Prenuptial agreements are a trend among the millennial generation. It is not entirely clear yet, but perhaps millennials are signing prenuptial agreements because they are more cautious about marriage than their baby boomer parents, or perhaps they are entering into these agreements because they are getting married later in life and have more assets to protect. Whatever the reason, prenuptial agreements are becoming more common in divorces in Colorado and across the nation.
What is a Prenuptial Agreement?
A prenuptial agreement is a contract between two people who intend to marry one another and wish to decide how their rights and obligations will play out upon divorce. The agreements are sometimes called a premarital agreement, prenup, or antenuptial agreement. However, technically, a “marital agreement” is an agreement between two parties who are already married and who intend to remain married. These sorts of agreements are called a “postnup” or “postnuptial agreement.”
Client’s often us ask what a prenuptial agreement means upon divorce. The answer? It depends on the language of the prenuptial agreement – it could mean anything depending on what the spouses agreed to.
Usually, a prenuptial agreement explains how the parties’ property owned at the time of marriage, and the property each will accumulate during the marriage, will be divided upon divorce. Colorado courts have recognized and enforced prenuptial agreements for over 100 years and have held that it is the public policy of Colorado to uphold such agreements generally. However, under certain circumstances, a court may not enforce the agreement.
The bases for which a person can challenge a prenuptial agreement depend on when the parties signed the agreement as the law regarding prenuptial agreements underwent revisions in 1986 and again in 2014. The Uniform Premarital and Marital Agreements Act is the current version. See C.R.S. § 14-2-301, et seq. The bases for challenging an agreement are largely similar, although there are subtle nuances. Generally, the two most common bases for challenging the enforcement of a prenuptial agreement are:
- Involuntariness or Duress
- Inadequate Disclosures
- Inadequate or No Legal Representation.
Challenging a Premarital Agreement
1. Challenging a Prenup for Involuntariness or Duress
The first basis for challenging a prenuptial agreement is if a person signed the prenuptial agreement involuntarily or under duress. If a party claims involuntariness, a court will consider the totality of the circumstances, including (1) the opportunity to review and reflect on the agreement, see In re Marriage of Ross, 670 P.2d 26, 28 (Colo. App. 1983); (2) the sophistication of the parties in legal and financial matters, see In re Marriage of Ingels, 596 P.2d 1211, 1214 (Colo. App. 1979); and (3) a knowledge of the nature, extent, and value of the rights waived by the agreement, see Linker v. Linker, 470 P.2d 921, 134 (Colo. App. 1970).
The most commonly cited reason for claiming that the prenuptial agreement is involuntary is there was “ink on the wedding dress,” meaning one party was presented with the agreement close in time to the marriage with little time to review it. Some people might want to argue that they were subjected to duress because their betrothed said they would not marry them unless they signed the agreement. However, the Colorado courts have ruled that scenario does not amount to duress as one is perfectly within one’s rights to decide to not marry at any time.
2. Challenging a Prenup for Inadequate Disclosure
The second basis for challenging a prenuptial agreement is inadequate disclosure. When signing a prenup, the parties must disclose to each other their respective financial circumstances, including all known assets and liabilities. After July 1, 2014, the law dictates that a party should also disclose his or her income. The crux of the issue is whether the party challenging the agreement reasonably understands the other party’s financial situation when the agreement is signed. See Newman v. Newman, 653 P.2d 728, 733 (Colo. 1982)
3. Challening a Prenup for Inadequate or No Legal Representation
There is now another ground for challenging a prenuptial agreement entered into after July 1, 2014, which relates to legal representation. If a party did not have independent legal counsel, the agreement must include a plain statement of the rights and obligations modified by the agreement and the party must have had access to independent legal counsel. C.R.S. § 14-2-309(1)(b). Access to legal counsel means that before signing the agreement, the party had the financial means to afford a lawyer and also had reasonable time to decide whether to hire a lawyer and to obtain and consider the lawyer’s advice. C.R.S. § 14-2-301(2).
Though this ground for challenging a prenuptial agreement was not explicitly delineated until July 1, 2014, issues regarding access to independent legal counsel for agreements entered into between 1986 and 2014 would be considered and subsumed under the “involuntariness” inquiry discussed above. Besides the grounds outlined in the prenuptial statutes, prenuptial agreements are also contracts subject to common law contract principles. They are also subject to legal and equitable defenses that could render some or all of the contract void.
Challening the Maintenance or Attorney Fees Provision
Finally, though the three sections above outline the ways in which a person can challenge the entirety of a prenuptial agreement, if none of the above challenges are applicable, there is one way in which a person can challenge the portion of a premarital agreement regarding spousal support or attorney fees.
A prenuptial agreement that is otherwise enforceable is “nevertheless unenforceable insofar, but only insofar, as the provisions of such agreement…relate to the determination, modification, limitation, or elimination of spousal maintenance or the waiver or allocation of attorney fees, and such provisions are unconscionable at the time of enforcement of such provisions.” C.R.S. § 14-2-309(5); In re Marriage of Ikeler, 161 P.3d 663.
The test for unconscionability of maintenance provisions in the prenuptial agreement context is set forth in Newman v. Newman, which provides that: the person claiming that a prenuptial agreement is unconscionable regarding support must prove that, “at the time of the marriage dissolution the maintenance agreement rendered the spouse without a means of reasonable support, either because of a lack of property resources or a condition of unemployability.” 653 P.2d at 735.
In conclusion, if a party had time to consider the agreement and either did or had the chance to consult with an attorney, so long as the other party was forthright and upfront about his or her financial circumstances, a court will likely uphold the entire prenuptial agreement.
However, if the terms regarding spousal support or payment of attorney fees are deemed unconscionable, those sections, rather than the entire agreement, will not be enforced. If you are considering divorce and you are subject to a prenuptial agreement, you should meet with an attorney to determine whether the agreement is likely to withstand any challenges to its enforcement.