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Previously published in the Portsmouth Herald, May
2011
Prenuptial agreements, "prenupts", once rare, are now
commonly executed preceding second, etc., marriages and
increasingly prior to first marriages. The announced nuptials
of Prince William and Kate Middleton has raised the question of
whether brass tacks financial concerns of the royal family will
intrude upon this fairy tale romance. Considering that the
bulk of Princess Diana's post-divorce wealth came from Prince
Charles and having already broken up with Kate once in their eight
year relationship, Prince William might well follow the advice of
those advocating in favor of a prenupt. Following tradition,
however, Prince Charles married Camilla in 2005, ignoring such
advice, even after Princess Diana took him to the cleaners.
Not just royals are contemplating the protection of prenupts
these days. Such agreements are often encouraged by parents
of us commoners who wish to insure that future inheritances remain
in the bloodline. While such protection can be legally
addressed in other ways, valid, enforceable prenuptial agreements
are the best first line of defense. The key words here are
"valid" and "enforceable". Unlike other
contracts, the validity of prenupts will be challenged in almost
every case. The manner of their execution prior to the
wedding and the observance of their terms during marriage are
critical factors affecting their enforceability.
Courts in New Hampshire apply a three part test in assessing a
prenupt's validity: (1) whether the agreement was fair
when executed; (2) whether the agreement was appropriately
executed; and (3) whether changed circumstances at the time of
death or divorce have rendered the agreement so unconscionable as
to make it unenforceable. The following admonitions should be
heeded to insure a prenupt's validity:
Make Your Intentions Known Early. Those
who present the agreement to their intended the day before the
wedding might as well light a match to it on the honeymoon.
Giving your fiancé adequate time to consider the agreement
and to comprehend its legal and financial consequences are critical
factors affecting later enforceability.
Plan For The Likely As Well As The
Inevitable. Keep one unfortunate fact in mind:
before most couples die, they get divorced. Over 50% of
marriages now end in divorce. Therefore, address divorce
issues first in such agreements and estate planning issues
second.
Preserve, Protect And Defend The
Document. The executed original should be kept in a
safe deposit box inaccessible to the other spouse, not in a file at
home or in a joint safe deposit box. Many divorces start with
the disfavored spouse dispossessing the other from the marital
home. That is similarly the case where a spouse dies.
If the original agreement is kept at home, it likely will
disappear.
Practice What You Preach. Actions speak
louder than words. Actions taken contrary to the terms of the
agreement may result in a court finding that the parties
effectively revoked the prenuptial agreement. Moreover, even
the most carefully worded prenupts may be worthless if separate
property is not kept separate during the marriage. Avoid
co-mingling of separate property with marital property.
Provide Copies Of The Agreement To Professional
Advisors. Estate planning documents should be
revised following the marriage to reflect the intent of the
agreement. The agreement should also be disclosed to
accountants and financial advisors with admonitions to them that
they abide by its terms.
Don't Rub Salt In The Wound.
Prenupts should be viewed as unalterable. Revising a prenuptial
agreement after the marriage is personally wrenching and opens up a
legal can of worms. Desired changes can often be accomplished
by employing other legal devices.
Make It Fair. Providing for a fair,
albeit skewed, disposition of property dramatically improves the
odds of validity. Effectively addressing the possible
financial situation of the parties years into the future by
adequately providing for the party in need, while protecting the
preferred party from future loss of significant assets, helps to
make it fair. Making the agreement fair improves the odds
that it will be enforced for, as the House of Windsor is aware, not
even the royal family is immune from divorce. The financial
advisors of the likely future King of England might wish to write
the script now for what may turn out to be something other than a
fairy tale ending to this royal romance.
David DePuy is a Director in the Litigation Department of
McLane, Graf, Raulerson & Middleton, Professional
Association
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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