Although no one expects to die early, most people take out life insurance policies to be prepared for the unexpected, especially as their families grow. Similarly, although no one expects to get divorced, it is usually a good idea to make a premarital agreement to be prepared for the unexpected, especially if at least one spouse has been married before and/or has separate property to protect.
Premarital agreements are more than just “divorce insurance.” In fact, they are insurance against divorce, in many ways. Money is one of the leading causes of marital strife, and a premarital agreement removes this element before it has any chance to poison the relationship. Bear in mind the money fights are not just limited to assets. Liabilities can cause such turmoil, as well, because for example, a wife may be unhappy that part of her paycheck goes to pay her husband’s student loan debt.
Making Premarital Agreements
Spousal agreements can do much more than assign assets to one spouse or the other upon divorce. These pacts can also classify such assets as either marital or nonmarital property, and this issue can consume significant resources of time and money during divorce litigation.
Premarital agreements can also cap the amount and/or duration of spousal support payments. In fact, especially if the signing spouse receives something of value in return, these agreements may even be able to cut off this obligation altogether.
There are nonmonetary aspects as well. For example, if the couple owns a business, an agreement can designate inheritance and succession procedures. To further ensure that their wishes are followed, many people also execute wills, trusts, and other documents along with their premarital agreements.
Breaking Premarital Agreements
Although Illinois has adopted the Uniform Premarital and Marital Agreements Act and there is a strong presumption in favor of enforcing voluntary agreements, no such pact is ironclad. To overturn these agreements, challenging parties must normally show one of the following:
- Involuntary: In a few cases, a last-minute “sign or else” ultimatum may render the agreement involuntary. But generally, the agreement is involuntary if one spouse withheld important financial or other information. In these cases, the challenging spouse must also establish that s/he could not have obtained the missing information from any other source.
- Unconscionable: A 51/49 split is uneven but certainly not unconscionable, a 100/0 split shocks the consciousness, and everything else lies somewhere in between. Furthermore, the agreement must have been unconscionable at the time it was made, as the below case study illustrates.
Since most premarital agreements have severability clauses, if one part of the contract is invalidated, the rest probably survives.
How it Works
It has been several years ago now, but some baseball fans may still remember Frank and Jamie McCourt, the former owners of the Los Angeles Dodgers. When the couple divorced around 2011, the team was in bankruptcy and, for all intents and purposes, completely worthless. So, Ms. McCourt gave up her half of the team in exchange for about $180 million in cash and property.
A few years later, Mr. McCourt sold the team for over $2 billion, and Ms. McCourt sought to overturn the property agreement. She argued that the division was unconscionable and that Mr. McCourt withheld key financial documents concerning the team’s value.
The court disagreed, ruling that, as a co-owner of the team, she had access to any and all financial information. Moreover, the agreement was not unconscionable when it was made, because “Jamie simply chose the security of a guaranteed $131 million payment, plus more than $50 million in real and personal property, over the uncertainty and risk presented by the valuation and sale of the Dodger assets.”
Rely on Experienced Lawyers
A premarital agreement can help put your marriage on a strong foundation. For a confidential consultation with an experienced family law attorney in Schaumburg, contact Glasgow & Olsson.
(image courtesy of Brandon Morgan)