by: Carolé C. Krogmann
Premarital agreements, or “prenups” as they are often referred to, serve as an excellent means for prospective spouses to avoid the sometimes considerable expense and the (likely) aggravation of a multi-day equitable distribution (property division) trial that often ensues upon the filing for divorce in Virginia. While premarital agreements are typically drafted by family law practitioners or trust and estates attorneys, a general working knowledge of these agreements will certainly come in handy for any Virginia lawyer and may very well end up being relevant for personal as well as professional use.
Are premarital agreements recognized in Virginia?
Yes. The Virginia Premarital Agreement Act (“the Act”),[1] which was adopted in 1985, clarified the validity of agreements between prospective spouses created after its enactment. Additionally, it validated all prior agreements that were otherwise valid as other forms of contracts between potential spouses.[2] Since the adoption of the Act, a number of cases have been decided under the Act, with a couple of notable decisions recently coming out of the Virginia Court of Appeals. The case law on premarital agreements tends to be fairly fact specific, so a close examination of the individual facts and circumstances of the case is necessary when determining specific applicability. While keeping that in mind, there are certain requirements and other considerations, discussed herein, which would be generally applicable and are certainly worth knowing.
Who should enter into a premarital agreement?
Any couple intending to marry may choose to enter into a premarital agreement and would likely benefit from doing so as these agreements allow the parties to limit the rights and responsibilities that they will have to one another. The agreements enable prospective spouses to enter the marriage with a clear understanding of how things will end up financially in the event of separation, divorce, or even death. That said, these agreements are typically not utilized in first-time marriages where neither party has yet to accumulate significant assets or liabilities. Rather these agreements are more often seen in situations such as: (1) prospective marriages between older parties whose assets have largely been secured by separate efforts prior to the marriage, (2) prospective marriages in which either prospective spouse has a child from a previous relationship for whom they wish to provide, or (3) prospective marriages in which a party who has acquired wealth through business interests or a significant investment portfolio wishes to ensure that this acquired wealth remains separate property. Additionally, premarital agreements are vital in situations wherein parties wish to ensure that spousal support does not become a highly contested issue in the event of a subsequent divorce. These agreements allow prospective spouses to limit the amount and/or duration of any support obligation or provide a means to abolish future ongoing spousal support obligations to the other.
When are premarital agreements effective/enforceable?
Unlike most contracts, a premarital agreement does not become effective upon the full execution of the agreement but rather upon the parties’ subsequent marriage. The marriage itself serves as the necessary consideration for the agreement.[3] Even if the agreement is fully executed, the parties’ failure to thereafter enter into a valid marriage renders the agreement unenforceable.
What are the requirements of a premarital agreement?
A premarital agreement is required to be in writing and must be signed by both parties. Additionally, as previously noted, the parties must actually marry for there to be a valid and enforceable agreement between them.[4] Further, to avoid, or at the very least survive, a challenge to the validity of the agreement, full and complete disclosure of each party’s current assets and liabilities should be provided and included as an attachment to the agreement. These disclosures should include the current values of each party’s assets and liabilities so as to provide the required transparency.
What issues are most often addressed in premarital agreements?
Section 20-150 of the Virginia Code allows the parties to contract with respect to: (1) the rights of each in the property of the other as to jointly-owned property; (2) the right to manage and control property; (3) the disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event; (4) a limitation or elimination of the obligation of spousal support; (5) the requirement of a making a will, trust, or other agreement; (6) the obligations related to the provision of life insurance; (7) choice of governing law; and (8) any other matter not in violation of public policy or a criminal statute.
Are there any topics that should not be included in premarital agreements?
Provisions setting forth the custody arrangements and specific custodial schedules for future children should not be included in premarital agreements. These provisions are inappropriate and likely unenforceable because, by definition, they cannot take into consideration the “best interests of the child” at the time of the parties’ separation as is required by Virginia law.[5] Also, parties cannot limit or eliminate by premarital agreement the obligation to pay child support for a future child. As with any contract, terms in a prenuptial agreement that offend public policy are not enforceable. Certainly, parties may not expect a court to recognize a contract that memorializes and obligates the parties to never have children or that contracts for an “open marriage” situation. Therefore, any such terms should not be included in the agreement.
What are the most common reasons premarital agreements are challenged?
The agreement may be challenged and subsequently set aside for a number of reasons. The most obvious reason for such challenge would be if it was not voluntarily signed by the person against whom it is being enforced.[6] Additionally, the agreement will not be enforceable if the person against whom enforcement is sought establishes: (a) the agreement was unconscionable when signed, (b) the party challenging the agreement was not provided a fair and reasonable disclosure of the property or financial obligations of the other party, and (c) the party did not voluntarily and expressly waive in writing any right to such disclosure.[7]
As previously stated, a premarital agreement must be in writing and signed by both parties. The failure to comply with those requirements would lead to a finding that the agreement is generally invalid. Further, in the event of a bigamous marriage or one in which the parties are related by blood, the premarital agreement would not be valid and enforceable as the marriage itself (the actual consideration) is void.
Are premarital agreements really necessary?
If individuals are seeking to protect their assets or wish to limit the rights and responsibilities owed to a prospective spouse, a premarital agreement will allow them to do so. These agreements can act as an insurance policy of sorts, allowing certain protections and restrictions to be put in place. Premarital agreements can limit the unknown, thereby providing the parties with a sense of security and peace of mind.[8]
Carolé C. Krogmann, a partner in the firm of Masterman Krogmann PC, in McLean, is a member of the Board of Governors for the Family Law Section of the Virginia State Bar. Additionally, she has been a Virginia CLE author and lecturer on various domestic relations topics. Krogmann continues to be named in Super Lawyers and Best Lawyers in America for her work in the area of family law.
[1] Va. Code § 20-147 et seq.
[2] Va. Code § 20-154.
[3] See Peter N. Swisher & Victoria Burr, Domestic Relations, 19 U. Rich. L. Rev. 731, 732 n.8 (1985).
[4] Va. Code § 20-149.
[5] Va. Code § 20-124.3.
[6] Va. Code § 20-151(A)(1)
[7] Va. Code § 20-151(A)(2)
[8] The author wishes to acknowledge David D. Masterman of Masterman Krogmann, PC for his prior research on this topic, which was reviewed and a portion of which was incorporated here.
