Premarital agreements increasingly have become commonplace in modern marriages. A 2022 poll by Harris Insights & Analytics found that 15 percent of married respondents reported having a premarital agreement, up from 3 percent in 2010.
This uptick undoubtedly has been a win for the dockets of divorce court judges (obviously, unless you consider the increase in premarital agreement litigation). However, the proliferation of prenuptial agreements or prenups also means we are seeing more premarital agreements being litigated in probate court after one of the parties dies. Married couples, and their attorneys, should be aware of how these two processes can interact.
What is a premarital agreement?
Premarital agreements are contracts entered into by two individuals prior to their marriage that in their simplest terms set forth a structure for dividing property in the event of separation or divorce. In California and most other states, for a prenuptial agreement to be valid and enforceable, it must meet the following requirements:
- It must be entered into voluntarily by both parties. Evidence of coercion or duress can invalidate the agreement.
- Full disclosure is required. Prenups can be invalidated if it is shown that either party failed to fully disclose their assets, income and debts to each other before signing the agreement.
- Both parties must be legally competent and capable. They must have capacity to enter into a legal contract, meaning they are of sound mind and are at least 18 years old.
- The agreement must be fair. As with all legal contracts, if the agreement unfairly favors one party over the other, a court may refuse to enforce it on the grounds that it is unconscionable.
If a married couple wants to change the terms of their premarital agreement, they can do so by entering into a written agreement to amend or revoke the original agreement. This written agreement too must be signed by both parties and should clearly state the changes being made to the original agreement.
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How do prenups impact the probate process?
A premarital agreement can waive a surviving spouse’s ability to serve as administrator or executor of their spouse’s estate, or waive their right to inherit in whole or part from their spouse’s estate. In California and other community or quasi-community property states, a spouse generally will still be entitled to one-half of all income and assets earned due to the spouse’s efforts during the course of a marriage, regardless of whether there is a will or not. However, a premarital agreement can override this default rule and specify that the surviving spouse will not receive some (or any) of that inheritance.
When wills, trusts and prenups conflict or lack clarity, probate litigation inevitably results. A prime example is Northern Trust v. Shaw, 2D15–537 (2016), where the surviving spouse sued her husband’s trust estate seeking $1 million – as the terms of both the couple’s prenuptial agreement and his estate plan each entitled her to a $500,000 payout.
The district court sided with the plaintiff’s spouse, awarding her the $1 million, but the appellate court reversed that decision, finding the obligations of each agreement had already been satisfied under the relevant intestate law, giving the spouse only a $500,000 payout.
Similarly, incongruences between one’s premarital agreement and one’s will or trust are likely to lead to litigation in which parties may seek to use “extrinsic evidence” (evidence drawn from outside the source document) to demonstrate the decedent’s intent rested in one but not the other document, potentially resulting in an interpretation that wanders far astray from the decedent’s original intentions.
Of course, the best solution, as always, is to avoid a problem before it happens, but planning for the unthinkable, no matter how unlikely, can help you avoid unwanted outcomes. Considering your pre-nuptial agreement alongside your estate plan in consultation with your estate planning attorney and/or your family lawyer should help bring harmony even in unharmonious circumstances.
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