exchange for a promise) is not required, as noted above, to bind the parties to the agreement. A binding contract allows the court to enforce it against the violation party. Still, many argue the promise to marry is adequate consideration when exchanging for a promise to sign a premarital agreement. With consideration satisfied, the remaining requirements for validity are the legal capacity to contract and voluntariness.
Legal Capacity to Contract
Does the person have a requisite legal capacity to enter a premarital agreement? If the premarital agreement is challenged in the parties' divorce, for instance, the court will look back to the circumstances surrounding the contract's execution.
A party to an agreement must have the ability to understand:
- Character and
- Effect of the agreement
He or she must be able to understand what signing the agreement reasonably will do in terms of limiting or waiving marital rights. The ability to understand the contract and actual understanding of the contract are two distinct concepts.
Contracting Must Have Been Voluntary
A contract must be voluntary. Premarital agreements are, by their very nature, prone to being executed under emotional circumstances. For some, marriage may not happen at all if the premarital agreement goes unsigned. Therefore, the courts look more closely at the requirement that it is voluntarily entered contract and not something else. Neither party can waive the provision of voluntariness.
While Sections 4.006 and 4.105 of the Texas Family Code do not define "voluntarily," courts have generally construed it to mean an action that is taken intentionally or by the free exercise of one's will." Martin v. Martin, 287 S.W.3d 260 (Tex. App.–Dallas 2009, pet. denied);
What does involuntariness look like? Ultimately, it means an individual was coerced into signing it. Coercion may be through:
- Undue Influence or
Factors Considered When Determining if Involuntariness Existed
One court in Moore v. Moore, 383 S.W.3d 190 (Tex. App.–Dallas 2012, no pet. h.) considered when determining whether any evidence of involuntariness existed:
- whether a party has had the advice of counsel
- misrepresentations made in procuring the agreement
- the amount of information provided, and
- whether information has been withheld
Undue influence means the individual is coerced into signing the contract by another's unlawful threat. Because of that threat, the weaker party had no alternative but to sign the agreement.
When undue influence destroys voluntariness, as the individual was deprived of any meaningful choice. The will of another effectively substituted his or her freedom of choice to decide whether to execute the agreement or not (usually the other party to the premarital agreement, but not always).
For instance, the parties' relationship may involve a weaker individual who is emotionally and financially controlled by a dominant partner. Or an overbearing parent who desires the premarital agreement. Undue influence is always something to look for among those in a close relationship such as:
- Coworkers and
- Two people planning to spend married life together
Fairness is Needed
Texas Family Code Section 4.006 requires that for premarital agreements to be valid, they must be fair both procedurally and substantively. To satisfy procedural fairness, voluntariness is needed. With substantive fairness, if the contract was unconscionable when signed, then it should be held invalid.
What does unconscionability mean in this context? An unconscionable agreement shocks the conscience or is expressly unconscionable, according to the Statute. The judge determines unconscionable as a question of law under section 4.006(c) under the Texas Family Code.
A valid premarital agreement is supported by fair and reasonable disclosure of both individuals' property or financial obligations. Substantive unfairness may result if there was inadequate or nonexistent financial disclosure of assets and debts.
The most common situation of substantive unfairness involves a party who did not know, and could not have known, about the other's finances. Without a property disclosure, the agreement may be unconscionable, lacking substantive fairness from the beginning under Section 4.006(2)(A) of the Texas Family Code. Unlike voluntariness, however, a party can waive the right to fair disclosure and proper financial disclosure under Section 4.006(2)(B).
Steps to Prevent Arguments Against Enforcement of a Premarital Agreement
For these reasons, both parties must fully disclose all earnings, property, and financial obligations during a premarital agreement negotiation. If one spouse proves that the other hid an asset, a source of income, or a financial obligation, this will create an argument against the agreement's enforcement. If the agreement were based on information that was inaccurate in some way, this would prove an argument against enforcement.
Sometimes the lack of adequate time to review and consider information could support an argument that a fiancé could not reasonably have had sufficient knowledge of the property or financial obligations. This can be avoided by allowing for time to review all disclosure and the agreement.
If one party retains an attorney to draft the agreement, the other party must have adequate time and opportunity to hire an attorney to review the deal and provide legal advice.
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