Pre-Nuptial and Post-Nuptial Agreements
Pre-nuptial and post-nuptial agreements are meant to modify the way assets and income are handled both in case of a divorce or in the case of death of one spouse. Anyone who has assets to protect should understand the benefits of such a document. As one court stated:
Today, divorce is a common-place fact of life… As a result there is a concurrent increase in second and third marriages – often of mature people with substantial means and separate families from earlier marriages. The conflicts that naturally inherent in such relationships make the litigation that follows even more uncertain, unpleasant, and costly. Consequently, people with previous “bad luck” with domestic life may not be willing to risk marriage again without the ability to safeguard their financial interests. In other words, without the ability to order their own affairs as they wish, many people may simply forgo marriage for more ‘informal’ relationships. Prenuptial agreements, on the other hand, provide such people with the opportunity to ensure predictability, plan their future with more security, and, most importantly, decide their own destiny!
The most commonly sought objective in most prenuptial agreements is to ensure that one’s property passes to the children or other relatives from a first marriage rather than to the second spouse or his or her family. Illinois’ divorce laws define “marital property” at the time of a divorce proceeding but spouses (before or after the marriage) may agree to a different definition. They may identify certain properties as marital or non-marital. For example, they may agree that one spouse’s assets that were acquired prior to marriage shall be excluded from division at the time of a divorce. Likewise, they may agree on maintenance (alimony) payments (both amount and duration) and lump sum payments (“if we divorce within three year’s of the date of marriage, husband shall pay to wife one hundred thousand dollars; if we divorce after three but within ten years of marriage, husband shall pay to wife five hundred thousand dollars”).
Furthermore, pre-nuptials and post-nuptials may discuss the asset allocation in case of death and not just divorce. Spouses can agree to waive certain inheritance rights in case of death. This can be of incredible importance in case of family businesses or children from prior relationships.
Timing of a prenuptial agreement can be of utmost importance. Illinois law says that to be valid, a prenuptial agreement must be voluntarily signed by both parties. In other words,if one party is signing the document under duress or coercion a court may find that it is not a valid prenuptial agreement. As such, it is important to consult an attorney well in advance of the marriage in order to not have a party to consider the emotional distress of signing a document or losing a ton of money already expended for the wedding and disappointing guests and family. That could be considered by a court as signing the document under distress.
Another concern is if the document is considered Unconscionable. Unconscionable is when a court may deem the document to be grossly unfair to one party. When asked to consider the “conscionability” of a prenuptial agreement the court considers the circumstances that existed at the time the agreement was signed; not circumstances that may have arisen since the agreement was executed. That is, for the court, the question is “regardless of how the agreement looks or works at the time of divorce, was it unconscionable at the time it was executed?”
Lastly, a court would look for full disclosure to the parties as a key component when considering the validity of a pre-nuptial or post-nuptial agreement. The theory is that how can a party waive rights to assets that they never knew about. For instance, if a party has a million dollar off shore bank account when they marry that turns into multi-millions by the time a divorce happens it is difficult to say that the spouse waive the right to that assets in addition to the appreciation of the asset during the marriage.
Since every pre-nuptial or post-nuptial agreement are so unique to the circumstances, the best choice is to come in a discuss the matter with one of the attorneys at Kenny, Kain, & Jablonsky, LLC.