What Makes a Prenuptial Agreement Valid in Pennsylvania?

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Gone are the days when prenuptial agreements are viewed as contracts on a marriage or a guarantee on divorce. While some religions and cultures still do frown upon them, they can be a great way to talk about finances and strengthen your marriage with clear expectations. If you have children from a previous relationship and significant assets to protect, a prenup can also make everyone feel more comfortable.

What is a prenup? A prenuptial agreement, also known as an antenuptial agreement here in PA is a formal agreement entered into before marriage in which the future spouses agree to provisions for equitable distribution of assets, debts and spousal support in case they divorce in the future or if they wish to provide for what happens to assets in the event of death by waiving a spousal election which is provided for in each state under the state law. In this document you can discuss current financial positions and how finances are going to be handled during the marriage, and whether you wish your will to control in the event of death.

The general purpose is for future spouses to think about and decide, prior to a marriage, their rights and duties concerning financial issues. These agreements can be especially helpful because putting one together forces the parties to discuss financial issues, a topic many of us avoid and is a common reason for divorces. If one or both parties have a substantial income, assets or debts these agreements may be a good option.

If one of you has significant assets or had to pay handsomely in a previous divorce, a prenuptial agreement can put one’s mind at ease that the less well-off party is not marrying for money.

In case a divorce does happen and if the agreement is valid, the issues agreed to in the contract are settled. Whatever issues not included in the agreement need to be worked out or failing that, litigated.

What makes a prenuptial agreement valid?
It is important to note that a prenuptial agreement’s validity is only determined when it comes into question in either a divorce or estate proceeding. This is why the writing of a prenuptial agreement must be done by an attorney who has significant experience in this area. There are a few general requirements to which make a prenuptial agreement valid:

· The agreement is in writing,

· Signed by both spouses, and notarized.

· Accompanied by a statement of assets for both parties and includes an estimated net worth as well as previous tax and salary information.

· The agreement cannot be the result of fraud or duress. It is a good idea to complete the prenuptial agreement and signing far before the wedding to rule out the appearance that it was forced on one party by the other.

· The parties understood and accepted the terms and conditions of the agreement, agreed to it voluntarily and had enough time to think about it prior to signing it. This includes the opportunity for both parties to consult with their own attorneys and make changes to or discuss points in the document.

· The agreement is fair and not “unconscionable,” which it may be even if what one spouse receives is small or disproportionate compared to what the other spouse receives, as long as one spouse is not left destitute.

Prenuptial agreements, like any contract, can be changed with the agreement by both parties.

A valid prenuptial agreement should shorten if not prevent disputes over financial issues if a marriage ends or a spouse dies, but issues they don’t cover are child custody and child support which can be especially contentious depending on the parties. If they can’t reach an agreement these issues would be decided in court, which can be a long, expensive and emotionally painful process.

Whether or not you signed a prenuptial agreement and your marriage is heading for a divorce, contact our office so we can talk about how mediation could bring an end to the disputes between you and your spouse, allowing you to start a new chapter in your life without the emotional and financial trauma that a divorce can inflict.

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Alimony in a Divorce

If you expect to receive alimony in a divorce, you will want to make sure that any agreement specifies the terms on which it is modifiable. Alimony is normally modifiable in amount provided you state that in your agreement, but not modifiable in duration. In Pennsylvania, however, if your spouse dies or you remarry or you live with another person unrelated of the opposite sex, alimony terminates at that time, unless you specify otherwise in an agreement. Since alimony does terminate in death, it is important to consider life insurance in your divorce plan or agreement. Many agreements will provide that until your alimony terminates that it is secured by a life insurance policy equal to or more than the remaining amount of money that you anticipate that you will receive over the course of the alimony term. In some instances, you may want to consider a buyout of alimony if you are paying alimony. This means that instead of making monthly payments on alimony, you lump sum the payment upfront and usually ask for a reduced amount since the money is being paid immediately. In this case, however, you may lose the deduction on your tax return depending on how the agreement is drafted since normally alimony is deductable by the payor and taxable to the payee. In addition, you will not be entitled to any of the payment back should your spouse remarry or cohabitate, but you will not be subject to an increase if your income goes up. There are many options to consider when paying or receiving alimony that should be considered in any divorce settlement. You should consult both an attorney and a certified public accountant.

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Alimony Modification

Alimony is support paid to an ex-spouse following the divorce decree. Unless otherwise stated by agreement, alimony may be subsequently modified due the changed circumstances of either party. The changes must be substantial and of a continuing nature. For example, if a party loses their employment or becomes disabled modification could be sought. An alimony provision within an agreement between the parties may not be modified in the absence of a specific provision allowing such a modification within the agreement.

Generally, the length is directly attributable to the length of the marriage. For example, a party may expect approximately 1 year of alimony for every 3 years married. For marriages of over 25 years, an indefinite term of alimony may be appropriate. However, the trend is to now consider the retirement ages of the parties when determining the appropriate duration of an alimony award. If the parties include alimony as a part of their own settlement agreement, they are free to set the amount and length as they so agree. The amount of alimony is largely based on the incomes of the parties but may also be affected by the distribution of the other assets, if any. In total, there are fourteen factors for a court to consider in awarding and/or modifying an alimony award. These factors can found at 23 Pa. C.S. Section 3701.

Click here to read more about alimony.

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New Jersey Alimony Reform

New Jersey is waiting to hear whether the long sought-after changes to their alimony laws will be adopted. Many view NJ’s alimony laws as unfair and inconsistent. The proposed changes to the law would seek to fortify a more uniform and rational framework for determining what amount and duration of alimony is appropriate as well as circumstances that would warrant a change or termination of the alimony award. One of the key provisions of the proposed new law is the “elimination” of permanent alimony which would be replaced with open durational alimony. Additionally, the court would be required to consider all the relevant factors for an alimony award and provide specific written findings of fact and conclusions of law in support of their decision. The factors would be expanded to include a consideration of support that has already been paid prior to finalization of the divorce as well as the standard of living of both parties such that neither would be entitled to a greater standard of living than the other post-divorce.

The proposed revisions to the alimony law also attempt to put a cap on alimony such that for marriages of twenty (20) years or less, the alimony award cannot be longer than the length of marriage. The court could still get around this general rule in the case of exceptional circumstances. Additionally, alimony awards could be modified and/or terminated upon the retirement of the spouse paying alimony if at full retirement age. If seeking to retire earlier, the paying spouse would have the burden of proving retirement is reasonable and made in good faith. Finally, alimony could be suspended or terminated if the party receiving support cohabits with another person. It is still the burden of the party alleging cohabitation to provide proof of the same to be successful in terminating the alimony award.

Click here to read more on NJ Family Law.

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