The term “pre-nup” is often part of pop culture’s nomenclature. We hear about it on television, we hear about celebrities and athletes entering into pre-nuptial agreements, and we hear about it in music. However, how does a pre-nuptial or premarital agreement actually work, and what is the legal reason people actually enter into pre-nuptial agreements?
Pre-nuptial agreements are governed by Illinois state law. This means that it is very state specific and different states have different provisions regarding what makes a pre-nuptial agreement enforceable and what is the scope of said agreement. Illinois has its own laws governing pre-nuptial (also known as antenuptial) agreements.
Illinois is governed by the Illinois Uniform Premarital Agreement Act, which is Section 750 ILCS 10/1 through Section 750 ILCS 10/11.
Illinois law defines a “premarital agreement” as “an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.” 750 ILCS 10/2(1). This means that, even if two parties sign a premarital agreement and subsequently do not get married, the premarital agreement is essentially void and not enforceable. The act of marriage is required to trigger the enforcement of a premarital agreement. Therefore, “[a] premarital agreement becomes effective upon marriage.” 750 ILCS 10/5.
Premarital agreements require certain formalities to be enforceable. “A premarital agreement must be in writing and signed by both parties. It is enforceable without consideration.” 750 ILCS 10/3.
With premarital agreements, parties typically contract regarding the disposition of assets, liabilities, and payment of spousal maintenance. Parties are unable to contract regarding children’s issues in a premarital agreement, such as child support or allocation of parental responsibilities and parenting time. However, parties commonly utilize premarital agreements so they can avoid long and drawn out battles in court about possible disposition of assets, all while the assets are being depleted by litigation. Parties are generally free to dispose of assets or contract regarding disposition of assets in any manner they choose, as long as both parties to the premarital agreement are in agreement to it.
Illinois law is clear with regards to the content in a premarital agreement. 750 ILCS 10/4 states that:
“(a) Parties to a premarital agreement may contract with respect to:
(1) the rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located;
(2) the right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property;
(3) the disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event;
(4) the modification or elimination of spousal support;
(5) the making of a will, trust, or other arrangement to carry out the provisions of the agreement;
(6) the ownership rights in and disposition of the death benefit from a life insurance policy;
(7) the choice of law governing the construction of the agreement; and
(8) any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
(b) The right of a child to support may not be adversely affected by a premarital agreement.”
There are often instances when changed circumstances require that the terms contained in a premarital agreement are also changed. Illinois law provides for this modification as long as both parties are again in agreement to the modification. 750 ILCS 10/6 states that “after marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration.” This means that the only formality needed is that the both parties sign the amended provisions. They are also able to completely revoke the premarital agreement if they so choose.
A premarital agreement is only as good as a court that enforces it. If the provisions of a premarital are deemed to be violative of Illinois law or contrary to public policy, or places one party in a much more inequitable than another party, the Court may, as a matter of law, decide the unconscionability of the premarital agreement and can choose not to enforce the premarital agreement.
750 ILCS 10/7 discusses enforceability and states that:
“(a) A premarital agreement is not enforceable if the party against whom enforcement is sought proves that:
(1) that party did not execute the agreement voluntarily; or
(2) the agreement was unconscionable when it was executed and, before execution of the agreement, that party:
(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.
(b) 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.
(c) An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.”
As you will note with the law, a big portion of enforceability deals with disclosure of assets. Failure to fully disclose can result in unenforceability of the agreement. Similarly, even if both parties agree to waive spousal support in the future, a court can still award one party spousal maintenance from the other based on the facts that exist at the time that might not have been reasonably foreseeable at the time of execution of the premarital agreement. For example, if one party starts a business that suddenly booms after a few years and is worth a lot more than initially expected.
Premarital agreements can be a great way to control future litigation and plan for possible divorce. This is especially common if there are a lot of assets that need protection or if this is one or both parties’ second marriage. Absent a premarital agreement, Illinois law governs property disposition and discusses what happens to property acquired prior to the marriage and during the marriage. While often times premarital agreements only state what is already governed by Illinois law, they can be especially useful if a party wants to protect a retirement account or pension that is likely to grow during the time of marriage, an asset that is likely to be considered marital absent a premarital agreement. For this purpose, and others, people choose to enter into premarital agreements.
Premarital agreements are not for everyone. It can also be very complex and have adverse effects if done improperly. It’s best to speak with a lawyer and obtain representation prior to executing a premarital agreement. It is also highly recommended that both parties have independent counsel to advise them of the premarital agreement since the rights of different parties can be affected differently, and two lawyers are best to avoid any conflicts of interest or lack of understanding.
Contact my Chicago, Illinois office to learn more about what a pre-nuptial agreement is and if it is a good idea for you.