by Jorge E. Salazar

In popular culture, prenuptial agreements have received their fair share of criticism, and the legal community has likewise viewed these agreements with varying degrees of disfavor over time. Laypeople and legal professionals hold valid concerns that the types of agreements, whether called prenuptial agreements, premarital agreements, or prenups, will prove unenforceable. For instance, Idaho is among the states that will not enforce provisions of a prenup that would render a spouse eligible for public assistance.[i] Such policies may discourage individuals from even considering a premarital agreement, because they perpetuate the popular belief that prenups are “not worth the paper they’re written on.”

These views have some merit. Where the legitimacy of a prenup is at issue, courts must essentially engage in “double litigation” to first assess the validity of the premarital agreement, and if unenforceable, only then can the court commence with the process of property division and dissolution. Double litigation can lead spouses who find the outcome of their divorce did not align with their often long-held expectations to feel frustration and disappointment.  It can also lead to increased legal expenses.

However, drafting an effective premarital agreement can greatly benefit marital partners and the legal system. An adequately prepared premarital agreement acts to conserve judicial resources by avoiding this “double litigation” issue, and it permits a couple to divorce and have their assets divided as they previously agreed. By resolving marital settlement issues such as property distribution in advance, effective prenups ensure that a divorce can be granted more expediently, thereby conserving the resources of both parties and the courts.

Furthermore, despite their reputation for creating problems between intended spouses, premarital agreements may help couples avoid the pitfalls that commonly lead to marital problems and divorce.[ii] Because a properly drafted and executed premarital agreement requires the partners to communicate about their finances before issues arise during their marriage, couples who prepare premarital agreements are often better equipped to handle the financial issues that inevitably occur during any marriage.[iii] Spouses can decide in advance how they will manage their earnings and the couple’s financial goals as they build their shared life.[iv] Rather than signaling the imminent end of a marriage, executing a prenup may help spouses remain together through the difficulties that inevitably arise during any marriage.

Premarital agreements can be a valuable tool in the arsenal of lawyers who practice family law, and they should not be disregarded because of problems that are easily avoided using careful and conscientious legal practices. This article will first discuss trends in marriage, then turn to the principles of how to properly produce and execute a premarital agreement that works to preserve a client’s resources and judicial economy, rather than creating new issues to litigate.

Trends in Marriage and Popularity of Premarital Agreements

The reality is that among the marrying-age population, divorce is much more foreseeable than it has been for previous generations.[v] It may surprise some that the highest divorce rate is among Baby Boomers, individuals born between 1946 and 1964.[vi] Although the national divorce rate has declined over the last two decades, for 55- to 64-year-olds, the divorce rate has doubled and tripled for the over-65 group.[vii] These divorces tend to occur after a couple’s children are grown, when spouses realize they no longer share the same interests and seek to end the marriage to pursue their wishes during retirement.[viii]

The children of Baby Boomers, who are primarily members of Gen X and Millennials, are responding accordingly to this increasing rate of divorce among their parents’ generation.[ix] While the divorce rate is lowest in Gen X, it seems that Millennials are responding to the heightened divorce rate in their parents’ generation by marrying less often and later in life.[x] Recent spikes in premarital agreements show this cautious attitude that Millennials display towards marriage and their realist views of the likelihood of a marriage ending in divorce.[xi]

Indeed, the current population that is of age of marriage is more interested in premarital agreements than previous generations. Nearly two-thirds of the divorce attorneys surveyed by the American Academy of Matrimonial Lawyers reported an increase in the total number of clients requesting prenuptial agreements in recent years, and over half of those attorneys indicated Millennial clients drove the increase.[xii]

Legal Principles

The distribution of assets in divorces without prenuptial agreements follows a specific legal framework. For example, Idaho is a community property state that operates under the principle that all property acquired after the marriage is jointly owned by both spouses, regardless of who earned or purchased it.[xiii] The term property includes rents, issues, and profits of all property. [xiv]

During divorce proceedings, the court’s primary goal is to divide community assets equally, aiming for a 50-50 split, with each spouse receiving an equal share of the community property.[xv] But, if compelling reasons exist to not divide property equally, the court may divide community property in another way while considering relevant factors.[xvi]

On the other hand, separate property is any property acquired before the marriage, through inheritance, or gifts.[xvii] Separate property may also be established by a written agreement (such as a prenuptial agreement) between the parties that declares that some community property item(s) will be considered separate property of one spouse.[xviii] Accordingly, separate property remains with the respective owner. But it’s crucial to establish and prove the separation of such assets during divorce proceedings. Therefore, without a premarital agreement, Idaho operates under the principle that both spouses jointly own property acquired during the marriage.

Additionally, it is important to understand that Idaho courts have applied contract law to premarital agreements.[xix] Contract principles that have been applied to premarital agreements include voluntary abandonment, which the conduct of the parties can infer.[xx] It may, therefore, be wise to instruct clients to consistently act in accordance with the premarital agreement, lest it be deemed abandoned or otherwise precluded from enforcement by other principles of contract law.

