A prenuptial agreement is a contract that outlines how couples will handle their property and finances if they divorce. It can help avoid any disputes early on, which can be crucial if you or your spouse own complex or high-value assets. A prenup can protect family businesses, inherited wealth or significant pre-marital assets.
However, this does not mean that prenups are always binding. In some cases, a judge may invalidate specific provisions or even the whole agreement.
Involuntary execution
Courts may invalidate a prenup if one party did not sign it willingly. For example, if one partner threatens to cancel the wedding unless the other signs the prenup, the court may see it as coercion. They may also deem the prenup invalid if a person lacked mental capacity when they signed it, either due to illness or the influence of drugs or alcohol.
Unconscionability
This means the prenup is extremely unfair or unjust to one party. California courts examine how the couple made the agreement and the agreement’s terms. They typically ask questions such as:
- Did one person have less power or understanding during negotiations?
- Do the terms heavily favor one person over the other?
For example, the court may consider a prenup unconscionable if it leaves one spouse poor while the other keeps great wealth. They may also consider it unconscionable if one party did not have enough time to review the agreement or have independent legal counsel when signing.
Lack of full financial disclosure
When creating a prenup, both parties must fully disclose their finances. This includes:
- All assets, including real estate, vehicles, bank accounts, stocks, retirement funds and valuable collectibles
- All debts and liabilities, such as mortgages, student loans, credit card debts and personal loans
- Current income sources and amounts, including salary, bonuses, investment income and rental income
Courts require complete transparency to ensure informed decision-making. Any concealed assets or debts can be grounds to challenge a prenup’s validity.
Contracts can be questioned
Not all contracts are set in stone, including prenups. If you’re concerned about the fairness of your agreement, an attorney can help you explore your options.