Prenuptial or premarital agreements have a long history of being associated with the affluent. Historically a party to a marriage who had considerable wealth and assets going into the marriage would have their attorney draw up an agreement that protected these assets from their less wealthy fiancé. These agreements tended to be scrutinized in courts for the appearance of overreaching and unconscionable clauses making them void under law. The current trend is quite different. Most courts will uphold premarital agreements, if they conform to common law precedent or state statute, depending on the date the agreement was drafted.
Nevada is a community property state. This generally means that all property other than property owned prior to the marriage, or afterwards by gift, bequest, devise, descent, or through an award for personal injury damages, with the rents, issue and profits thereof, is community property. NRS 123.220. There is a strong presumption that all property earned after marriage is community property including each spouse’s income and retirement benefits. Either spouse, acting alone, may control the community property, subject to a few limitations. NRS 123.230. Lastly, the laws governing how community and separate will be inherited vary greatly. In general the surviving spouse will take a larger share of community property. NRS 123.250.
If the “default rule” is not the ideal for newlyweds, they have the freedom to modify their rights and obligations: a) to one another and b) to their personal or real property. There are many reasons why the default rule may not be ideal, but one of the most common reasons is that the couple has different estate planning goals. If either spouse is entering into marriage for a second time, there may be children from a prior marriage that will need protection from the default rule, should something happen to their parent. Premarital agreements help defend claims made against the assets of the estate of a deceased parent, and they are also binding in court during separation and divorce proceedings, when drafted and executed in compliance with the law. Premarital agreements are in a very basic sense, a shield or form of defense that both parties may need to use to protect themselves and their property from strong presumptions that come with the default rule above.
Nevada, like many states, has adopted the Uniform Premarital Agreement Act in 1989, which states that premarital agreements entered into on or after October 1, 1989 are governed by statute. See Nev. Stat, Ch. 472 § 22, at 1009. Premarital agreements entered into before 1989 will be governed by statute or common law. Under NRS 123A, a premarital agreement must have the following:
- It must be entered into prior to marriage;
- It must be in writing and signed by both parties;
- The execution of the agreement must be voluntarily;
- The premarital agreement cannot be unconscionable (unreasonably one-sided or excessive) when it was executed;
- Before the execution of the agreement, each party must:
- be provided a fair and reasonable disclosure of the property and financial obligations of the other party, or
- voluntarily and expressly waived in writing, any right to disclosure of the property or financial obligations of the other party, or
- had or reasonably could have had, an adequate knowledge of the property or financial obligations of the other party.
- The premarital agreement can eliminate alimony, but not child support. Although if a spouse requires public assistance at the time of separation or marital dissolution, then the court may require that the other spouse provide support the other to the extent necessary to avoid that eligibility.
The premarital agreement will not become enforceable until the parties are married and it can be amended or revoked at a later date, in writing, signed by both parties.
Most attorneys will have the document signed before a notary. They will also make sure that both parties have ample and reasonable time to review the premarital agreement with their own independent counsel of their choosing, so that both parties may ask questions as necessary, in a confidential setting. The facts and circumstances surrounding the execution of the premarital agreement are important, and in order to reduce any scrutiny from the court at a later date, counsel should ensure that both sides maintain a fair or “arm’s length” posture throughout the process.
Premarital agreements can be very simple and easy to create. Both parties should retain their own attorney. It is okay for one party to pay for both attorneys if necessary. Then each party will need to compile a complete list of their property and financial obligations. They will then determine what default rules should or should not apply to their marriage. The premarital agreement will then be drafted, reviewed, and if all looks well, signed and acknowledged by both parties, and in most cases, the parties’ attorneys. They can then go forward with certainty about their estate plans and their new venture together.
If you are considering marriage in the near future, and you think you may want a premarital agreement, please call to schedule a one-hour consultation. The earlier you start planning, the less stressful the whole process will seem. Essential Legal Services will do its best to make the entire process seamless for our clients.