Unfortunately, many marriages in the United States and in Indiana may end in divorce. Usually, it is not a thought in a bride or groom’s mind before their wedding that the marriage will someday end. However, with a relatively high rate of divorce present, and with many individuals re-marrying or getting married for a third or fourth time, more and more individuals are establishing contingencies in case a marriage does not work out. For this reason, some couples choose to enter into pre-marital agreements under Indiana Uniform Premarital Agreement Act (the “Act”) (Ind. Code § 31-11-3-1 et seq.). This blog post touches on some considerations that one may wish to think about if a pre-nuptial agreement is contemplated.
What Can Be Included in a Pre-Nuptial Agreement? For the most part, the Act allows parties to contract with each other (and that is what a pre-nuptial agreement is – a contract between two people before they get married) pursuant to the terms that they want to include and upon which they can agree. However, the Act specifically provides that certain things cannot be included. Specifically, the agreement cannot adversely affect the rights of a child to obtain support. That is, an agreement cannot say that if A and B get divorced, then A does not have to pay child support under any circumstances. If such a provision is included, it will be ignored.1 Additionally, in general, most courts do not look favorably on any provision that would try to take away the court’s independent ability to determine custody that is in the best interest of any children of the marriage. Last, the agreement cannot be against public policy. For example, a pre-nuptial agreement cannot be a contract that obligates a party to have sex with the other, prevent one of the parties from working or moving upon a divorce, etc.
What are the Legal Requirements for a Pre-Nuptial Agreement? Generally, there are few legal requirements for a pre-nuptial agreement over and above what are required for a general contract. However, there are some differences. First, a pre-marital has to be in writing and signed by both parties.2 Second, one key aspect that makes a pre-marital different than a “regular” contract is the concept of “consideration.” Consideration, in essence, means that each party gives up something in order to get something else. For example, if A and B enter into a sales contract, A gives up money to B to get B’s product, and B gives up the product to get A’s money. However, pre-nuptial agreements do not require consideration.3 So for example, if A comes into the marriage with $2 million in assets, B has nothing, and the pre-nuptial agreement provides that A gets to keep all of his or her $2 million upon divorce, the contract is not unenforceable simply because A is not “giving up” anything.
Pre-Nuptial Agreements are not Just for the Wealthy. A prenuptial is a document or series of documents, that specifies what a divorce court is to do in divorcing the parties in a divorce filing when separating their assets and liabilities. These contracts give the parties’ flexibility to agree to terms in the event of a divorce filing. Additionally, they make for certainty in the case of divorce as to division of assets. First, by way of example, Indiana is not a strong alimony state. Except for disability or maintenance for up to three years to obtain job skills, an Indiana divorce court cannot order maintenance or “alimony.” This is something that might be very important for a spouse who lacks earning potential or who stays out of the workforce for a long period of time to know. That spouse could ask for a pre-nuptial agreement that would provide for long-term maintenance to help protect him or her. He or she would know, barring insolvency, that in the event of divorce, a certain sum of alimony will be paid for months or years. Second, pre-nuptial agreements may provide the parties with some peace of mind in unique circumstances. For example, often, one spouse has important family heirlooms or a family business that he or she wants to ensure stays out of the “marital pot” of assets to be divided. These are just a few examples of how pre-marital agreements can sometimes provide some comfort in that if divorce occurs, some issues are already agreed upon, hopefully making the divorce less contentious and complicated.
While the Technical Legal Requirements are Minimal, there are Many Best Practices to Avoid Having a Pre-Nuptial Agreement Become Unenforceable. The only statutory requirements for a pre-nuptial agreement are that it is in writing and signed by both parties. However, the analysis does not end there. Pre-nuptial agreements are often challenged once divorce is filed because one of the parties feels like he or she came out much worse off than the other. This invokes the concept of “unconscionability.” Indiana Code § 31-11-3-8, in relevant part, provides as follows:
- (a) A premarital agreement is not enforceable if a party against whom enforcement is sought proves that:
- (1) the party did not execute the agreement voluntarily; or
- (2) the agreement was unconscionable when the agreement was executed.
Unconscionability, such as will justify disregarding an antenuptial agreement precluding an award of spousal support, involves gross disparity.4 Disparity, in this sense, means a difference in bargaining power between the soon-to-be spouses. Things like wealth, business acumen, the free exchange of information, education, understanding of language, having an attorney, etc. all go toward the concept of disparity between the parties. So, the question arises, what are some best practices that one can use, particularly those who want pre-nuptial agreements because they are bringing substantial assets into a marriage, to avoid having a pre-nuptial agreement declared unenforceable on the back end when a divorce petition is filed.5 Here are some suggestions:
- Hire legal counsel that is well-versed in family law and in drafting such agreements.
- Fully disclose your assets and debts to your soon-to-be spouse.
- Do not “spring” the pre-nuptial agreement on your soon-to-be spouse shortly before the wedding.
- Allow your soon-to-be spouse time to review the document and retain his or her own attorney to review it with them. In some cases, it may even be a good idea to offer to pay for an attorney to review it on their behalf.
- If there is any issue as to language (for example, your soon-to-be spouse primarily speaks a language other than English), have it translated into both English and your soon-to-be spouse’s primary language.
These recommendations may seem onerous, but as is often said, an “ounce of prevention is worth a pound of cure.” Spending the time and money to set up a proper pre-nuptial agreement may save you a tremendous amount in the long-run. While pre-nuptial agreements have their limits, they have a key place in divorce pre-planning and are valuable tools in certain situations.
This blog post was written by attorneys at Dixon & Moseley, P. C. who handle the full spectrum of domestic issues, ranging from premarital agreements to divorces to appeals. We hope it has provided you with useful information in understanding the full range of rights and remedies under Indiana divorce law. This blog is not a solicitation for legal services or specific legal advice. It is an advertisement.