Prenuptial Agreements in Minnesota: What You Should Know

All About Prenuptial Agreements in Minnesota

In the context of a marital agreement, the State of Minnesota has defined a prenuptial agreement as "an agreement between spouses made in contemplation of marriage and to be effective upon marriage." A prenuptial agreement is contemplated before marriage and not after marriage takes place. Unlike the Postnuptial Agreement (Article 513) which can be either prior to or after marriage, a Prenuptial Agreement is contemplated within a specific time frame and prior to the couple getting married.
Many people ask about the benefits of a prenuptial agreement. In general, these are agreements that are intended to provide financial transparency between each party prior to marriage. While various provisions of a prenuptial agreement might be added to a divorce decree , there are a number of issues that are not legally permitted to be addressed in a prenuptial agreement. For instance, in Minnesota, either party can set aside any provision that relates to custody or parenting time. It is held by the courts that such provisions must be set at the time when the facts and conditions exist for the court to fairly evaluate the evidence at the time of divorce and when the best interests of a child require the attention of the court.
A prenuptial agreement can address the following issues: transferable interests to businesses and parties, future inheritance, employment, retirement and insurance benefits, property ownership and maintenance, alimony and spousal maintenance awards, college funding, and the value of each spouse’s property. A prenuptial agreement can be implemented before a couple marries.

Prenuptial Agreements: What You Should Know

In Minnesota, for a prenuptial agreement to be binding and enforceable, both parties must voluntarily consent to the contract, the agreement must be full of complete financial disclosures, red flags or hints of coercion must be absent, and it must be signed prior to the marriage. This is a strict but more than reasonable set of requirements. Anything short of these criteria can lead the courts to declare the prenup invalid.
Each party to a prenuptial agreement in Minnesota must also be offered the opportunity to review the agreement with an independent counsel of their choosing. While the statute does not provide the parties the freedom to abrogate financial principles (like spousal support laws, for example), Minnesota does give upholders substantial deference when it comes to enforcing prenuptial agreements. For all intents and purposes, a prenuptial agreement is a legally binding contract in Minnesota.
Unlike other states, Minnesota does not have an opt-out waiting period for prenups, for better or for worse. In providing no short-term "sundown period" for the prenup, absenteeism from the signatory could more easily lead to a no-go on the prenuptial contract.
After the prenuptial agreement has been signed, it becomes part of the judicial filing for divorce. This means that it can be scrutinized by the court based on the rules and standards of contract law (i.e., concepts like impossibility of performance, justifiable reliance, unilateral mistake, etc).
As a practical matter, if you and your fiancée are planning to create a prenuptial agreement, it would make sense to have a lawyer involved sooner rather than later. Blindsiding your fiancé on the fly with a prenuptial contract is a big picture no-no. In Minnesota, you can’t bring a prenuptial contract out "of left field," so to speak, when it comes time to sign the paperwork.
More information on the creation of valid prenuptial agreements in Minnesota can be found in the Minnesota Uniform Premarital Agreement Act.

Requirements for Enforceable Prenuptial Agreements in Minnesota

There are many clauses that can, and often are, included in prenuptial agreements. However, several types of clauses are particularly common.
Property Division
One of the purposes of a prenuptial agreement is to determine the rights of the parties as to marital property and separate property. The agreement can be used to define what property is separate property and what is marital property. Also, the agreement can divide up property as to the amount or as to the specific property that shall go to each party upon divorce.
Spousal Support
A prenuptial agreement may limit spousal support. An agreement may prohibit spousal support, may be reciprocal, or may be one-sided in the event of a divorce. If an agreement limits spousal support to an amount still allowed by the Minnesota Guidelines for Fixed and Presumptive Spousal Maintenance, then the agreement will likely be followed. If the support is otherwise inconsistent with the guidelines, a court will examine the agreement more closely.
Limitations on Personal Rights
In addition to provisions as to property and support, an agreement cannot unilaterally limit certain personal rights. In Minnesota, prior cases have invalidated a prenuptial agreement that attempted to prohibit the pursuit of certain careers. Although a contract may, in certain circumstances, contain a limitation on the right to pursue a career, marriage is different. A court will likely invalidate a unilateral limitation on personal rights.

