Family Law Group

In the event of a divorce or death, pre-nuptial agreements can prevent unplanned or unintentional property distribution.

Getting ready to walk down the aisle? With all the excitement surrounding your impending nuptials, you may not be thinking about issues that may arise in the event of divorce or the death of you or your intended spouse. A well-drafted pre-marital agreement (otherwise known as a pre-nuptial or ante-nuptial agreement) prevents unplanned or unintentional property distributions following either of those events. These agreements are enforceable contracts provided they are in writing, signed by both parties, and incorporate "full and fair disclosure" of both parties' financial positions.

What is a "Full and Fair Disclosure"?
Full and fair disclosure routinely involves a thorough listing of all assets and liabilities of both parties as of the time of the agreement. In addition to listing these items, estimated valuations are provided. Valuations need not be exact and professional appraisals are not required.

Listing values is an inexact science, especially where certain business assets are included. Importantly, as long as the agreement specifies that full and fair disclosure has been made, which both parties acknowledge with their signatures, a presumption of full disclosure exists.

Challenges to Pre-Nuptial Agreements
In 2001, the Superior Court rejected a wife's challenge to a pre-nuptial agreement where she claimed that her husband had over-valued a closely held business. At the time of the agreement, the business was represented as worth $6 million. The husband made the financial information available for review. The business was later appraised at $2 million. After the wife's challenge, the Court found that she had enough information to investigate the value further if she had any doubts.

In another case from 1991, the Superior Court rejected a wife's attempted challenge to have her husband's motorcycle business considered as a marital asset. The parties had a pre-nuptial agreement indicating that they agreed and understood that the value of the motorcycle dealership at the time the agreement was signed was fully set forth in an attached exhibit to the signed pre-nuptial agreement. The exhibit listed the motorcycle business and a value for it. The Court found that the husband intended to exclude the value of the motorcycle business from the marital estate.

While pre-marital agreements can otherwise be challenged on grounds like fraud, misrepresentation, and duress, parties can avoid challenges to full and fair disclosure by adopting an open book policy during the drafting process.

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