Wednesday, January 9, 2008

Prenuptial Agreements - When an Indiana Prenuptial Agreement is Unenforceable

Why should both people to a pre-nup get their own lawyer?

Indiana Code 31-11-3-8 sets out when a court will not enforce a prenuptial agreement.

(a) A premarital agreement is not enforceable if a party against whom enforcement is sought proves that: (1) the party did not execute the agreement voluntarily; or (2) the agreement was unconscionable when the agreement was executed.
Now, read that again. Those two subsections create a very good reason to send the other party off to an attorney of their own. Hard for the other party to argue either grounds when they had their own lawyer.

"Unconscionably" appears again subsection (c):
(c) A court shall decide an issue of unconscionably of a premarital agreement as a matter of law. As added by P.L.1-1997, SEC.3."
To me subsection (b) presents a different sort of unenforceabilty, one not of bad behavior but of changed circumstances in a very limited setting:
(b) If: (1) a provision of a premarital agreement modifies or eliminates spousal maintenance; and (2) the modification or elimination causes one (1) party to the agreement extreme hardship under circumstances not reasonably foreseeable at the time of the execution of the agreement; a court, notwithstanding the terms of the agreement, may require the other party to provide spousal maintenance to the extent necessary to avoid extreme hardship.
Along these lines,UPDATES IN MICHIGAN FAMILY LAW reported on a Michigan case that turned raised questions about a prenup's fairness. From Will a prenup be enforced if it's not fair?:
"While fairness is, under some case law, a requirement for enforcement of a prenuptial agreement, I wonder how much fairness is really required in Michigan. Look at the result in Reed v Reed, for example, where the parties were married for about 20 years and the husband was awarded all of the assets he'd accumulated in his own name during the marriage (considerable assets). The prenup, challenged by the wife, was enforced even though she was awarded very little by comparison and had put her marital earnings into the parties' marital expenses rather than into separately titled property. The trial court's reasoning was that it was foreseeable that the parties might accumulate substantial assets during the marriage and that they could (and did) choose 'to be captains of their own ships' during the marriage. The court of appeals affirmed. After Reed, I really wonder whether unconscionableness is a factor at all.
Fewer facts than I would like comment upon but a worrisome case from what was posted.

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