Defining a Prenuptial Agreement
A prenuptial agreement, also known as a premarital agreement, antenuptial agreement or marriage contract, is a written contract executed by two people prior to their marriage. The agreement typically addresses numerous issues that a divorcing couple may face in the event of a divorce. In Oklahoma, such an agreement cannot impact child support obligations . However, it can deal with various financial issues, including division of property upon divorce and the liability of one spouse for the premarital debts of the other. A prenuptial agreement can also waive or limit spousal support. When properly drafted and entered into freely, fairly, knowingly and voluntarily, such an agreement typically will be upheld on valid grounds of challenge.
Mandatory Legal Requirements Under Oklahoma Law
In Oklahoma, a prenuptial agreement is considered a contract between the two parties and like all contracts, there are some legal requirements that must be met in order for the prenuptial agreement to be considered valid. The required provisions that are necessary for a prenuptial agreement to be valid in Oklahoma are listed under 43 OS 2102 (B):
(a) The voluntary disclosure by each party of his or her financial circumstances.
(b) The voluntariness of the agreement.
(c) That the parties intend to marry, and the exact date of the marriage.
(d) An acknowledgement that the spotted individual did not have the benefit of independent counsel.
(e) If applicable, specific waivers by the spotted party.
(f) That the parties agree to submission of their disputes for resolution by binding arbitration pursuant to the Oklahoma Uniform Arbitration Act.
(g) That the agreement is duly executed by each party and attested by two witnesses, and notarized.
(h) Any other provision agreed to by the parties which is recognized as legal in the State of Oklahoma.
As you can see, the two most important aspects of a prenuptial agreement involve the disclosure of assets and the date upon which the parties agree to marry. Failure to abide with either of those two legal requirements will cause the prenuptial agreement to be invalid. There are also additional requirements in order for a prenuptial agreement to be enforceable:
(a) A prenuptial agreement shall be enforceable in this state unless the spouse against whom enforcement is sought proves that:
- (1) the prenuptial agreement was not signed voluntarily,
- (2) the provisions of the prenuptial agreement unreasonably favor the spouse who prepared the agreement, and
- (3) the prenuptial agreement was unconscionable at the time that the agreement was executed.
(b) In determining whether the provisions of the prenuptial agreement are unconscionable, one or more of the following factors may be considered:
- (1) the financial circumstances of the spouse at the time the agreement was executed;
- (2) the education and training of the spouse at the time the agreement was executed;
- (3) the length of the marriage;
- (4) whether the spouse received financial or other benefits under the agreement;
- (5) whether each spouse was represented by independent legal counsel when the agreement was signed or has waived the right to independent legal counsel; and
- (6) whether everything that was to be disclosed to each spouse was disclosed.
Advantages to Having a Prenuptial Contract
One of the biggest benefits of having a prenuptial agreement is the protection it provides for your assets if you and your partner ever decide to divorce. It can ensure that you walk away from the marriage with your desired assets intact, especially if you have significant premarital possessions or know what you want in terms of asset distribution. Likewise, it provides you with an opportunity to make such decisions very clearly, giving you the power to dictate what would happen if you and your spouse get a divorce. This means you could have greater control over the final outcome and can feel confident that you are getting the settlement you both want. Also, while all marriages have certain expectations for both parties, those expectations are not always adequately expressed. A prenuptial agreement gives you both a chance to be very specific about what you are expecting out of the marriage, including how you expect the household to be run and what each party will be responsible for. A prenuptial agreement can help you avoid divorces occurring due to unmet expectations. From a practical standpoint, a prenuptial agreement may also be beneficial because it could provide you with some tax breaks after the marriage ends, which allow you to save even more money following your divorce.
Common Myths
Myth: A prenuptial agreement is only for couples with significant assets.
Truth: Many couples, regardless of their wealth or assets, can benefit from a prenuptial agreement. It can provide financial stability, a clear framework for asset division, and help avoid future conflicts.
Myth: Prenuptial agreements are unfair to one party.
Truth: An agreement can be fair to both parties if it is drafted honestly and voluntarily. Both parties should fully disclose all assets and liabilities, and lawyers must ensure the agreement is not entered into under economic duress or fraud.
Myth: Prenuptial agreements are unromantic and imply distrust in the relationship.
Truth: These agreements are sensible legal tools to protect both parties before entering into marriage and should not be seen as a lack of trust. It is better to deal with these matters ahead of time rather than after marriage.
