Each prospective spouse should have separate, independently selected counsel, who advises him or her of what rights he or she would have in the absence of the prenuptial agreement and the effect of the agreement on those rights. Consider having each lawyer certify, as part of the agreement, that he has been employed and compensated by his client and that he has fully explained the effect of the agreement on his or her rights.
In a case involving the major league baseball player, Barry Bonds, the California Appellate Court invalidated a pre-nuptial agreement on the grounds that the wife did not have independent counsel.
You must tell your intended spouse what you have.
Each spouse must disclose all of his or her income and assets. Failure to do this may make the agreement unenforceable.
"When [a prenuptial agreement] provides disproportionately less than the party challenging it would have received under an equitable distribution, the burden is on the one claiming the validity of the contract to show that the other party entered into it with the benefit of full knowledge or disclosure of the assets of the proponent." Fletcher v. Fletcher, 68 Ohio St. 3d. 464 (1994).
What rights are you giving up?
You need to look to your own state law to determine what rights are conferred by marriage. Here are the some of the ones that we take into account in our agreements: (1) To receive assets as an heir at law; (2) To contest the provisions of any will or trust agreement; (3) To receive a widow(er)'s elective share; (4) Dower or curtesy; (5) Homestead rights; (6) Alimony or separate maintenance; (7) To act as the spouse's administrator or conservator; (8) To receive damages for wrongful death or loss of consortium.
About a third of the states have some type of community property or marital rights law. Basically, these laws provide that, to some extent, income earned and assets acquired, during marriage belongs equally to both spouses. You can, in a pre-nup, provide that the assets and income of each of the prospective spouses, including proceeds and reinvestments, remain separate, notwithstanding any community property laws.
401(k), Pension, or Profit Sharing Plans? Watch Out !
The Federal Retirement Equity Act was supposed to ensure that the spouse of a qualified plan recipient receives survivor benefits from the plan even if the participant dies before reaching retirement age.
Although benefits may sometimes be waived in case of divorce, death benefits under pension and profit sharing plans are treated differently. They may not be waived, except by a "spouse." Since the parties to a prenuptial are not yet spouses, a waiver might not be effective. Perhaps a variation of a "no contest" clause used in wills would be useful. If the spouse agrees to waive her rights after marriage and has not done so, other provisions for her would be reduced by the value of the retirement benefits she received
Today, marriage is, unfortunately, not necessarily forever. Fifty percent of marriages end in divorce. Forty percent of marriages are entered into with a "pre-owned" spouse. Although it is a difficult subject to broach with clients, a properly planned and drafted pre-nuptial agreement can offer a layer of protection.