Some people view prenuptial agreements as a cynical statement about marriage. However, people who have interests in family businesses, have employment benefits that were earned prior to the marriage or are the potential beneficiaries of trusts or inheritances may want the security of knowing that certain assets can be protected from disruption in the event of a divorce or protected from probate claims on death. The reality is that no marriage lasts forever. Whether there is a divorce or one of the parties passes away, every marriage will end at some point. A prenuptial is simply a hedge against that reality. It can protect financial interests and take much of the conflict and uncertainty if there is a divorce proceeding or prevent estate litigation and preserve careful succession plans in the event of death.
The attorneys of Hogan Omidi, PC, can draft or review your marital agreement or cohabitation agreement so that you (as well as your partner) have peace of mind as you embark on your life together.
From Kathleen’s interview for the Masters of Family Law series on ReelLawyers.com.
When Is A Prenup Or Postnup Appropriate?
A prenuptial agreement, also known as a premarital or antenuptial agreement, is a written legal arrangement between two people who are getting married. The primary purpose of a “prenup” is to identify and preserve separate property interests. A valid prenuptial supersedes the presumptive classification and division of assets under Colorado’s equitable distribution statute if there is a divorce and can supersede the provision of state law setting forth the entitlements of a surviving spouse when the other spouse dies. A prenuptial agreement may be merited:
- When one party brings significant assets to the marriage
- When both parties own assets they want to keep separate
- To protect a business or professional practice from divorce claims
- To preserve inheritance rights of children from a prior marriage
- In anticipation of a future inheritance
The agreement specifies “mine and yours” for purposes of property division in the event of a divorce or the death of either spouse. It might also specify how the couple’s affairs will be managed, including steps to avoid commingling of separate property during the marriage. Prenuptials cannot dictate custody of children or child support. The parties can stipulate a limit on spousal support, or entirely eliminate the right to spousal support. However, those types of provisions are subject to court review if there is a divorce. If the court finds the spousal support prohibition to be patently unfair, it could strike that provision while upholding the remainder of the agreement.
Requirements for Prenups in Colorado
In order for a prenuptial agreement to be valid in Colorado, it must meet certain legal requirements. First and foremost, it must be in writing, and both spouses must voluntarily agree to the terms of the contract. This means that neither spouse can be forced into signing a prenup against their will.
Additionally, spouses are required to disclose their assets and current financial obligations before entering into a prenup. Ideally, this disclosure should be made in writing and should include an accurate accounting of each spouse’s assets and debts. Spouses are required to provide this information to each other freely and without coercion.
Finally, no quid pro quo is required for a prenuptial agreement. Either spouse may give up statutory rights without receiving anything in return. For example, a spouse could agree to waive their right to receive anything on the death of the other just in exchange for the agreement to marry each other.
What Can Be Included in a Prenup?
Generally speaking, anything that is not illegal or against public policy can be included in a prenup. However the kinds of terms most often seen relate to financial matters. This includes (but is not limited to) the following:
Assets and Debts
One of the most common things that people include in their prenups is the responsibility for assets and debts during the marriage and the distribution of assets and debts if the marriage ends. This can include everything from bank accounts and investment portfolios to homes and vehicles.
Another common item that people include in their prenups is the distribution of each party’s employee benefits and retirement plans. This can be especially important if one spouse has been working for longer than the other, or if one spouse has contributed more to their retirement plan.
Alimony or Spousal Maintenance Payments
Finally, some people want to eliminate or limit the possibility of future alimony payments if the marriage ends in divorce. In their prenup. Alimony is money that one spouse pays to the other after a divorce, and it can be a significant expense. However, Colorado law makes it very difficult to have effectively eliminate that possibility.
It’s important to note that prenups cannot include provisions that relate the custody of children or child support in the event of divorce. These matters are reviewed and decided by the courts at the time of any future divorce if there are disagreements. Prenups also cannot include anything that is illegal or against public policy.
Challenging a Prenup in Colorado
In Colorado, a spouse has legal rights to challenge the prenup agreement under the following circumstances.
1. Coercion or Duress
If either party can prove that they were coerced into signing the prenup agreement, then the contract may be declared null and void. Coercion can take many forms, not just physical threats. However, in Colorado refusing to marry a person unless there is a prenuptial agreement is not duress.
2. Failure to Disclose Relevant Financial Information
Both parties are required to disclose all relevant financial information before signing a prenup agreement. This includes things like income, expenses assets and debts. If one spouse concealed or substantially misrepresented major information, then the contract may be unenforceable.
A postnuptial (aka postmarital agreement or postnup) is an agreement signed at any point after the couple has married. However, it must be at a time when no action for divorce has been filed or is planned. If one spouse starts a business, for example, the couple may agree to exclude it from the marital estate, or they may want to protect marital assets from the claims of business creditors if the business is unsuccessful. A postnuptial can also protect an inheritance or proceeds of a lawsuit received by one party during the marriage.
The same requirements that apply to a prenuptial agreement also apply to a postnuptial agreement.
See our page on Colorado cohabitation agreements. Even if you are not getting married, it is prudent to protect your property rights, especially if you and your partner are sharing living expenses or the use of property such as a home or car that is owned only by one of you.
Our Role Is To Protect Your Interests
The lawyers of Hogan Omidi, PC, can help craft a clear and enforceable prenuptial/postnuptial. Assets must be fully disclosed and both parties must be allowed time to review the document without coercion or ultimatum. If you have been asked to sign a prenup, we can gauge whether it is fair and within your best interests. Call our Denver law office at 303-691-9600 or contact us online.