A prenuptial agreement, also referred to as a premarital agreement, or “prenup” for short, is a legally binding document that clarifies what will happen with a married couple’s finances in the event of a death, divorce or legal separation. A prenuptial agreement is nothing more than a contract between prospective spouses which takes effect when the parties to the agreement get married. In recent years, more and more couples are realizing the benefits that a prenuptial agreement can provide.
At Gearing Rackner & McGrath, LLP, our dedicated team of divorce attorneys are skilled at drafting enforceable and creative premarital agreements. We strongly believe in the value that a prenuptial agreement adds to a new marriage and work to create creative solutions that will provide for our clients in the event of the unanticipated.
The Basics of an Oregon Premarital Agreement
In most aspects of life, the best way to deal with an issue that may later turn into a problem is to take preventative action. Oregon divorces are no different. By creating a premarital agreement, prospective spouses can rest at ease knowing that they will be treated fairly in the event of a death, divorce or legal separation. While a prenup is usually the last thing on a couple’s mind as they plan for their marriage, the reality is that a premarital agreement can provide stability and a sense of security, which can strengthen the bond between partners. Every marriage has its high and its lows, and sensitive issues will invariably arise in one form or another. By confronting these seemingly difficult issues early in a relationship, couples can ensure that they are on the same page and immediately begin enjoying their future together.
While nearly every couple can benefit from a premarital agreement, these agreements are especially appealing to those who have been through a difficult divorce in the past. Oregon prenuptial agreements are also a valuable tool that can be used by a spouse with significant debt to protect their partner from assuming that debt. Premarital agreements can also cover issues of a child’s inheritance, which might otherwise be decided by a judge. In short, a prenuptial agreement is recommended for anyone who wants predictability or control of how their debts, assets and income will be treated when the unexpected occurs.
Oregon prenuptial agreements can cover a wide range of topics. Depending on a couple’s unique needs, a prenuptial agreement may provide for any of the following:
• Division of separate, gifted or premarital property
• Division of marital property
• Each spouse’s ability to buy, sell or take a loan out on property
• Division of debt
• Ownership and management of a business
• Whether either spouse has a right to the other’s inheritance
• Whether spousal support will be awarded and, if so, in what amount and duration
• Whether either spouse will be entitled to death benefits from the other spouse’s life insurance policy, and
• Any other issue that the couple believes to be important
Some matters cannot be included in a prenuptial agreement, such as child custody and child support issues. When judges consider Oregon child custody issues, they are bound to act in the best interests of the children at the time of the divorce. Thus, a couple cannot predetermine any issue related to child custody or parenting time. Similarly, child support matters usually cannot be included in a prenuptial agreement because the right to child support is tied to the child’s rights.
Ensuring an Oregon Prenuptial Agreement Is Binding
An Oregon prenuptial agreement is a contract, but not all contracts are legally binding. To be valid, a prenuptial agreement must be in writing and signed by both parties. Even so, there are various reasons why a court may declare a premarital agreement invalid and unenforceable, including:
• The marriage was void
• One spouse forced or tricked the other into signing the agreement, or
• The agreement was “unconscionable” in its terms.
Oregon prenuptial agreements are rarely unenforceable based on a void marriage. A void marriage is one in which the parties are closely related or one of the parties was already legally married at the time of they entered into a subsequent marriage. However, courts closely review prenuptial agreements to ensure that they are not “unconscionable,” which can be a complex analysis. It can also be complex to determine whether or not one party was coerced or unduly influenced into signing the agreement.
The doctrine of unconscionability refers to a contract that is unenforceable based on the fact that it was severely unfair at the time it was entered into. Courts will not typically find that a premarital agreement is unconscionable just because it awards more to one spouse. Typically, when a court determines that a prenuptial agreement is unconscionable, the court must find:
1. One of the spouses failed to reasonably disclose either their debts or assets;
2. The aggrieved spouse did not waive their right to know the other spouse’s financial situation; and
3. The aggrieved spouse did not have actual knowledge of their spouse’s financial situation and could not have reasonably obtained such knowledge.
Courts can also strike certain provisions in an Oregon premarital agreement. For example, if one spouse is forced to rely on public assistance (welfare) due to an agreement to waive spousal support, the court may strike this provision and order spousal support in an amount that prevents that result. This law protects the state from having to financially support an impoverished spouse that could and should be supported by the other spouse.
When creating a prenuptial agreement, it is essential to keep in mind the following, or else all or part of the agreement may be deemed unenforceable:
• Disclosure: Full, reasonable disclosure is crucial in an Oregon prenup, and a party’s intentional concealment of their debt or assets can be fatal to an otherwise enforceable agreement.
• Counsel: Each party to the agreement should have an experienced Oregon divorce attorney draft or review any prenuptial agreement prior to signing. An experienced Oregon divorce attorney will also be able to advise a party about the risks and benefits of the proposed prenup.
• Review: Parties should take the time to thoroughly understand the agreement and consider how the agreement would affect them in various scenarios. Parties should consider whether they expect to have children, who will care for the children, and so on. It can be especially important to consider retirement planning, especially for older couples.
• Reasonableness: Unreasonable prenuptial agreements are the most likely to be deemed unenforceable by the court. Thus, even if one party brought significantly more assets into the marriage, it may not be seen as fair for that party to keep the same percentage after 25 years of marriage.
Consult With A Dedicated Portland Prenuptial Agreement Attorney
If you are planning to get married and want to know that you will be secure in the event of death, divorce or a legal separation, contact the dedicated Portland family law attorneys at Gearing Rackner & McGrath, LLP. Our Oregon divorce attorneys are highly experienced in the drafting of prenuptial agreements. We understand what to include in an agreement to protect our client while taking every precaution to ensure that the agreement is fair and enforceable. To learn more, and to schedule a confidential consultation to discuss your situation with one of our attorneys, call 503-222-9116. We represent clients in throughout Oregon and Southwest Washington, with convenient offices in Portland and Astoria.