Just in Case? Premarital Agreements and Chicago Divorce

Put simply, marital property is accumulated during a marriage and divided upon divorce. The Illinois Marriage and Dissolution of Marriage Act governs what property is deemed marital, and what factors are to be considered by the court in dividing said property. While these laws purport to be as clear as possible in an effort to guide the court in determining the nature and extend of a couple’s marital estate and its equitable division, there are inevitably arguments to be made in every divorce over whether a particular piece of property should be considered marital or not, and how much of the marital estate should be allocated to each party. This uncertainty can extend divorce proceedings, increase related costs, and exacerbate the stress and strife of the dissolution. One way that parties can attempt to avoid this uncertainty is through a premarital agreement. A premarital agreement is a contract signed by two spouses prior to the marriage, which contains provisions for what property will and will not be divided and in what proportions during a marriage, among other things. There are many reasons why parties might enter into a premarital agreement. Most commonly, these agreements are entered into when one spouse has assets he or she would like to protect or keep separate in the event of a divorce, such as an interest in a family business or wealth accumulated prior to marriage. These agreements are also common when spouses would like to predetermine the parties’ rights to spousal support in the unfortunate event of a dissolution. While many stories shared about premarital agreements involve dramatics and last-minute contracts presented by surprise on the eve of a wedding, premarital agreements can also be a reasonable and sensible way to provide a roadmap in the event of an eventual divorce in certain circumstances. Curious about whether a premarital agreement may be an option for you and a future spouse to explore? It’s important to understand what premarital agreements can and can’t include, as well as how they must be drafted and executed in order to be enforceable. What can be contracted? The Illinois Uniform Premarital Agreement Act governs the enforceability of premarital agreements in Illinois. Under the IUPAA, premarital agreements may contain provisions regarding (in part): – The parties’ rights relative to property owned or acquired by either of them. Accordingly, these agreements can cover property that either or both parties owned prior to the marriage, or property acquired in any manner during the marriage, whether by purchasing, inheriting, receiving as a gift, etc. – How the parties will manage and control their property. Parties may choose to include certain provisions governing whether particular property (i.e., a home) may be sold during the marriage, whether a particular item may be purchased, and so on. – How property will be divided upon separation, divorce, death of either party, or any other specified event. For example, a pre-marital agreement may contain a full roadmap for a property division in the event of divorce, or may specify that a particular item of property will be retained by either party upon divorce, death, or any other named event. – Either party’s entitlement to spousal support. Parties can actually completely preclude one or both of their rights to receive spousal support in the event of a divorce, or may include provisions in the agreement governing the amount, duration, etc. of an award of support upon divorce, which may differ from what the law would otherwise provide. – What state’s law will apply in determining the effectiveness and enforceability of the agreement. Parties can choose for the law of a particular state to govern the agreement, not necessarily the same state in which the agreement was signed. – Anything else not in violation of public policy. Accordingly, parties can enter into a contract that covers any or all of the above areas. However, parties may not include any provisions in a premarital agreement that negatively affect a child’s right to child support. Is the agreement enforceable? Above all else, premarital agreements are intended to produce certainty. Not every premarital agreement will address each aspect of a divorce, but a solid, well-drafted, and enforceable agreement can provide a roadmap in the unfortunate event that the marriage ends at some point down the road. While a premarital agreement becomes effective upon marriage, whether it is actually enforceable is typically not determined until a divorce has been filed. In order to ensure that a premarital agreement has the best chance of being deemed an enforceable agreement by the court in the event of a divorce, it is prudent to be aware of the standard by which its enforceability would be judged if necessary. Was the agreement entered into voluntarily? If a party wishes to challenge the enforceability of an agreement, a few different arguments can be made. First, the IUPAA provides that said a premarital agreement could be deemed unenforceable if the challenging party proves that he or she did not execute the agreement voluntarily. This could involve a demonstration that the challenging party was under duress or was coerced into signing. This requires more than a showing that the agreement was signed shortly before the wedding took place; there must be actual evidence that the agreement was signed without the party’s voluntary intention to do so. Was the agreement unconscionable? Alternatively, a premarital agreement may be deemed invalid if the challenging party proves that the agreement was unconscionable at the time it was signed, AND that before the agreement was executed, he or she “(i) was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; (ii) did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and (iii) did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.” It is not sufficient to show that the agreement was unconscionable at the time of signing; the other three standards must be met as well. Accordingly, it is especially important to ensure upon execution of any premarital agreement that both parties have fully disclosed their assets and liabilities and neither waived their right to said disclosure, and that as a result each party had or could have had sufficient knowledge of the other’s property. However, even if a premarital agreement is deemed enforceable, the law does provide relief in very limited circumstances when the provisions of the premarital agreement would cause undue hardship to one of the spouses: “If a provision of a premarital agreement modifies or eliminates spousal support and that modification or elimination causes one party to the agreement undue hardship in light of 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 support to the extent necessary to avoid such hardship.” Therefore, although the agreement is technically enforceable, the court can award support notwithstanding the agreement in this situation. While this is an important point to keep in mind, it should also be noted that this can be a difficult standard to meet, in that the hardship must arise from circumstances not reasonably foreseeable at the time of the agreement’s execution. Is a premarital agreement right for you? Consult with the experienced and knowledgeable family law attorneys at Ward Family Law, LLC to determine if a premarital agreement is right for you and your spouse, and if so, let us offer our expertise to ensure that your agreement is comprehensive, thorough, and is executed according to the Illinois Uniform Premarital Agreement act to offer certainty and clarity should you need it in the future.

About

Jennifer R. Ward has exclusively practiced in the matrimonial and family law field for nearly 20 years. Furthermore, Ms. Ward is Adjunct Faculty at the John Marshall Law School teaching family law legal drafting to law students and has done so since 2005.

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