Written by attorney Anne Peyton Bryant

Negotiating, Drafting, and Execution of Prenuptial Agreements

From a legal perspective, a marriage is actually a contract. The best time to bring up your desire for a prenuptial agreement is as soon as you get engaged.

The best approach to bringing up the subject of a prenup with your fiance is to consider how the two of you will merge and manage your finances during the marriage, including family businesses and supporting children from a prior marriage. Start off with the positive. Traditional and non-traditional items as well as items of emotional significance (such as a pet), should be covered in a prenup. Clauses that are typically included in prenuptial agreements often focus on an event of marital discord otherwise known as an "operative event," which triggers the agreement, and is an occurrence indicating that the husband or wife has decided that the marriage is over. Hence an "operative event" is merely some occurrence that could end the marriage.

In general, the State of New York has a "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" (In re Estate of Greiff, 92 NY2d 341, 344, 703 N.E.2d 752, 680 N.Y.S.2d 894; see Bloomfield v Bloomfield, 97 NY2d 188, 193, 764 N.E.2d 950, 738 N.Y.S.2d 650). "However, this right is not and has never been without limitation" (Kessler v Kessler, 33 AD3d 42, 45, 818 N.Y.S.2d 571). "[T]he State is deeply concerned with marriage and takes a supervisory role in matrimonial proceedings. . . . Indeed, in numerous contexts, agreements addressing matrimonial issues have been subjected to limitations and scrutiny beyond that afforded contracts in general" (id. at 46 [citation omitted]). Thus, while "there is a heavy presumption that a deliberately prepared and executed written instrument manifests the true intention of the parties" (Brassey v Brassey\ 154 AD2d 293, 295, 546 N.Y.S.2d 370), an agreement between spouses or prospective spouses may be invalidated if the spouse who is challenging the validity of the agreement demonstrates that the agreement was the product of fraud, duress, or some other inequitable conduct (see Cioffi-Petrakis v Petrakis, 2013 N.Y. App. Div. LEXIS 1044, 1-3 (N.Y. App. Div. 2d Dep't Feb. 20, 2013; Christian v Christian, 42 NY2d 63, 73, 365 N.E.2d 849, 396 N.Y.S.2d 817; Petracca v Petracca, 101 AD3d 695, 956 N.Y.S.2d 77; Weinstein v Weinstein, 36 AD3d 797, 798, 830 N.Y.S.2d 179; Lombardi v Lombardi, 235 AD2d 400, 652 N.Y.S.2d 549).

As much as the drafting of the individual clauses of a prenuptial agreement are challenging to attorneys, its negotiation and execution can also present significant challenges. For this reason, a prenup is not the kind of agreement that bride and groom should discuss in a crowded restaurant or draft alone between the two of them at home over a glass of wine and then take to get notarized. It will not stand up in court. Clearly, the atmosphere and surrounding circumstances attendant to such an agreement are nothing short of extra-sensitive and only experienced matrimonial attorneys should be involved on behalf of the bride and groom who will be alert to any reluctance on the part of either party as to any term of the proposed agreement.

Divorce can be an expensive and emotionally draining proposition that substantially effects the parties' economic rights and futures. It can be intrusive in its discovery proceedings and attenuated in time. Prenuptial agreements allow people to "opt out" of this expensive proposition leaving only the issues of the children left for the court to decide in t he event of a divorce. Prior to the 1970s, prenuptial agreements were primarily he domain of the very rich and, even more particularly, those who were entering a second or third marriage and who wanted to guard their assets for the children of a prior marriage. Indeed, in many states prenuptial agreements were specifically limited for the purpose of protecting inheritance rights. After the 1970s, legislatures began widening the scope of what could be enforced in these agreements, thereby allowing those about to get married to lower the risk of costly, time-consuming and embittered litigation in the event of a divorce. The practitioner should bear in mind, and so advise the client, that since children are not parties to the agreement, provisions therein pertaining to custody, visitation and support of children born during the marriage of the are subject to judicial modification in the " best interests of the child."

Today, prenuptial agreements are recognized in all fifty states. Most states require that a prenuptial agreement be in writing, and a number of states require that the writing be executed in the manner that would entitle a deed to be recorded. While some states require that the parties provide financial disclosure, other states permit the parties to knowingly and intentionally waive financial disclosure. It is for reasons such as this that only an experienced matrimonial attorney who is fully informed of the particular requirements of the jurisdiction in which he or she practices should assist a bride or groom in the drafting, negotiating and executing of a prenuptial agreement.

The benefits of a well-drafted prenuptial agreement and the realities of high costs of divorce have caused a surge in the popularity of such contracts. For example, New York has made it the public policy of the State to foster and encourage agreements made before and during the marriage (known a postnuptial agreement).

A prenuptial agreement is usually suggested by a propertied party who is seeking to protect his or her assets in the event of death or dissolution of the marriage. To be upheld, an agreement need not appear "fair," so long as it is not unconscionable at the time of the divorce and execution of the agreement is not the result of fraud, duress or overreaching.

Prenuptial agreements are peculiar in two respects. First, these are agreements aimed at a specific event (i.e., the operative event) that both parties hope will not occur. If and when an operative event does occur, one party will usually be hurt by what he or she has previously agreed to. Second, prenuptial agreements are often an invitation to litigation because a party suing to set aside an agreement literally has nothing to lose, other than legal fees. As a practical matter, the party losing a law suit challenging the agreement is simply back where he or she started, i.e., being bound by the agreement bargained for in the first place. Because prenuptial agreements are unique in both these respects, special care must be taken in the negotiating, drafting and execution of these agreements, and attorneys for the parties should take extra steps to preserve the validity of any given agreement. Some suggestions:

Adequate Representation: A common claim among spouses trying to challenge the validity of a prenuptial agreement during divorce proceedings is that the lawyer, did not adequately represent the bride or groom during the negotiations. Most often the claim of inadequate representation is initiated by the lesser monied spouse and occurs when one lawyer either represents both parties, or the more monied spouses' lawyer suggests a lawyer to the lesser monied spouse. One lawyer should not serve both parties, nor should the attorney representing one party recommend the services of another in these circumstances. No matter how often the phrase "independent representation" is stated in the agreement, a claim for inadequate representation can still be made during subsequent divorce proceedings under the guise that both lawyers were in fact representing the "other" spouse's interests.

Given the ease of technology available today, the actual signing should be videotaped, memorializing subtle questions that can affect later potential, albeit, spurious claims of duress or having been under the influence a the time of the signing. Videotape can catch the true demeanor of the parties during the signing of the agreement. A smiling face and vivacious, responsive answers toll the death knell for any future complaints of "I didn't know what I was signing."

Net Worth Claims: In the required representations of net worth during the negotiation of your prenup, not only should the future spouse be accurate, but it is even advisable overstate rather than understate his/her estimated net worth . This will avoid later claims of waiver or reduced accepted benefits based on understatements of net worth. The more financial documentation provided as an exhibit to the Agreement, the stronger it is.

In determining whether to aside a prenuptial agreement, the trial Court must reasonably resolve credibility issues in favor of the plaintiff or defendant. With respect to the material facts underlying a party's claim, the curt must find that one party's testimony was "credible," "convincing," "unequivocal," and consistent with "additional corroborative evidence," and that any "inconsistencies" in his/her testimony related to "insignificant" matters. If a court finds that a party's "credibility to be suspect," due in part to factors such as "patent evasiveness," than the court is not likely to rule in that party's favor.

Additional resources provided by the author

The Law Offices of Anne Peyton Bryant 305 Broadway, 14th Fl. New York, NY 10007 ph: 646.421.6505 email:[email protected]

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