What is a Premarital Agreement and how can it be beneficial?

http://www.dreamstime.com/-image4812859A Premarital Agreement means an agreement between prospective spouses made in contemplation of marriage and to be effective upon marriage.  Under 750 ILCS 10/3 A premarital agreement must be in writing and signed by both parties.  It is enforceable without consideration.

Under 750 ILCS 10/4 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 statue imposing a criminal penalty.

(b) The right of a child to support  may not be adversely affected by a premarital agreement.

 

Under 750 ILCS 10/7 a premarital agreement is not enforceable if the party against whom enforcement is sought proves: the agreement wasn’t’ voluntary or the agreement was unconscionable.  Meaning that one of parties were not provided a fair and reasonable disclosure of the property or financial obligations of the other party or if a provision of a premarital agreement modifies or eliminates spousal support and that modification causes undue hardship in light of the circumstances not foreseeable at the time of execution of the agreement.  An issue of unconscionability of a premarital agreement will be decided by the Court.

The Court in Brooks v. Brooks, 733 P.2d 1044, 1050 (Alaska 1987) summed up premarital agreements in a reasonable way, “Today, divorce is a ‘common-place fact of life.”….as a result there is a concurrent increase in second and third marriages—often of mature people with substantial means and separate families from earlier marriages.  The conflicts that naturally inhere in such relationships make the litigation that follows even more uncertain, unpleasant and costly.  Consequently, people with previous ‘bad luck’ with domestic life may not be willing to risk marriage again without the ability to safeguard their financial interests.  In other words, without the ability to order their own affairs as they wish, many people may simply forgo marriage for more ‘informal relationships.  Prenuptial agreements, on the other hand, provide such people with the opportunity to ensure predictability, plan their future with more security, and most importantly, decide their own destiny.  Moreover, allowing couples to think through the financial aspects of their marriage beforehand can only foster strength and permanency in that relationship.”

 

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