Myth: A prenuptial agreement will not be enforced by an Oklahoma court.
Truth: Agreements can be validly enforced in Oklahoma if executed properly with full disclosure, voluntary action, and without duress.
Following the Steps to Prepare a Prenuptial Contract
Creating an effective prenuptial agreement can be a complex process, requiring both parties to fully disclose their financial situations. It is critical that all parties approach the negotiation of prenups with a clear understanding and respect for themselves, and preparation and sharing of all financial documents in order to have a fair and equitable agreement. With guidance from the right legal professionals and a willingness to negotiate and compromise, a prenup becomes a safer way to go into the marriage, not to mention begin the marriage on the right foot.
A good prenuptial agreement represents the best compromise from each party. A not-so-good one often accommodates only one party at the expense of the other. A good agreement is comprehensive, thoroughly detailing how any number of situations will be handled, including financial arrangements, property division, insurance coverage, and more. A not so good agreement is vague and lacks detail or is simply a list of provisions.
As mentioned, the first step in drafting a prenup is to be candid with one another fully disclosing your finances in order to have an effective agreement. Otherwise, it may be challenged later as not properly executed. Next, parties should work to create a list of all assets, liabilities, income, and expenditures that can be exchanged prior to the marriage. From these lists the two parties should craft a list that sets out the property rights each wishes to maintain for their own benefit, as well as each party’s plan for spousal support. Parties should make these plans with the advice of an attorney to ensure they are accomplishing the intent. The exact terms and provisions may be difficult, but there should be an attempt to anticipate all possible contingencies. This allows for a more comprehensive agreement less likely to be challenged in court. Again, an attorney’s involvement may be necessary to ensure that the agreement satisfies current Oklahoma law or if there are any questions about the potential enforceability of specific provisions.
Once a draft agreement is ready, each party should have an attorney review it. In Oklahoma, both parties must retain separate counsel. If there is a financial hardship, one or both parties may petition the court for a waiver of the counsel requirement. Most agreements should include specific provisions for spousal support, division of property and other issues. There should also be a clear description of separate and marital property. Further, most agreements should, if possible, include a choice of law provision so that the parties can agree beforehand what jurisdiction will be used if the agreement is challenged.
Both parties must then execute the agreement in compliance with the requirements of 43 O.S. §9.12.
Giving Legal Force to Prenuptial Agreements
In Oklahoma, a premarital agreement is enforceable if it is in writing and signed by both parties. A premarital agreement is not enforceable if the party against whom enforcement is sought proves that. (1) that party was unable to understand the nature and consequences of the document when that party signed the agreement, or (2) that prior to signing the agreement that party was not provided a fair and reasonable disclosure of the property or financial obligations of the other party, did not voluntarily and expressly waive in writing any right to disclose beyond a fair and reasonable disclosure and did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party . There are many pitfalls that can lead to an unenforceable agreement. For instance, being represented by an attorney can go a long way in enforcing an agreement. Furthermore, there has to be some knowledge of property and financial obligations. Banks statements, real property appraisals and business valuations combined with a "to do" list should help the parties understand exactly the purpose and the value of what they are dealing with. This may also lead to the unfair advantage argument as well.
Alteration and Cancellation of a Prenuptial Contract
In Oklahoma, while prenuptial agreements are generally valid and binding contracts that govern property rights between spouses when contemplated by law, there are circumstances under which one or even both spouses may seek to modify or revoke the terms of a prenuptial agreement. As a general principle, modification requires the mutual consent of the contracting parties.
There are a number of conditions under which a prenuptial agreement may be modified or revoked in Oklahoma according to the law. As mentioned above, the terms of a prenuptial agreement may be modified by a later agreement of the parties.
Another situation occurs when the agreement was provided as a result of fraud or mistake. In either case, the agreement is void or invalid. While courts might be less likely to honor pre-determined alimony provisions, non-compliance with such provisions is a basis for modification or revocation of a prenuptial agreement.
As a general matter, courts will not inquire into the underlying consideration of a contract as long as such consideration is sufficient, which means that the consideration need not be equal. One exception to this rule is that the court may invalidate a prenuptial agreement if the agreement does not provide for sufficient consideration.
There are a number of factors that are relevant to the consideration involved in a prenuptial agreement: In determining the sufficiency of consideration for the modification of a prenuptial agreement, the court might consider whether the party whose circumstances changed was planning to have children or was involved in an auto accident that left him or her unable to work.
