Prenuptial Agreements

Once thought of as the exclusive provenance of the “rich and famous,” Prenuptial Agreements (“Prenups”) are now commonly accepted and appropriate for many engaged couples. A Prenuptial Agreement is simply an agreement between two people to alter some of the legal rights that the law grants to the married couples. A Prenuptial Agreement, sometimes called a “Premarital Agreement,” typically has one or more of the following objectives:

1. Protect the marital assets and property for children from previous marriages.
2. Protect inherited and gifted property from being subject to an unintended division with the new spouse.
3. Reassure family members affected by a spouse’s interest in a closely held family business.
4. Identify and quantify separate property that each spouse has brought to the marriage.

A prenuptial contract is an important element in estate planning, and the process of working through financial questions often helps a couple establish a working economic relationship which will benefit the marriage in years to come. If a spouse dies without a will or a premarital agreement, the courts will fall back on relationship guidelines to determine the distribution of assets – guidelines which do not necessarily reflect the wishes of the deceased in any way.

The two principal areas covered in a Prenuptial Agreement involve the death of one of the spouses or a divorce. Both circumstances and issues are important. The Supreme Court of Ohio, approximately 20 years ago, in a case entitled Gross v. Gross, held that as long as there was no fraud, coercion or undue influence when the Prenuptial Agreement was entered into, and there had been a full and complete financial disclosure in the agreement, all provisions in the Prenuptial Agreement related to a division of property in the event of a divorce were binding and enforceable. However, the Gross case clearly made a distinction between dividing property rights in a divorce and attempting to set, limit or revise the Ohio Law as it relates to support. Alimony, referred to as “spousal support” in Ohio, is governed by a statute which sets forth fourteen factors for the Court to consider in deciding whether to award spousal support to one of the parties. If the Court finds that the Prenuptial Agreement is unconscionable, taking into consideration the facts and circumstances at the time of the divorce, the Court may make any order it deems appropriate as to spousal support, without regard to the language in the Prenuptial Agreement. This is an important distinction.

The Court in Gross was also very clear that statutory spousal rights of inheritance, to serve as executor, and many other rights conferred upon a spouse, may be legally restricted or eliminated by an enforceable Prenuptial Agreement, if there has been no fraud or coercion and a full disclosure of what rights have been waived. There can be no waiver of a legal right if one does not know what that right entails.

Prenuptial Agreements often involve one spouse that has considerably more assets than the other, and sometimes considerably more income. The approach to a Prenuptial Agreement is determined by the social and financial circumstances of the parties and often the ages of the parties. A quantified analysis of the disparity of property owned by each of the spouses is also a critical factor. There is certainly no “cookie cutter” Prenuptial Agreement and no attorney should ever undertake to prepare a Prenuptial Agreement by simply using a standard “form”. The circumstances between marrying adults are always crucial to an analysis of the terms that one chooses to propose in a Prenuptial Agreement. No two “Prenups” are the same.

Prenuptial Agreements are sophisticated documents that need to be carefully constructed to meet the objectives of the clients. Procedures must be followed and information must be exchanged so that each of the parties understands his or her legal rights if they wish to waive those legal rights. Full disclosure, including current income, debts and the identification of property must be made in all cases. It must also be noted that last minute agreements are always subject to attack on the basis of coercion or duress. In most cases we believe that the agreement should be finalized 90 days prior to the wedding to avoid such attacks. If you would like to arrange an initial consultation with one of our attorneys at the Zamary Law Firm, please contact our Cincinnati office. Our lawyers will work with you to establish your objectives and prepare a plan to construct a Prenuptial Agreement that both parties feel is fair, so the marriage begins on a positive, solid foundation.

Related practice areas: estate planning, wills and trusts, and business law