Robbins: How nuptial agreements work
I’ll tell you, pal, I’ve seen it all.
After more than 40 years of practicing this craft of law, there is little you could say or do to shock me. The human imagination and the ability to create marvels, wonders, and mischief seem almost without limitation. That, after all, is what launched man to the moon, mapped the human genome, posed the possibility of nuclear annihilation, conceived the internet, and cured polio.
But, since our topic is less lofty, let’s confine ourselves within its bounds; when it comes to prenuptial and postnuptial agreements, how people wish to tuck in their affairs is nearly equally without limit.
Let’s first lay out the playing field: What, exactly, is a “nuptial” agreement?
Webster’s recognizes two definitions of the word “nuptial:” 1. “of or relating to marriage or the marriage ceremony,” and, interestingly, perhaps, 2. “characteristic of or occurring in the breeding season.” Who knew, by this second definition, that deer and bunnies, and nearly every other creature under heaven, enjoy the bliss of nuptials? However interesting and birds-and-beesy that may be, let’s focus on the first.
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“Pre” of course, denotes something that occurs “before” something else. The pregame is before the kickoff. Logically, then, in this context, “post” means after. As such, a prenuptial agreement is one that’s entered into before the state of wedded bliss, and a “postnup” is one that’s entered into after the proverbial matrimonial knot is tied.
A basic precept of a contract is that consenting adults, so long as they are under no incapacity, can conceive and bind themselves to any sort of arrangement to which they both agree, the only bumpers narrowing that expansive concept being that parties may not contract to do that which is illegal or immoral.聽Further, there is the concept of “consideration” which, at law does not mean that the parties must be thoughtful or considerate of one another, but instead, means that an essential ingredient of any bargain is that something of value must be exchanged for something else of value.聽In the context of nuptial agreements, the “consideration” to be exchanged is that of mutual promises and the give-and-take reflected in the nuptial agreement itself.
Generally, the point and purpose of a nuptial agreement (and, it should be said here, that, so long as there is no overreaching, duress, or undue influence, prenuptial and postnuptial agreements are equally binding), is to modify certain rights of the parties which would otherwise apply under the law in the event the marriage fails, or upon the death of one of the married partners. Nuptial agreements are often also used to clarify the parties’ respective rights in either of those circumstances.
An example here might help.
With some nibbling around the edges, what the law in Colorado (and most if not all other states) provides is that, in the event of divorce, the higher-earning party will likely pay what this state calls “spousal maintenance” (and many other states call “alimony”) to the lower-earning party. The amount and duration of the maintenance obligation will be in consideration of the length of the marriage and the incomes (both absolute and relative) of the parties. However, if a nuptial agreement has been entered into, those rights may be voluntarily shifted. Provided both are capable of their own economic sustenance, the maintenance obligation may be modified or entirely waived.
Another common circumstance that may be 鈥� and often is 鈥� modified by a nuptial agreement is that which constitutes separate and marital property. Speaking broadly, anything of value that comes into a marriage during the marriage, except by gift to one but not both of the couple or by way of inheritance, is marital. My income is my wife’s and vice versa. Too, even though assets (real property, investment accounts, etc.) that are owned before marriage remain separate (unless they are willingly or inadvertently “converted” to martial property by intermixing them with joint assets), any increase or “accretion” thereupon is marital.
Another example here might make this clear. Say you own a home worth a million dollars on the date of marriage. Say, too, that on the occasion of your divorce, the home is now worth $600,000 more. The first million, being your separate property, would be set aside as yours before the increase of $600,000 is divided between the two of you. A nuptial agreement can, however, change that equation and might provide that any increase in separate property 鈥� even after marriage 鈥� will remain separate. As such, in our example, the whole $1.6 million would be yours
Provisions can also be made in a nuptial agreement as to how particular assets will be divided. For example, in the event of divorce, who gets to stay in the marital residence and who will have to leave? If there are children, parenting matters can also be addressed with the caveat, however, that, regardless of what the nuptial agreement might say, the court retains ultimate authority to do what is in the best interests of the minor children.
I started this column by saying I have seen it all. I have seen nuptial agreements that are so detailed as to make your head spin: who will do the dishes, who will take out the trash, who will fold the laundry 鈥� the list is nearly endless.
Hey, whatever works!
Rohn K. Robbins is an attorney licensed before the Bars of Colorado and California who practices in the Vail Valley with the Law Firm of Caplan & Earnest, LLC. His practice areas include business and commercial transactions; real estate and development; family law, custody, and divorce; and civil litigation. Robbins may be reached at 970-926-4461 or Rrobbins@CELaw.com. His novels, “How to Raise a Shark (an apocryphal tale),” “The Stone Minder’s Daughter,” “Why I Walk so Slow” and “He Said They Came From Mars (stories from the edge of the legal universe)” and “The Theory of Dancing Mice” are currently available at fine booksellers.
