When two people decide to get married they aren't doing it with an eventual divorce in mind. Unfortunately, divorce is very common -- in Arizona, the rates at which people get married more than once are above the national average. Even if a couple is confident they will never divorce, the statistics give us a compelling reason to at least consider the possibility of a divorce. For this reason, any couple getting married consider the possible benefits of a prenuptial agreement.
A prenuptial agreement is essentially an agreement made before marriage that both parties agree how to treat property in the event of a future separation or divorce. Also called a premarital agreement, it is a contract entered into by the two people intending to marry. In most cases, a prenuptial agreement will address the division of property or spousal support in the event of a divorce. It is especially useful in cases where the parties getting married have significant separate property accumulated before the marriage, and they want to avoid the possibility of the new spouse receiving any interest (sometimes called a community lien) in that property because the spouse contributed community funds or efforts to the maintenance of that property. A premarital agreement can even be used to provide that community property principles will not apply the salaries and assets earned by the parties during the marriage, or the debts contracted by the parties.
Premarital Agreements Under Arizona Law
The Arizona Uniform Premarital Agreement Act provides a statutory basis for prenuptial agreements under state law. A “premarital agreement" is defined as “an agreement between prospective spouses that is made in contemplation of marriage and that is effective on marriage.”
A prenuptial agreement is limited in scope, and cannot contract away the rights of a child to support. Otherwise, the parties can contract with respect to most things, including their personal rights and obligations, so long as the contract is not in violation of public policy or a statute imposing a criminal penalty. A premarital agreement can specify the terms of:
- The rights and obligations of each of the parties in any of the property, whenever and wherever acquired or located;
- The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign or create a security interest in, mortgage, encumber, dispose of or otherwise manage and control property;
- The disposition of property on separation, marital dissolution, death or the occurrence or nonoccurrence of any other event;
- The modification or elimination of spousal support;
- The making of a will, trust or another arrangement to carry out the provisions of the agreement;
- The ownership rights in and disposition of the death benefit from a life insurance policy; and
- The choice of law governing the construction of the agreement.
Property Distribution Without a Premarital Agreement
Without a valid prenuptial agreement, upon divorce, marital property will be distributed according to Arizona law. If the divorcing couple agrees on what to do with the property, money, and other assets, the distribution of property may go relatively smoothly. However, if there are disputes, then the court may make decisions on how to split up property, the home, furniture, vehicles, bank accounts, and any other property the couple acquired during their marriage. The court may even determine who gets the family pet after a divorce.
Spousal Maintenance Agreements
Another issue that may come up after a divorce without a prenuptial agreement is spousal support. Before entering into a marriage, the couple may agree to possible terms for spousal support in the event of a divorce. However, without a premarital agreement, spousal support can be determined by the court.
The court can grant a maintenance order for either spouse, with a specific amount and time period that the court deems appropriate. Factors influencing spousal maintenance may include the standard of living during the marriage, duration of the marriage, and comparative financial resources of both spouses.
Even if the couple enters into a premarital agreement that modifies or eliminates spousal support, the court may refuse to enforce those terms. Specifically, if the modification causes a spouse to be eligible for public assistance after divorce, the court may require the other party to provide sufficient spousal support to avoid eligibility for public assistance.
Enforcing a Premarital Agreement
In many cases, a couple will sign a premarital agreement before marriage, and show no signs that one of them intends to challenge the agreement later on. However, after a contested divorce, one individual may claim that the premarital agreement should not be enforced, and they should have an equal distribution of the property or spousal support.
Just because the prospective spouses signed a premarital contract does not necessarily make it enforceable under state law. In order for it to be enforceable, a premarital agreement must be in writing and signed by both parties, and it becomes effective on the day of marriage of the two parties.
The agreement may not be enforceable if the person against whom enforcement is sought proves that they did not execute the agreement voluntarily. The agreement may also prove to be unenforceable if it is considered to have been “unconscionable” at the time it was executed because the signer was not provided a fair and reasonable disclosure of the property or financial obligations of the other party. However, in some cases, the right to disclosure can be waived in writing.
Unconscionability of a premarital agreement is a matter of law that will be decided by the court. This is not a precisely defined term, but an unconscionable contract is generally one that is considered to be so unfair that to enforce the terms would shock the conscience. This usually means more than a simple uneven distribution of property, especially considering the entire purpose of a premarital agreement is to alter the default terms of how property is divided on divorce.
Even a validly signed prenuptial agreement can be later challenged in court, which is why it is important to contact your attorney with experience in drafting and defending prenuptial agreements to make sure it can be carried out. They will advise you on possible limits to your contract, make specific provisions to back up the terms of the agreement, and ensure that the agreement will be enforced in the event of a dissolution of marriage.
Amendments or Other Agreements After Marriage
After a couple is married, they can amend or revoke their premarital agreement only by a written agreement signed by both parties.
Even if a couple does not enter into a prenuptial agreement prior to getting married, there is another mechanism for making certain agreements after marriage. A postnuptial agreement is valid in Arizona and is often used as a way to settle issues that only came up during the marriage. This can help to avoid later disputes over property and assets, and can even help a couple avoid a divorce.