Pre-Marriage

Question 1

Uniform Premarital Agreement Act (UPAA)

Answer 1

• Codificed in Texas in 1987
• Defines a premarital agreement as an agreement between prospective spouses to be effective at marriage.
• Does not apply to apply to parties already married, or to persons who cannot marry -e.g. first cousins

Question 2

PreMarital Agreement

Answer 2

• We mostly think of them as contracts that define who will get what upon the dissolution of a marriage—and they definitely include that but, they can encompass so much more. Couples can decide things like:
• Who will be responsible for household responsibilities,
• Who will pay whichliving expenses,
• Coital schedules,
• Sharing of child-rearing responsibilities,
• Religious upbringing of children,
• Procedures for conflict resolution.
• Range of issues parties can agree to is as broad and diverse as the parties’ imaginations.

Question 3

Common Reasons for Premarital Agreements

Answer 3

1. Preserve family fortunes for children,
2. Eliminate, limit, or set any future alimony obligations,
3. Predetermine rights and duties during marriage,
4. Detail what property belongs to each party upon entering the marriage and who can manage it during the marriage,
5. Clarify how taxes will be filed and who will be responsible for income tax liability.
6. Provide for dissemination of property after death (non-testamentary transfers)

Question 4

Premarital Agreements Cannot

Answer 4

1.Violate public policy or a statute imposing criminal penalties;
* Texas hasn’t addressed this issue, but other UPAA states have held that you cannot have a provision encouraging or promoting dissolution of marriage.

2.Adversely affect a child’s right to support;
* Any provision for child support must be in the child’s best interest.

3.Defraud a creditor
* Cannot agree to something that would be considered a fraudulent transfer to avoid preexisting creditors.

4.Waive Employee Retirement Income Security Act (ERISA) Benefits
* Can’t waive a prospective spouse’s survivor benefits.

Question 5

Premarital Agreement Requirements

Answer 5

1. Must be in writing
2. No consideration is required
3. No date of marriage required
4. There must be full financial disclosure of property and financial obligations
5. Must be signed before marriage
6. If real property ownership is involved, it must be notarized.

Question 6

Attoreny’s for Prenups

Answer 6

To avoid problems with enforcing the agreement, the best practice is to require that each party have their own attorney. If a party is unwilling to retain counsel, or obtain independent counsel, the agreement should contain a provision that independent representation was recommended but refused.

Question 7

Agreements may also include

Answer 7

• Choice of law determination—specify which state’s (or country’s) law will govern the construction of the agreement. Jurisdiction may not violate Texas’ Public Policies.
• ADR—can require parties to submit to alternative dispute resolution to resolve any disputes arising from the agreement.
• Forfeiture—can include a forfeiture provision that penalizes a party for taking or not taking a specific action.

Question 8

Duration

Answer 8

• Premarital agreements become effective on the date of marriage (marriage may be informal or ceremonial).
• Ends on date provided by agreement. If no date is specified, presumes parties intend for agreement to continue for a reasonable time.

Question 9

Amending / Revoking

Answer 9

• Before Marriage: can be amended by a written agreement, signed by both parties. If parties decide not to marry, no revocation is necessary. If parties want to marry but have changed their mind about having a premarital agreement, the agreement should be revoked by written agreement.
• After marriage: can be amended only by a written agreement signed by both parties.

Question 10

Statute of Limitations

Answer 10

A party has 4 years to contest the enforcement of a premarital agreement. The time is tolled during the parties’ marriage.

Question 11

Defenses Against Enforcement

Answer 11

• Date of execution matters—
• Pre-September 1, 1993, you can claim fraud, duress, overreaching, mistake, lack of consideration, and ambiguity.
• Post 9/1/1993, you can only claim involuntary execution or unconscionability
• Fraud, duress, undue influence, overreaching can be considered when court is trying to determine if the execution was voluntary.

Question 12

Involuntary Execution

Answer 12

• Factual, case-by-case determination
• Party contesting does not have to show an express, direct threat or coercion to establish involuntariness. Court can consider four nonexclusive factors when evaluating involuntariness
  1. Advice of counsel—did the party receive advice of counsel?
  2. Misrepresentation—were any misrepresentations made in procuring the agreement?
  3. Amount of information—what information did the parties have before signing the agreement? (e.g., did wife know value of husband’s estate when she signed agreement?)
  4. Withheld information—did a party withhold information from the party signing the agreement?

Question 13

Unconscionability

Answer 13

A premarital agreement is unenforceable if the agreement was unfair when signed and:
They didn’t receive a fair disclosure of the other party’s finances.
They didn’t waive their right to this disclosure in writing.
They didn’t know and couldn’t reasonably have known about the other party’s finances.

Question 14

Procedural Unconscionability

Answer 14

• Focuses on the actual maing or inducement of the contract.
• Courts will look at:
  1. The presence of deception, overreaching, and sharp business practices,
  2. The absence of a viable alternative, and
  3. The relative acumen, knowledge, education and financial ability of the parties involved.

Question 15

Substantive Unconsciouability

Answer 15

• Focuses on the terms and conditions of the agreement.
• Unconscionability must have existed at time of execution, not on resulting disproportionate effect.

Question 16

Inadequate Disclosure

Answer 16

• If contestant proves agreement was unconscionable at time of execution, must additionally prove:
  1. There was no fair and reasonable disclosure of property and financial obligation before agreement was signed, and
  2. The contesting party did not voluntarily and expressly waive in writing any right to disclosure of the other party’s information before the agreement was signed