A prenuptial agreement is a contract. As a contract, the parties may enter into a contract constituting a modification or revocation of the original prenuptial agreement without having the modified agreement subjected to the Uniform Statute of Frauds.
Parties may even agree to modify or revoke only a portion of the original prenuptial agreement. Courts have held that parties can compromise on a portion of a contract and that the adjustment is a permissible modification or revocation of a contract.
Another consideration is that contract law places the burden of proof on the party seeking enforcement. Once a prenuptial agreement has been entered into by parties, the burden of proof shifts and the party seeking a modification or revocation bears the burden of proof.
As an example, let us consider the validity of a family or martial trust as provided for in a prenuptial agreement. Typically, the prenuptial agreement provides that the parties agree to transfer certain assets to the trust. For the trust to be valid as a marital trust or a family trust, the assets must be lovingly bestowed upon the family or marital trust. One spouse may later come to believe that the other spouse misapplied the funds and again shift the burden to himself or herself to prove that the funds were not used for their intended purpose.
Choosing an Attorney for Your Prenuptial Agreement
Selecting the right attorney for a prenuptial agreement is as important as understanding the provisions of the agreement. When your relationship with your spouse and your worldly possessions are at stake, you need to ensure that you have competent legal representation. Most importantly, you should be seeking an attorney with family law expertise to help guide you through what can be a long and tricky process. When meeting with an attorney regarding writing a prenuptial agreement, your attorney should review your financial situation and assets, your spouse’s financial situation and assets, your biggest assets, and any specific considerations such as children from a previous relationship, and the existence of a business owned by either party. Your attorney should be able to walk you through the terms of what will become your prenuptial agreement, and provide an overview of what should be included, what provisions are unnecessary, and what may not be enforceable in Oklahoma. If the attorney you choose cannot provide you with this information, then it may be time to find another attorney. While finding an attorney that specializes in prenuptial agreements is important, your attorney should also have experience negotiating and drafting marital settlement agreements and uncontested divorces. Finding an attorney with this type of background can prove beneficial should your marriage end in divorce and you need additional assistance with the Court in negotiating or getting a fair marital settlement agreement to divide the property that you both acquired during the marriage.
Real World Prenuptial Agreements
A common pitfall many couples encounter is the scope of a prenuptial agreement and what must be contained in it. Many think that their marital agreement must cover everything in detail. A clearer understanding would be that all the important issues must be discussed, and the intent of the parties must be made clear. The analysis of the validity and the enforceability of a prenuptial agreement will be based on what the agreement says, or on what it should have said.
In the unpublished Oklahoma case of In re Estate of Riley, 2017 OK CIV APP 68 (Aug. 30, 2017), the will of a decedent incorporated a prenuptial agreement which limited the spouse’s inheritance. The decedent and his fiancé signed a prenuptial agreement before their marriage which provided that the decedent would not have any interest in the spouse’s child’s estate. Five years after their marriage, the decedent died and left a will which incorporated the premarital agreement by reference. The issue before the court in that case was whether the spouse had inherited her husband’s business as their joint property since the will stated that the spouse and the decedent owned it together. The court found that the estate was required to offer evidence that the decedent intended for the business to be his property, and that because the decedent failed to clarify that in his will the spouse owned the business alone.
A classic example where a prenup was contested is the Estate of Goldstein, 198 P.3d 898 (2008) , which involved the daughter of a prominent Jeweler who had died leaving a will that established an irrevocable inter vivos trust. Before he died, he acquired business real property which was assigned to a land trust and designated in his will as his "Keystone" property. The will did not mention the pre-existing prenuptial agreement with the plaintiff, forbidding the disposition of property acquired prior to the marriage. Also, the will contained specific provisions for disposition of all other property. According to the will, when the land trust sold the Goldstein property, the Trustee was to place half the resulting proceeds in the residuary, and half in the ‘Semel No. 5 Charitable Trust.’ The ruling of the Appellate Court states that although the prenuptial agreement prohibited transfer of any property that was acquired prior to the marriage from the plaintiff to her estranged husband, the prenuptial agreement stated that it "would continue in full force and effect notwithstanding any estate plan or codicils." Also, it said that "the provisions of the prenuptial agreement for property rights were controlling."
A key takeaway from this case is the consideration of future events that may damage or slow down the couple’s financial position. The court pointed out that the Goldstein will did not specify what was to happen to either party’s share of the land trust proceeds in the event they were part of a divorce action before his death. So the clear lesson here is to consider all future scenarios and those most likely to happen, and then act accordingly.