Together you fell in love. And of course, you thought you’d live happily ever after. That’s why, when he first broached the topic of the prenuptial agreement, you were surprised, sure, but you weren’t hurt. And to prove you weren’t there for the money, you went ahead and signed it: with a flourish, without a second glance.
Now that the marriage is over, you realize you may have given up more than you ever intended. Your pride is gone, that’s a given. Is it true you also signed away your half of some important shared assets, your pension, even your dog? Maybe not, says, Daniel R. Burk
, certified divorce financial analyst
(CDFA) and president of the Northern Virginia-based company, Resolution Point
. “If, for any reason, the prenup was signed under pressure, it can be broken. Clear proof of coercion, duress, fraud, undue influence or bad intent, will void the document.”
According to Burk, other breaches include:
- Ineffective or unbalanced legal counsel;
- Agreements that were made verbally, as opposed to written;
- Or if the document was never signed;
- Provisions regarding child support will be voided while the rest of the agreement might stand;
- Unconscionable provisions. “For example,” explains Burk, “a provision that says ‘One spouse must lose weight; or even ‘Child support won’t be provided upon divorce’ wouldn’t stand up in court.”;
- Severe financial imbalance before or after the marriage;
- And of course, false or incomplete information, particularly financial information.
In fact, prenups get blown up regularly, says Michelle Smith, CDFA, of Smith Financial Strategies Group in New York. “Judges are the ones who make the final rulings. And they are human beings, just like everyone else. They are reading the faces in the room, and body language. They are thinking, ‘Does this smell fair?’ Blanket complete waivers aren’t viewed as fair. Did the partner have adequate legal representation? Were the issues thought about, negotiated, discussed, disclosed? The judges look for financial disclosure, and the lack of it. They weigh any appearance that you were trying to mislead, which will taint the entire document as disreputable. Consider this: Anytime there is nondisclosure, there is a 50/50 shot it gets thrown out. All the more reason you want to not only disclose, but over-disclose.”
Gabrielle Clemens, CDFA and vice president of wealth management at Citi/Smith Barney in Boston, points out that the judicial system takes into account such descrepancies even after the document was signed by both spouses. “Judges believe in a thing called ‘equity powers’,” explains Clemens. “You can write in anything you want, but sometimes a judge will throw out a clause that he feels is inequitable. In fact, judges can be inconsistent. Depending on the day, the weather, or the judge’s own life experience, he can ignore, or disregard any provision.”
The most common prenup-buster is the failure to disclose an asset prior to signing. Whether the item was overlooked, or the exclusion was deliberate, the revelation can void the whole document, which means all the other provisions can be revisited as well. “Both you and your future spouse have a fiduciary responsibility to bring all of this forward,” explains Susan Campbell, a CDFA, and principal with Buena Vista Financial Resources in San Francisco. After all, the goal is to make informed decisions about your future.”
If not, the things you thought would never be up for grabs are suddenly in play. To help prod her clients toward an open and honest accountability of their assets, Campbell provides them with a list of possible items that should be covered.
- Property division;
- Future inheritances, and the income from inheritances as well;
- Irrevocable trusts;
- Off-shore bank accounts;
- Unusual investments, such as timeshares;
- All income sources;
- Caps on future alimony payments;
- Existing life insurance policies; and
- Any trusts or partnerships.