In the ever-changing cultural landscape we live in, the reality is that 50% of marriages fail. As the divorce rate rises, so does the prevalence of prenuptial agreements. Prenuptial and postnuptial agreements are excellent tools and much less taboo than they were once considered. Whether you are faced with the prospect of entering a pre- or postnuptial agreement or dissolution proceedings involving a pre- or postnuptial agreement, it is important to understand the basic rules.
Generally speaking, a prenuptial agreement can pre-determine just about all issues typically raised in dissolution proceedings with one huge exception. Premarital agreements may not determine custody of any children born to or adopted by the parties; otherwise, just about everything else is fair game. In Illinois, prenuptial agreements are governed by the Uniform Premarital Agreement Act (codified as 750 ILCS 10/1 et seq.); however, prenuptial agreements executed prior to 1990 are governed by general contract law.
Under the Uniform Premarital Agreement Act, prenuptial agreements become effective upon marriage and will generally be enforceable as long as three conditions are met: 1) both parties submitted to a full and complete disclosure of their financial picture, 2) an absence of fraud or duress, and 3) the agreement is not unconscionable. These conditions all have to do with the conditions at the time the prenuptial agreement is signed.
Disclosure is a crucial element to the effectiveness and enforcement of any pre- or post-marital agreement. Both parties must provide a full and honest disclosure of his or her financial condition – including assets, liabilities, current income, etc. This disclosure provides parties a context to evaluate the terms contained in the agreement and the potential assets – or liabilities – they may be walking away from. Disclosures may be waived by either party, but only in writing signed by the other. If one party fails to provide complete and adequate disclosure at the time the premarital agreement is signed, that may be grounds to set it aside in a dissolution action. Both the adequacy and accuracy of purported disclosures may be challenged. Along these lines, a party is entitled to be represented by his or her own counsel during the negotiations of the agreement but may waive that right so long as it is writing.
Another commonly litigated issue is the overall fairness of the premarital agreement, otherwise known as conscionability. Unconscionable is legalese for for extraordinary unbalanced and unfair. “The term ‘unconscionability’ includes 'an absence of a meaningful choice on the part of one of the parties together with contract terms that are unreasonably favorable to the other party.' A contract is unconscionable when it is improvident, totally one-sided or oppressive." This court later held that the inquiry into unconscionability requires at least two considerations: (1) the conditions under which the agreement was made and (2) the economic circumstances of the parties that result from the agreement.” In re Marriage of Gurin, 212 Ill. App.3d 806 (internal citations omitted.) The court makes this determination based upon the circumstances known and reasonably foreseeable at the time the premarital agreement is signed. Even if an agreement is found unconscionable, the court still has to find that there were inadequate disclosures before the agreement may be set aside. 750 ILCS 10/7.
While not common, there are certain circumstances which may exist at the time the prenuptial agreement is seeking to be enforced which may defeat the terms of the agreement. The court has discretion to order maintenance, even if a party has waived the right to such, if the enforcement of that waiver would work an “undue hardship” on the party (See 750 ILCS 750 10/7). The language of the statute allows the exception only to the extent necessary to avoid the hardship; furthermore, the hardship must be due to circumstances which were not reasonably foreseeable at the time the prenuptial agreement was signed.
Did you sign a prenuptial agreement and now facing dissolution proceedings? Are you faced with the prospect of entering into a prenup? Contact the Nally Law Group today to set up a consultation to find out how you can best protect your rights.