Monday, January 26, 2009

Prenuptial Agreements - Some History

FindLaw's Writ published Prenuptial Agreements: The Iowa Supreme Court Takes a Strong Pro-Enforcement Stance which might interest those outside of Iowa.

"In the modern era, prenuptial agreements are tolerated to a much greater extent than they were historically. While states vary in their approach to regulating such agreements, they all agree that it is possible for most couples to enter into an enforceable prenuptial agreement that will dictate, at a minimum, the economic consequences of marital dissolution.

The basic tension among states is whether to treat premarital agreements just like any other contract, or whether to apply special standards, in this context, that take account of the particular context in which they arise. The choice dictates how likely it is that premarital agreements will be enforced.

Outside of the family law context, contracts are presumptively enforceable. Courts do not generally 'police the bargain,' which means they neither conduct a fairness or reasonableness inquiry when evaluating contracts, nor concern themselves with each party's knowledge or understanding of a contract's terms. Contracts are presumed to reflect voluntary, mutually-beneficial exchanges. Absent evidence of fraud, duress, or some other recognized defense to the contract's initial formation, individuals are bound by their agreements, even when the terms are obviously unfair or ill-considered."

Frankly, I am not so sure where Indiana fits in all this. Put it down to being too close to the trees to see the forest. Having had time to think over the subject, I would I would say that Indiana tends not to police the bargain. I say tend because our courts do not seem to like the situations where one spouse has the greater sophistication forces a less sophisticated spouse into a very bad bargain - but even those cases are helped greatly by the more sophisticated spouse hiding assets.

Two easy steps exist to an enforceable prenuptial agreement in Indiana: 1) make sure the other side has a lawyer review the agreement; and 2) disclose all assets.

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