When most people think of premarital agreement, or more colloquially termed a “prenup,” they think of a marriage based on distrust or greed. Why would you want to tarnish pre-wedding bliss by thinking about the worst possible scenario, divorce? But premarital planning and agreements do not have to be the proverbial elephant in the room. It’s about power. Or, more precisely, a well-negotiated premarital agreement can place both spouses on more equitable footing. Each spouse can be sure-footed as they enter into marriage, a legal entity with its own unique attributes completely unlike being an individual for property law and tax law purposes.
Each party to the agreement, with the assistance of separate legal counsel, can be apprised of the other’s financial position; negotiate division of property pursuant to a divorce decree; and may negotiate support payments to or for the benefit of the ex-spouse or children of the marriage after a divorce. You will know exactly what cards your partner is holding before taking on the risk of marriage, and, particularly, for individuals with children from prior marriages, a subsequent premarital agreement may be contemplated with protecting your assets for the future benefit of such children. Prenups are a win-win. Now, how do you create one?
Premarital agreements are regulated under Florida law pursuant to the Uniform Premarital Agreement Act, Fla. Stat. § 61.079. It defines a premarital agreement as any agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage. § 61.079(2)(a). In order to be valid, the agreement must be in writing and signed by both parties. Because this agreement is in contemplation of marriage, the agreement is enforceable based on your promise to marry alone. No further consideration is needed to validate this agreement as a contract.
There are additional formalities, which if not met, will invalidate the premarital agreement. § 61.079(7) et seq. The agreement is invalid if it was the product of fraud, duress, coercion or entered into involuntarily; and if it is unconscionable as executed and before the execution the other party was not provided a fair and reasonable disclosure of the other party’s financial obligations and property. Additionally, it is not valid if a party did not voluntarily waive, in writing, any right to disclosure of the other party’s property or financial obligations. Lastly, if the marriage is determined to be void, this may affect the extent to which the premarital agreement is valid. Once you get beyond these initial formalities, you and your partner will need to decide what to put in the agreement.
Florida law provides broad guidelines as to the content of premarital agreements and what parties are allowed and not allowed to contract about. For example, you can contract with respect to the rights and obligations of each party in any property owned by both, or individually, whenever and wherever acquired or located. §
61.079(4)(a)(1). Further, you may contract with respect to the right to buy, sell, use, transfer, exchange, abandon, lease, consume, assign, create a security in, mortgage, encumber or otherwise dispose of or manage the property. § 61.079(4)(a)(2). Not only can these agreements be made with respect to divorce, but these provide flexibility in post-mortem planning after a spouse has died, or can provide for the disposition of property on the occurrence or nonoccurrence of an event such as the deterioration of the health of a spouse. § 61.079(4)(a)(3). Additionally, today it is very common for families to have life insurance to provide for their families after they have passed away. Premarital agreements may also be used settle the ownership rights in, and disposition of, life insurance death benefit proceeds. § 61.079(4)(a)(6). It is important to make your insurance policy death beneficiary designation form conform to the provisions of your premarital agreement. While premarital agreements may cover the gamut of issues, Florida law provides that premarital agreements may not be used to opt out of child support obligations. § 61.079(b). Lastly, if a provision of the agreement modifies or eliminates spousal support in such a way that causes one party to be eligible for support under public assistance after separation or divorce, then a court may require the other party to provide support to prevent dependence on public assistance.
Premarital agreements may be as flexible as parties to the agreement decide. Remember to seek separate legal counsel in making such an important decision.