What Is A Prenuptial Agreement?

People may acquire property and other assets before they are in a relationship. While in a relationship, they may separately acquire additional property. When the couple plans to get married, they may decide to outline in a prenuptial agreement the terms and conditions of their marriage as well as for a possible divorce in the future.

A prenuptial agreement, or prenup, is legal contract between a couple that they enter into before getting married. Oregon law defines a prenup as an agreement made in contemplation of marriage between prospective spouses. The contract must be in writing and signed by both parties The agreement does not go into effect until the couple marries.

Each person in the couple brings their premarital property into the marriage. Each prospective spouses property owns and possesses the property separate from the other prospective spouse. Although a couple does not foresee a divorce in the future, the prenuptial agreement is created to outline marital guidelines and divorce arrangements within the limits of the law.

State law lists the matters that parties to a prenuptial agreement may contract about, including:

  • Rights and obligations of property of one or both parties
  • Permissive terms and use of property of one or both parties
  • Modifying or eliminating spousal support
  • Disposition of property upon separation, divorce, or death
  • Making a will or trust to carry out the terms of the prenuptial agreement
  • Terms in case of incapacitation

Although a premarital agreement is effective upon marriage, it must also be enforceable under state law. Unenforceability may occur if a person does not enter into the agreement voluntarily. The agreement may also be unenforceable if the contract is unconscionable before and at the time of the execution of the prenuptial agreement. Unconscionable means that an action is so unjust or is extremely one-sided in favor of the person with greater bargaining power. Essentially, the victim of the unconscionable agreement has enter into a contract that is not only against her best interest but may also violate her legal rights.

To enter voluntarily into a prenuptial agreement, each party must receive fair and reasonable disclosure of the other party’s property and financial obligations. A couple’s disclosures of their respective property and finances allows each contracting party to make a knowing decision to accept the terms of the prenup. If one party failed to fully disclose their assets and obligations, they must show that the other party voluntarily and expressly waived the right to receive disclosure beyond what the party already disclosed. The lack of full disclosure is only permissible if the other party had knowledge of or reasonably could have found an adequate method of discovering out the full extent of the prospective spouse’s property and financial obligations

One benefit of having a prenuptial agreement is that prospective spouses can determine the distribution of property upon dissolution of marriage, commonly known as divorce, Oregon divorce laws sets forth how courts determine the distribution of spouses’ separate and marital property. Separate property is property owned by one spouse and acquired before marriage or after marriage as a gift, through inheritance, or under a will. Marital property is property acquired after marriage whether held in the name of one or both spouses.

In Oregon divorces, the court spouses must submit a list of assets. Unless the couple can agree on their own how to distribute their assets, the court determines whether the assets or separate or marital property. Property designated a marital property is distributed between the divorcing spouses by equitable distribution. This form of property division distribute property in a manner that is just and proper to both spouses. The distribution may not be an equal split; one spouse may receive more property than the other spouse. Also, the status of separate property can change to marital property in a process known as transmutation. If a spouse commingles their separate property into the financial affairs or funds of the marriage, the separate property may become marital property and subject to equitable distribution upon divorce.

A prenuptial agreement can help to resolve the issue of separate and marital property. The agreement can state what property is or will be designed separate or marital property. It can even declare what property acquired after marriage may be designated as separate property. Additionally, the prenup can resolve issues of alimony, death, incapacity, and financial obligation at a time in the relationship when both parties are likely at their most amicable.

To schedule a consultation with one of our prenuptial agreement lawyers in Oregon or SW Washington, call us now at 503.222.9116 or write us.

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