Premarital Agreements (Prenup)
In Florida, Florida Statute 61.079 controls what most people call a prenuptial agreement or prenup. However substantial case law also controls some issues.
If the prenup is signed by both parties then the Court looks to whether it is enforceable or not. The Statute defines how it can be set aside as:
- Was it executed voluntarily.
The one area this usually comes about is that it is signed too close to the wedding! While no case or statute defines what is or is not “too close”, you should have it reviewed and approved well before you ever get close to the marriage date. I normally suggest no less than 30 days. Obviously if the party were forced to sign or was told there would be no wedding while guest are already on their way for it, then this would be indicia of involuntary.
- Was the agreement a product of fraud, duress, coercion, or overreaching.
This is more difficult to define. Duress and coercion can take many forms. Legal duress is more than telling someone they will not marry them without a premarital agreement. Fraud is much clearly and is based n the facts surrounding its signing and leading up to signing.
- If the agreement is unconscionable when signed and before signing, the other party was (a) not provided a fair and reasonable disclosure of the property and financial obligations of the other party and (b) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond what was disclosed (paraphrased) and © did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.
This is why I normally require a full disclosure attached to the agreement as Exhibits of what each party is bringing into the marriage that may be worth in excess of $500. Then it is difficult later to say the other party did not know what each had.
The statute also defines what can be included in premarital agreements.
Clients normally want to protect what they bring into the marriage, however current law provides that assets brought into the marriage are nonmarital, thus their value as of the date of marriage and any passive appreciation remains nonmarital. Without a premarital, the issue(s) becomes if the asset is improved during the marriage through “marital efforts” then the increase is marital. Also if it is an intangible asset such as bank accounts, then if you mix marital funds (earnings or other funds gained as a result of marital efforts) into the nonmarital funds, then they become marital in their entirety. The one exception to this are retirement accounts. There the Court will value it as of the date of marriage then calculate what that value would have done invested as it was during the marriage and that is set aside as nonmarital. Any monies deposited during the marriage from earnings and appreciation or depreciation will be marital. This can be changed by the terms of the agreement so that all is nonmarital. For Estate purposes, any ERISA account (usually 401k, 403b, but there are others) is subject to a spouse’s entitlement whether acquired before or during the marriage. Thus if you want to be able to designate it to someone other than the spouse, then you must file a waiver after marriage or it will go to the spouse.
Also the mere fact that you marry, permits one spouse to claim 30% of the other’s Estate (Elective Share). This can be waived in the agreement.
One case has held that where the Elective Share is waived by the premarital agreement and the spouse later provides in their Will for a Trust to be created for their spouse equal to the elective share, that this provision in the Will is void as an attempt to modify the premarital as it was not signed by both parties (which the premarital Statute requires) and the Wife, in that case, lost the value of the Trust.
If you plan on living in one party’s home and it will remain titled solely in that spouse’s name, then this “homestead” comes with statutory rights. That right is for the non-owner spouse to receive either a life interest in the house or one-half of its value should the owner die. This too can be waived. In the case of divorce, the case of Kaaa ruled that any passive appreciation, improvements and mortgage paid down during the marriage using marital funds are marital. There is a statutory formula for determining how much the non-owner receives.
By law, gifts by the parties to each other during the marriage (note, engagement rings are before the marriage thus the receiving party keeps them as nonmarital) are treated as owned one-half by each party. This can be modified so that the receiving party is entitled to it. Gifts from third parties (so long as not improved or commingled with marital funds) remain nonmarital as would purchases made from them.
While this is not intended as an exhaustive analysis of premarital agreements, we hope it has helped you understand them better.