The Idaho Code also includes provisions that pertain to premarital agreements. But, they can be somewhat vague in that they reference requirements that are only articulated in other provisions of the code. For instance, Idaho Code § 32-922 requires certain formalities for the execution of premarital agreements, which are found by a review of Sections 32-917 through 32-919.[xxi] These are virtually identical to the formalities for writing and executing contracts for the conveyance of real estate, which again requires consultation of different statutes within Title 55.[xxii]

Idaho Code § 32-922 also requires that premarital agreements conform with the rules that are required for executing marital settlement agreements.[xxiii] Although derivative, this means that attorneys drafting premarital agreements can essentially approach the process as if drafting a settlement agreement for a divorce. This provision also has practical benefits: it reduces the resources that clients and courts must expend should the couple’s marriage ultimately end, as the settlement agreement was essentially drafted in advance.

Attorneys should also be aware that the Idaho Code expressly allows the enforcement of a premarital agreement where a marriage is found to be void, but only to the extent necessary to avoid an inequitable result.[xxiv] The Idaho Code also permits courts to order a party to pay spousal support notwithstanding the existence of a properly executed premarital agreement, where the agreement includes a provision that modifies or eliminates spousal support, and that provision causes one party to the agreement to be eligible for support under public assistance at the time of separation or marital dissolution.[xxv] As such, attorneys should take particular care in drafting and producing premarital agreements, where an intended spouse lacks separate property or has limited education or employment capabilities that may put them at risk of requiring public assistance in the absence of spousal support.

Safeguards for Enforceability

Idaho Code § 32-925 sets forth two statutory bases to challenge the enforcement of a premarital agreement.[xxvi] First, an agreement is unenforceable if the party against whom enforcement is sought proves that they did not voluntarily execute it.[xxvii] As explained, proving that a premarital agreement was involuntary when the party challenging enforcement had independent legal representation when executed is difficult, so this should be among the first considerations when preparing an agreement for a client.

Second, Idaho Code § 32-925 provides that a premarital agreement is unenforceable on the basis of unconscionability, but only if (1) it was unconscionable when executed, and (2) prior to execution of the agreement, the party challenging enforcement did not receive a fair disclosure of the property or financial obligations of the other party, did not voluntarily and expressly waive – in  writing – a right to such disclosures, and did not or reasonably could not have had adequate knowledge of the other party’s property or financial obligations.[xxviii]

Because this second basis for unenforceability is in the conjunctive, lawyers can preclude a future challenge to premarital agreements on the grounds of unconscionability by simply incorporating a voluntary and express waiver to the right of such disclosures within the agreement itself. Likewise, even an unconscionable agreement can be enforced when a party is actually provided fair and reasonable disclosure of property and debts of the other party. Even so, the Idaho Code does not permit a challenge to enforcement on the basis of unconscionability where the party challenging enforcement had actual or constructive notice of the property or financial obligations of the other party.

As such, it is an uphill battle to challenge premarital agreements on the basis of unconscionability. Lawyers preparing such agreements can avoid pitfalls for unconscionability by acquiring fair and reasonable disclosure of property or financial obligations of their clients, and if these are difficult to ascertain, incorporating a voluntary and express disclosure of the right in writing within the agreement itself. It may also be useful to encourage clients to be transparent with their intended spouse and diligently document the efforts made to convey information about their property and financial obligations so that knowledge of these obligations can be readily proven if the agreement is ever challenged.

Beyond the language of the agreement itself, the circumstances of execution are perhaps the most critically important factor in determining whether a premarital agreement will be enforceable. These circumstances play into whether the agreement was made voluntarily. A challenge based on voluntariness is much more straightforward than an unconscionability challenge, as there are fewer elements and circumstances the party opposing enforcement must prove to succeed.[xxix] Attorneys should use care to avoid any circumstances that can suggest fraud or undue influence during execution.[xxx] The presence of independent legal counsel provides significant evidence that the agreement was voluntarily executed.[xxxi]

To ensure an agreement cannot be challenged on the basis of voluntariness, both parties should have independent counsel, while taking the time to engage in full and accurate disclosure of their financial conditions, at a time well in advance of the marriage itself. As a practical suggestion, when conducting the intake of a client who seeks a premarital agreement, it may be wise to require that the intended spouse has independent legal representation before engagement, as well as ensure that the wedding date is set far enough in advance to have enough time to draft and execute the agreement properly.

Conclusion

Premarital agreements can be worth much more than the paper they are written on. Accordingly, attorneys can ensure that the agreement reached by the parties will be upheld and enforced at the time of divorce. Attorneys can draft a premarital agreement as if drafting a marital settlement agreement while taking simple steps to ensure it is voluntarily executed and not likely to be challenged on the grounds of unconscionability. A final consideration is that contract principles do apply, so attorneys should know how ambiguities or defenses can affect an agreement and avoid these pitfalls as well. In short, premarital agreements have earned their place in the practice of family law, and they can benefit the judicial system and the intended spouses, both where they are conscientiously prepared.