Before a worldwide audience of admirers, millions witnessed the pageantry of the recent “Royal Wedding.” Like most couples about to enter into holy matrimony, the Prince and Duchess probably were not thinking about what would happen to them in the event of divorce. But, there are some couples who consider the possibilities of divorce and take proactive measures to protect their financial interests in the event a divorce occurs.
Couples contemplating marriage often want to talk to a lawyer, before the wedding ceremony, to discuss the implications of how a divorce would affect the division of pre-marital property and how pre-marital property would be protected. These kinds of cases can involve protection from separate pre-marital inheritances or substantial asset protection, such as investments in real or personal properties. There are certain situations where a Pre-Nuptial Agreement can clarify the events that would unfold if divorce became a future reality.
A Pre-Nuptial Agreement’s validity may depend on several critical factors:
- Did the parties have competent counsel. It is a conflict of interest for one attorney to represent both parties who are about to sign a pre-marital or pre-nuptial agreement. Therefore, it is always advisable for each party to secure their own independent legal counsel before signing a Pre-Nuptial Agreement.
- Did the parties fully and completely disclose their finances. This typically involves the execution and exchange of all relevant financial information, including the parties’ Sworn Financial Affidavits, description of all assets, bank, retirement, investment, and other interest bearing accounts, real and personal property inventories complete with appraisals and a list of all debts, loans, mortgages, etc. A recent case in New Mexico, found that when one of the parties’ entered into a Pre-Nuptial Agreement and failed to fully disclose the “all pre-martial assets”, prior to signing the agreement, the court held that the agreement was unenforceable.
- Did the parties enter into the Pre-Nuptial Agreement freely and voluntarily. Any agreement or contract of this kind, must be entered into voluntarily and not because of a promise to do or not do something. An agreement that would require a party to do something that is forced upon them, is not a voluntary agreement. Nor would an agreement be valid when one or both of the parties are intoxicated or under the influence of drugs or alcohol. Parties who enter into a Pre-Marital Agreement, should enter into that agreement because they feel that that the agreement is right for them and it is “fair and just.”
Under proper circumstances, a Pre-Nuptial Agreement is a binding and enforceable contract between each of the parties. As with any contract, an enforceable agreement means that if either party wishes to challenge or enforce the terms of the agreement in court, they have the right to have a judge enter orders interpreting the agreement. The state of Colorado has a specific statute or law that governs these kinds of agreements, which can be found in Title 14, Part 3 of the Colorado Revised Statutes, entitled as the “Colorado Marital Agreement Act.” Under Colorado law, these kinds of contracts are called, “Marital Agreements,” which is defined as follows:
“A Marital Agreement means an agreement either between prospective spouses made in contemplation of marriage or between present spouses, but only if signed by both parties prior to the filing of an action for dissolution of marriage or for legal separation.”
These kinds of agreements are entered into when parties want to safeguard and protect their separate property interests or assets. In many cases, a spouse wants to keep his/her future spouse from receiving any economic benefit from an increase in value of pre-marital property. Here are some examples of situations where a Pre-Nuptial Agreement may be considered:
- Pre-Marital Asset Protection: Substantial investments, real estate and personal property holdings;
- Inheritances: Substantial inheritances from parents or family members;
- Restrictions on Future Spousal Support or Alimony;
- Significant increases in “value” of pre-marital property during the course of the marriage. In Colorado, the increases in value of pre-marital property are subject to division by the Court in the event of a Legal Separation or Divorce.
- Future Estate Issues, such as providing for children not born of the parties’ relationship;
In every instance in which prospective spouses are considering the benefits or risks to entering into a Pre-Marital Agreement, it is best to have a full understanding of the Domestic Relations laws where you live. Always consult with a Family Law Attorney who has experience in these kinds of matters.
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