Common Provisions Of Minnesota Prenuptial Agreements

Employing a prenuptial agreement in Minnesota can provide both financial protection and clear expectations for your marriage. On the other hand, agreements that are too one-sided or unfair can be set aside by a court. Here are some reasons why you might consider a prenuptial agreement:
A prenuptial agreement can act as a safety net if significant changes occur during your marriage. For example, it could protect the rights of a stay-at-home spouse in the event that the working spouse dies unexpectedly while you are still married. In addition, a prenuptial agreement can protect your inheritance from your parents. A prenuptial agreement can also set forth what happens to your business if you and your spouse divorce.
Many people enter into business with a partner for a reason. They may have different goals for the business or different areas of expertise. If you anticipate running a business during your marriage, a prenuptial agreement can help to ensure your spouse does not receive a portion of the business in the event of your divorce.
A prenuptial agreement often addresses debt. If you enter into a marriage with significant debt, it may be a good idea to sign an agreement that prevents your spouse from being responsible for your debt in the event of a divorce. In addition, agreements can address debts that accrue after marriage. For example, if one spouse takes on debt for his or her graduate degree and earns a higher salary at graduation, the agreement can specify that the graduate’s former spouse does not have a right to the increased income that results from the new degree.
One of the benefits of a prenuptial agreement is that it offers you and your partner the opportunity to negotiate together before the marriage, while disagreement and acrimonious divorce proceedings are less likely to be present. Given that divorce negotiations typically occur at a time when hurt feelings are high, a prenuptial agreement can serve as a problem-solving mechanism.
Imagine that you are marriage to a professional athlete or an actress. These individuals are often high earners who may have spouses with equally high earning potential. The assets of each couple will be considered marital property in a divorce. As a result, a prenuptial agreement can help you protect your earnings and your investments. The prenuptial agreement can even state that any increase in value of one spouse’s assets during the marriage remain the sole property of that spouse.
A prenuptial agreement can be hard to renegotiate later in life. In addition, if you anticipate a significant increase in wealth during your marriage, you may be better off simply remaining legally unmarried. In these situations, you and your partner may benefit from living together as a couple but without the legal rules that govern marriage. Finally, a prenuptial agreement can be set aside if it was not signed voluntarily, if it was drafted without full financial disclosure or if it is too one-sided or unfair.

Pros and Cons of Using a Prenuptial Agreement in Minnesota

The process begins with an initial meeting with your attorney. The purpose is to discuss your circumstances, goals and concerns. Once this meeting has taken place the attorney will ask the other party to formally commit to having a meeting with his or her attorney providing the option of meeting separately with the same attorney who met with you. No one is committed to any agreement at this stage. It includes an indication of a willingness to undertake the legal representation to see whether an agreement can be reached. This is usually accompanied by the signing of a retainer agreement, agreeing to pay the fee charged as discussed at the time of the first meeting.
Once the retainer agreement has been signed an attorney/client relationship has been formed and both attorneys begin the reviewing of proposals and rewriting them to meet client needs . When everyone is satisfied with the language used, the parties decide on a time and place to sign a document. After signing the original document is filed in the property records of the county in which either party resides. Copies are exchanged and if the parties desire, filed in the states in which they may reside after the marriage.
In general, it is important for both parties to consult with their own attorneys in order to assure they understand the provisions of the agreement and that the provisions are fair and equitable. Minnesota law requires that prenups must be reviewed by independent counsel who is paid for by the party being protected by the prenup.

Forming a Prenuptial Agreement in Minnesota

In Minnesota, prenuptial agreements are generally enforced according to the terms set forth within the agreement so long as it was entered into knowingly by both parties and that there has been full and honest disclosure of assets. The dealine for contesting the validity of a prenuptial agreement is six months after a marriage dissolution. It’s worth noting that one spouse’s failure to abide by the terms of the prenuptial agreement is not a legal reason to void the agreement.
Like most states, Minnesota recognizes several defenses to enforceability when it comes to prenuptial agreements. An agreement may be unenforceable if it was not made voluntarily, or if one party did not enter "fairly, reasonably and in good faith" into the agreement. A prenuptial agreement is also unenforceable if it meets any one of the following conditions:

• The agreement is the product of misrepresentation or the withholding of material fact that had it been known would have likely caused a reasonable person not to enter into the agreement;
• If the agreement causes one party to be an executor or executee of the estate of the other party; or is otherwise unfair due to one party’s lack of independent legal representation prior to the signing of the agreement.
• The prenuptial agreement was not signed in the presence of a notary public.

A party may seek a court determination regarding the enforceability of a prenuptial agreement; and if found unenforceable the court may allow for the enforcement of a portion of the agreement that remains enforceable.

When a Minnesota Prenuptial Agreement Will Be Enforced or Challenged

In conclusion, having a comprehensive understanding of the nature and purpose of a prenuptial agreement is essential for making an informed decision. In Minnesota, these agreements have the potential to be used for more than just the preservation of property rights. The laws continue to evolve as with many facets of our society. How expectations evolve in regards to marriage, property and support will continue to impact the way the legislature and courts deal with prenuptial agreements . We recommend that parties consult with an attorney who has experience in this area and who can guide the attorneys representing the parties in facilitating an arrangement which works best for them. The earlier that the process is initiated the better. The mere fact that you are considering a prenuptial agreement should prompt you to seek a qualified attorney who has specific experience in this area to provide you with the final assurance that you are making the right decision for you.