What is a Premarital Agreement?
The Premarital Agreement is a contract between soon-to-be spouses entered into prior to marriage. The agreement typically requires a signature by both spouses and witness as well as notarization, though Virginia law does not require such.
Under Virginia law, a premarital agreement may address issues of property rights before and during the marriage, debts incurred prior to the marriage, including spousal support and division of property and debts upon divorce or separation, spousal support waiver , attorney’s fees and costs of litigation or arbitration in the event statutory minimums are not waived.
The parties are free, pursuant to statutory authority, to put into a written agreement almost any arrangement they feel is appropriate for their needs. The only limitations are that any agreement cannot be unconscionable at the time it is enforced, and neither party was: (i) not provided a reasonable disclosure of the property or financial obligations of the other; (ii) did not and could not have had adequate knowledge of such property or financial obligations; or (iii) did not have independent counsel of their own.
Virginia Premarital Agreement Legal Requirements
Virginia law requires that all premarital agreements must meet certain conditions of formality in order to be enforceable. The agreement must be in writing and signed by both parties. The law does not require these agreements to be notarized or recorded with the court. The failure to comply with any of the necessary conditions causes the agreement to be unenforceable. Essentially, these agreements function as contracts and the formalities required for enforcement of a contract must be followed.
It is also critical that both parties voluntarily sign the agreement and that the voluntarily executed agreement is enforceable. In Virginia, a spouse will have a claim to set aside the premarital agreement if he or she was:
The law in Virginia requires that parties to a premarital agreement must make a full and fair disclosure of their finances before the agreement is signed. If one spouse fails to provide sufficient financial disclosures within the premarital agreement voids it. More specifically, the Financial Disclosure Statement included within the premarital agreement must include the following:
If a party does not disclose financial information at the time the agreement is entered into, the agreement is void and unenforceable unless one of the following exists:
Advantages of a Virginia Prenup Agreement
The key benefits of a Virginia prenuptial agreement include the protection of one or more parties’ assets, the availability of funds for the payment of debts, and the elimination of uncertainty in the event of divorce. The ability of one or both parties to protect their assets from a potential claim by the other spouse is, perhaps, one of the most significant benefits of a valid prenuptial agreement. Even when a prenuptial agreement is not entered into until after the particular property was acquired, the protection of pertinent assets is still possible in a limited way, as may apply in the event that a court finds that one spouse assisted the other spouse in the acquisition of the property at issue. All debts of the parties, real or personal, may be addressed in a prenuptial agreement. If there are concerns about either party’s credit, the elimination of any liability towards any debts of the other spouse will serve to protect against any possible claims of creditors. One of the most important aspects of a prenuptial agreement is its ability to reduce uncertainty if a divorce occurs. If either spouse has any doubts regarding the financial arrangements for marriage, the uncertainty that would be resolved with a prenuptial agreement is sure to be a benefit to both parties.
Premarital Agreements Commonly Include
Virginia premarital agreements (also known as antenuptial, prenuptial, or marriage contracts) play an important role in the legal landscape, especially during divorce proceedings. Often, these marital agreements outline important provisions for property division, guardianship for minor children, spousal support, debt management, and even estate planning. Before entering into a marriage legally recognized in Virginia, many couples choose to formalize their relationship by drafting a marital agreement. A legal contract before matrimony provides greater peace of mind to both lawyers and their clients.
The basic idea behind a premarital agreement is to avoid decision-making for the upcoming split in an atmosphere where emotion often trumps logic. Premarital agreements provide clear definitions for property rights, inheritance needs for step-children, and financial debts. Standing by the terms of a marital agreement is critical.
For example, suppose an agreement states that upon divorce a spouse will retain 50 percent of his/her retirement account and that the other spouse will receive the remaining funds. The judicial system works to enforce every clause contained within the document, as long as both parties were legally married at the time of contract signing. In Virginia, an increasing number of divorce lawyers have been able to write premarital agreements that follow Virginia law to the letter.
Premarital agreements are increasingly common within couples of many different backgrounds and ages. Individuals marrying for the second or third time often seek to prevent the financial devastation that frequently comes from divorce. While the properties and assets of couples are often very commingled, many individuals feel that it is in their best interest to look out for themselves by creating a prenuptial contact before marriage.
The critical elements of a marital agreement involve provisions like spousal support, property division, estate matters, and debt. With spousal support clauses, spouses can decide whether financial assistance will be provided during the divorce process, what amount will be distributed, and for how long support will last. With the concerns over lengthy and costly divorce procedures in Virginia, multiple couples are adding this clause to their premarital agreements. Fortunately for those interested in drafting marital agreements, most state laws allow for altering, waiving, or stating the amount and duration of spousal support.
Property division is also a common component of premarital agreements. This involves outlining specific property rights for both parties. For example, under the Virginia Premarital Agreement Act, separate property is retained after marital dissolution. While the idea is to provide a fair division of property, many elements may already be included in wills, trusts, or separate documents. Others may choose to divide property acquired during the marriage into separate or marital property.
Debts are typically divided during marriage in a 50-50 split. However, if cases exist involving pre-marital debt, both partners will review and equally divide the cost of paying off the existing costs. For example, if a spouse holds $50,000 in pre-marital debt, the other partner may be responsible for one-half of that amount or $25,000.
