What is a prenup?
In its most basic form, a prenuptial agreement is a legally binding contract entered into voluntarily by two individuals who are contemplating marriage. The conditions included in a prenuptial agreement can include the division of assets and liabilities should the marriage be terminated or if one party were to die. In some cases, such agreements become effective immediately upon signing, although most come into effect with the marriage. While prenups are commonly viewed as something only celebrity couples or the super-wealthy need to consider, the truth is that they are an excellent way for any couple to protect themselves financially. In some cases, it’s all about preserving what was acquired prior to the marriage. Other times, it has more to do with recognizing the potential financial risk of entering into a marriage with someone who has quite a bit of debt , while also increasing the chances that one couple won’t be stuck with the financial burden in the event of a split.
There are many other reasons why a couple in Louisiana may see the necessity of having a prenuptial agreement. For one, a prenuptial agreement can be an important way to provide a spouse, who may not have the emotional or practical ability to manage the couple’s joint finances, with a secure standard of living after a divorce or the death of the spouse who held most of the joint assets. In addition, couples who have children from previous relationships may choose a prenuptial agreement to protect those children. Likewise, couples with a large disparity in wealth sometimes choose a prenuptial agreement in order to protect their standard of living and the interests of any minor children who may be involved in the prospective marriage.
Requirements for a prenuptial agreement in Louisiana
In Louisiana, the law sets out specific requirements that must be met for a prenuptial agreement to be considered "valid." In addition to the formalities a contract must meet under our Civil Code, such as the parties’ capacity to contract and their mutual consent to be bound, there are several elements that must be included in a Louisiana prenuptial agreement. First, the agreement must be in writing. There is no requirement under Louisiana law that a prenuptial agreement be executed before the marriage ceremony or notarized. Second, the contracting parties must have entered into the agreement free of any undue or improper influences. These influences can arise from circumstances or factors other than an unbalanced power dynamic, such as substance or alcohol abuse, mental deficiency, an insane delusion, or a false pretense. Finally, both parties to the agreement must make complete disclosure of their assets and liabilities.
In general, Louisiana courts will recognize prenuptial agreements and enforce them unless the provisions are patently unreasonable, result from fraud, or impose an unreasonable hardship on one of the parties’ children from an earlier marriage. The courts will also look at whether there has been a failure to comply with the legal requirements, whether the spouses entered the agreement voluntarily and with knowledge of its effects, and whether the agreement was fair at the time it was made.
The provisions of a prenuptial agreement generally become effective on the day the marriage takes place. However, if the marriage cannot be validly performed, the provisions of the agreement are deemed to be effective only from the date that the parties would have first entered into a legally valid marriage.
The advantages of a prenuptial agreement
One of the many benefits of having a prenuptial agreement is that it allows you and your spouse to generally determine yourselves how you want your property to be divided if you get a divorce. The law, although it can be helpful in some circumstances, cannot accurately provide you with the same protection and not all property or other rights can be easily divided. Generally, the law assumes that you and your spouse can create a fair system of dividing property. As a result, giving you the opportunity to contract among yourselves instead of relying on the law to do so, give you more control and protection. Some of the more common issues that are addressed give you and your spouse: Prenuptial agreements can also clarify the difference between community and separate property during the marriage. It also offers protection against creditors. Furthermore, it allows you to address issues that are unique to you and your spouse and may not be addressed adequately under the law, such as whether a life insurance policy would count as community property or separate property, etc.
Myths and misconceptions of prenuptial agreements
Many people have misconceptions about prenups. Some of these misconceptions are based on myth and some on reality. Sometimes a confusing term means different things to different people. Furthermore, the dichotomy between community property and common law states has led to some misconceptions. In any event the following are some of the more common misconceptions.
Myth: A prenup is only for the rich or famous. While prenups are used by the rich and famous to avoid a protracted and expensive palimony case, they are also used by everyday folks. At the heart of some of the older misconceptions is the notion that wealthier people use prenups as a tool to protect themselves against a greedy spouse while common folk seem to think a prenup is a tool of the bad guys. In fact prenups can protect you and some of your separate property even if you are not rich.
Reality: A prenup can be a simple contract or an elaborate legal document. The most common misconception is that a prenup is complicated. In fact prenups can be as simple as you wish or as complicated as needed. We often see clients who think that a prenup is a 30 page legal document giving up all their rights which lawyers tend to charge an arm and a leg to draft and explain. A prenup can be made as short as you like or as complicated as you need. Of course there is the adage that you get what you pay for. In other words if you get a prenup on the cheap it may come back to haunt you.
Myth: A prenup is only enforceable in the state where it was drafted and signed. This is simply not true. Usually the law of the place where the agreement is signed (the "domicile" of the parties) applies. However, a prenup is most often enforced in the state where the marriage ends. In Louisiana, with its idiosyncratic family laws, a prenup must pass certain tests of other states’ laws to avoid being declared unconscionable or contrary to public policy. