Antenuptial and Prenuptial Agreements in Minnesota
An Antenuptial Agreement is also called a prenuptial agreement.Retaining an experienced attorney is important part of negotiating, drafting and reviewing prenuptial contracts. Costly errors are not easily remedied, if they can be remedied at all.
What is an Antenuptial Agreement?An antenuptial agreement may also be called a prenuptial agreement. It is a written agreement between parties who intend to marry that must be executed prior to marriage. An antenuptial agreement is a contract that can significantly alter rights of the parties to property, or spousal support in the event of divorce or death of a spouse. Because of the significance of such agreements, there are laws in place governing how such agreements must be signed and executed.
What are Reasons for an Antenuptial Agreement?There may be any number of reasons for antenuptial agreement. Such agreements can protect both parties while defining rights and responsibilities in the event of divorce or death. Antenuptial Agreements also often facilitate speedy and less complicated divorce proceedings by resolving many of the potential issues in advance. Antenuptial agreements are most often considered in the following circumstances:
o Significantly Different Financial Circumstances. A prenuptial agreement can limit the property division or alimony payments due upon divorce or death particularly if one spouse has established premarital wealth that is not attributable to the new spouse. Similarly, an antenuptial agreement may also provide some protections and financial support for any spouse who is in a weaker financial position.
o Business Interests. Prenuptial agreements can protect business interests from invasion in the event of divorce or death.
o Changing Protection of Law. A prenuptial agreement may seek to modify rights that a spouse may otherwise have by law. For example, provisions for property division or even support can preempt laws of the state for probate where a spouse may be entitled to an elective share of the estate.
What are the Requirements for Antenuptial Agreements?Under Minn. Stat. 519.11, a prenuptial agreement must meet the following requirements.
o In Writing: Agreement must be in writing and between parties of legal age.
o Disclosure of Assets: For a prenuptial/antenuptial agreement to be enforceable, it is important that there is a full and complete disclosure of all assets and debts for each party. Without full disclosure, a party would not have a full view of the potential rights they give up with a prenuptial agreement. In most cases, a schedule of assets and liabilities would be attached to the agreement as exhibits memorializing the disclosures of the parties. This would also include a statement of approximate gross annual income for each party.
o Use of Attorneys: Each party must be offered the right to consult with an attorney of their own choosing. It is a conflict of interest for one attorney to act as counsel for both husband and wife. Although a party may waive their right to an attorney, it is not advisable and could open up the agreement to attack later. Having sufficient time to discuss the agreement with an attorney before signing is also important. Rushing to complete an agreement before a wedding may create an appearance that it was not well discussed.
o Signed Before Day of Marriage: An antenuptial agreement cannot be signed on the day of the wedding. It must occur beforehand
o Witnesses and Notary: An antenuptial agreement must be executed like a Will which means it is done in a very formal manner, witnessed by two individuals and with a notarized signature.
o Interpretation as Reasonable and Limitations of Agreement: An antenuptial agreement must be reasonable at the time it is executed in addition to when it is enforced. Reasonability can be a disputed issue in any challenge to such agreements depending on the circumstances of the parties. The Minnesota courts have held that the basic test for enforcing the agreement is whether the circumstances on which the agreement were originally based have so drastically changed that enforcement of the agreement would not comport with the reasonable expectation of the parties at the inception of the agreement, thus making it unconscionable. The burden of proof falls on any party seeking to avoid the terms of the written prenuptial agreement. The subjective nature of substantive "reasonableness" means that an antenuptial agreement is never bulletproof from later challenge.
What issues are Covered in Antenuptial Agreements?An Antenuptial agreement generally addresses three primary issues:
(1) rights to property and/or support during the marriage;
(2) rights to property and/or support upon divorce; and
(3) rights to property and/or support upon death.
Issues During the MarriageThe antenuptial agreement will carefully define the non-marital assets and debts for each party. Non-marital assets and debts are generally those that each party brings with them into the marriage. An Antenuptial agreement generally reserves those assets as individual property or individual debt of the party that had it previously. However, whereas income generated by an asset during the marriage (eg. Property rent, dividends, interest, business revenue) may often be considered marital under divorce laws, an antenuptial agreement may seek to preserve that income as part of the at person's individual property. Additionally, under the antenuptial agreement a spouse is required to sign any documents or deeds necessary to allow non-marital assets to be transferred or encumbered.
Property in DivorceAn antenuptial agreement usually states that each spouse maintains property that they brought into the marriage in addition to appreciation or interest on that asset, without the other spouse making a claim in the context of a divorce. It will also allow parties to clam a non-marital interest in assets derived from the sale or transfer of other non-marital assets.
The provisions of an antenuptial agreement generally do not prevent one spouse from re-characterizing formerly non-marital assets as marital by making a gift or transfer to a spouse. This may often occur when married couples commingle their assets, in particular cash savings or investments. Commingling occurs when a separate asset is placed into a joint account or mixed with joint funds. if assets are commingled, a divorce court will sometimes presume commingled assets are marital assets and can be divided in a divorce.
Spousal Maintenance or Alimony in DivorceAntenuptial agreements may seek to avoid the payment of any spousal support or to limit the payment of spousal support in a divorce. Whether such agreements are completely enforceable at the time of a divorce will depend on how the parties operated during the divorce. Considerations for enforcement may include: the length of the marriage; whether one spouse limited his/her earnings or employability for the other party's job; and/or immigration issues. Many antenuptial agreements will specifically provide for a minimum level of spousal support for a dependent spouse where financial circumstances are significantly disparate. This may include provisions for lump sum payments or monthly support over a defined term based, in some cases, on the length of marriage. This will often reduce the chance a judge in a divorce will completely invalidate an antenuptial agreement's spousal support clause.
Rights Upon DeathAn antenuptial agreement may also seek to avoid unintended transfers of assets upon the death of one spouse. Without an antenuptial agreement, a surviving spouse would have a number of rights under Minnesota statutes to property as a spousal beneficiary or, where there are other descendants, as an "elective share." These rights may include a claim to the homestead property outright, or as a life estate where they may live there until death. Absent an antenuptial agreement, he state laws may also provide for payment of a percentage of the estate of the deceased spouse and for spousal maintenance to be paid from the estate during administration,. Antenuptial agreements may be written to limit or modify these rights.