In Virginia, one of the most significant and often disregarded components of premarital agreements involve estate planning. Many individuals fail to mention or plan for concerns like life insurance benefits, inheritances, or visitation rights for future children. Your divorce attorney can explain why this aspect can play a critical role in your marital agreement.
Enforcing or Challenging a Virginia Prenup
Virginia courts will uphold premarital agreements except in limited and specific circumstances. Where a party wishes to challenge or enforce a premarital agreement, that party will need to demonstrate the basis for their request. Common decisions by Courts that are heard in Virginia dealing with premarital agreements fall under the following challenges: fraud, duress, unconscionability or the failure to disclose material information in a premarital agreement.
Fraud arises when one party intentionally misrepresents to the other party a fact within the agreement. If fraud is discovered to exist, then the agreement is voidable by the party injured by the fraud. Unconscionability exists when the facts of the agreement are so unfair that a reasonable person would deem it unjust or oppressive. When the agreement is signed, such unfairness must exist to be considered unconscionable. The courts will not set aside an agreement that is merely unfair when signed but becomes more unfair during the marriage, such as when the fortunes of one party change drastically and greater disparities arise between the parties or one party spends money on the other is not reimbursed .
The Contract must be fair at its inception in order for it to be upheld during the marriage. If the agreement is inherently unfair even if no dramatic events have happened, or the terms of the agreement no longer meet the standard of good faith and fair dealing then the agreement may become unenforceable.
Generally, issues of fraud, duress and lack of full disclosure must have occurred at the time the agreement was signed. They must be present at the inception of the contract for a Court to consider them when hearing educational validity of a premarital agreement.
Courts do not have the authority in Virginia to make substantive changes to a prenuptial agreement. Therefore, they will not look into the present day material situations of either party involved.
All contracts made between partners in a Virginia marriage must have been entered into freely and knowledgeably in order for the agreement to be upheld. While the above instances provide a window into when a prenuptial agreement may be thrown out of Court, it is very rare that a Court will set aside the agreement. Therefore, parties in Virginia are generally bound by their prenuptial agreement so long as it was entered into knowingly and voluntarily.
Lawyers Prepare Virginia Prenuptial Agreements
While it is possible to draft a premarital agreement without the assistance of an attorney, it is not in the best interest of either party. There are specific legal requirements that must be met for a premarital agreement to be enforceable, and unless you are an attorney, you are not going to know what these requirements are. If you are to knowingly waive any rights, you should know what it is that you are giving up. In addition, the premarital agreement will be difficult to enforce if you do not have a third party witness your signature. Part of the purpose of a premarital agreement is so that each party has a proper understanding of their rights and obligations, and having an attorney involved helps to make it clear to everyone what issues have been discussed.
More importantly, from a practical standpoint, you should have your own attorney review the agreement to ensure that your interests are protected. Even if you both have the same attorney, that attorney represents the premarital agreement, and could serve as a witness to the signing. If something goes wrong with the premarital agreement (for example, after your spouse discovers your secret $5 million inheritance), you have just put your jointly hired attorney in the position of testifying against you. It is better to have two attorneys involved from the onset, even if just one is drafting the agreement itself.
Another issue for couples is that each may have a different understanding of the purpose of the document. Both parties should be on the same page regarding the end goal, so that the final product meets both Foxhole and Grenade expectations. Legal counsel assists in the process by ensuring that both parties have discussed what they hope to accomplish with the agreement. An attorney can also explain the various purposes for the agreement (for example, it makes sense to have a premarital agreement if one party has already been through one divorce, and like the idea of knowing exactly what to expect should the next marriage fail – basically, the agreement allows for freedom of choice).
In the past, the law did not look kindly upon unilateral premarital agreements where one party did not have their own counsel. Virginia courts were reticent to enforce premarital agreements because they worried that the party without independent counsel had not fully understood the agreement at the time of signing. Now, the law only requires that each party be given reasonable opportunity to retain counsel, to ensure that there was no fraud in that regard.
While the law may be slightly more accepting of the non-attorney drafted or attorney appointed agreements today, prudence would dictate that you should always have an independent attorney review the agreement to ensure that it is enforceable and that each party understands what the agreement does and does not require.
FAQs About Virginia Prenuptial Agreements
Most of our clients have questions about premarital agreements and their current relationship with their future spouse. Here are some I’ve commonly come across:
How much does a virginia prenuptial agreement cost?
Costs vary greatly on the complexity of the issues you need addressed, the amount of property you and your fiancé have, the amount of income you and your fiancé have, the assets and debts you need to value, and the amount of time and effort required to draft the agreement. Some of the most common and expensive issues to value are retirement plans and business interests. There is also a lot of negotiation that takes place during the drafting of the agreement and negotiating can be time consuming.
Can you change a prenuptial agreement once it is signed?
The answer is yes, but only if both parties agree . Your Virginia prenuptial agreement should include a provision for amendment or rescission. However, such an amendment must be in writing and signed by both parties to the original agreement.
How will a prenuptial agreement affect my relationship with my fiancé?
That depends. It is extremely hard to predict how a prenuptial agreement, like any other financial tool, will impact the couples relationship. For some individuals, a prenuptial agreement can create security and peace of mind. For others, the thought of discussing potential divorce issues with their fiancé can appear overwhelming and hurtful. The initial discussion regarding a prenuptial agreement can place added stress on a relationship and may even result in the end of the relationship.
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