Criteria for a Valid Agreement
The laws governing the validity of premarital agreements vary from state to state. In general, the agreements must be in writing and signed by the parties.
In most states, the parties (particularly the wealthier party) must disclose their income and assets to the other party. This way, the parties will know more about what they might be giving up. In some states, it may be possible to waive a full disclosure of income and assets, but the person waiving that right should do so knowingly, and it is best if each party has at least a general idea of the other's net worth.
Sometimes it is difficult to make a precise statement of a party's net worth. If for example, the husband or wife owns a business that is closely held (meaning shares of the company's stock are not traded on a public stock market), it may be difficult to ascertain the value of the business. In that circumstance, it usually is best to acknowledge the difficulty of precise valuation in the agreement and then state the minimum net worth or the range of possible net worth of the party.
In order to be valid, an agreement must not be the result of fraud or duress. An agreement is likely to be invalid on the basis of fraud if one person (particularly the wealthier one) deliberately misstates his or her financial condition. For example, if a man hides assets from his future wife so that she will agree to a low level of support in case of divorce, a court probably would declare the agreement invalid. Similarly, if one person exerts excessive emotional pressure on the other to sign the agreement, a court also might declare the agreement to be invalid because of duress.
In order to avoid an appearance of duress and to give the parties ample time to consider the agreement, the agreement should be reviewed and signed well before the wedding. Most states do not set a specific time at which premarital agreements must be signed, but the greater amount of time the parties have to consider the agreement, the greater the likelihood a court would find the agreement to be voluntary.
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Guide to Family Law
Copyright © 1996, 2000 American Bar Association
