What is a Prenuptial Agreement?
A prenuptial agreement is a contract made by a couple before they marry concerning the ownership of their respective assets, as well as the payment of alimony and debt, should the marriage fail. This agreement can also be called an antenuptial agreement, premarital agreement, or prenup.
Why do I need a Prenuptial Agreement?
Considering whether to have a prenuptial agreement in place before marriage isn’t just about protecting yourself in the unfortunate event of a divorce. Discussing the agreement with your fiancée is an opportunity to decide together how you will manage personal and household finances, which can lead to a better understanding of what each of you expect from the marriage partnership. A marriage is a legal contract, one which many enter into without consideration for the impact marriage can have on your personal finances. A prenuptial agreement, also called a prenup, premarital or antenuptial agreement, is a legal contract made between spouses before marriage that provides for each person’s specific financial needs and goals. These agreements can help a couple avoid the financial and emotional expense of complicated litigation should the marriage end in divorce. Prenuptial agreements are prevalent among individuals entering a second marriage; often people who are remarrying desire to ensure that certain assets are received by their children from a previous relationship. Prenuptial agreements are also an effective way for individuals who have significant pre-marital estates to ensure that their separate property remains separate, and is not considered comingled or transmuted to marital property during the course of the marriage. Prenuptial agreements are not only for those remarrying or individuals with significant wealth; these agreements are also becoming more common among young couples who want to spare themselves an expensive and stressful divorce proceeding if the marriage ends.
Requirements of an Enforceable Prenuptial Agreement in Tennessee
Tennessee Code Annotated Section 36-3-501 is the statute that defines what is necessary for a prenuptial agreement to be valid and enforceable:
"any antenuptial or prenuptial agreement entered into by spouses concerning property owned by either spouse before the marriage that is the subject of such agreement shall be binding upon any court having jurisdiction over such spouses and/or such agreement if such agreement is determined, in the discretion of such court, to have been entered into by such spouses freely, knowledgeably and in good faith and without exertion of duress or undue influence upon either spouse."
Disclosure Requirement for a Valid and Enforceable Prenuptial Agreement
The Tennessee Supreme Court has stated that for a prenuptial agreement to be considered valid and enforceable, there must be a full disclosure of all assets owned by a party, including the value of each asset, as well as the income earned by a party. This is best accomplished by each person disclosing, in writing, all real estate and personal property in which a person has an interest, and to ensure that the parties exchange several years of filed tax returns, complete with all schedules and attachments. One of the best ways in which a person can prove that adequate disclosure was made during the drafting and execution of a prenuptial agreement is for both parties to have sought the advice of an attorney to draft, review and offer advice concerning the prenuptial agreement. Randolph v. Randolph, 937 S.W. 2d 815 (Tenn. 1999). During your consultation, your attorney can provide you with a form which will allow for a complete and adequate disclosure of all your assets.
Discussing the Prenuptial Agreement
One mistake frequently made by the person who wants a prenuptial agreement is putting off that difficult conversation. Don't put it off; having the conversation early in your engagement is the best way to ensure that your request for a prenuptial agreement is received by your future spouse in a thoughtful and considerate manner.
An easy way to begin the dialogue is to invite a discussion about what each of you wants from the marriage. Ideally this conversation would occur before formally announcing the engagement, before setting any dates and before financially investing in the nuptials so that neither partner feels any emotional or financial pressure during the discussions.
Allowing your partner to participate in the drafting of the agreement can also dispel any concern or doubt that your partner may have about your intentions. When there is sufficient time before the actual marriage for the disclosure and review of each partner's assets and income (as described above), it builds trust that the agreement is fair to both parties. It can also be helpful to communicate that you intend for both you and your partner to have the agreement reviewed and potentially revised by an attorney, who can offer advice about the agreement.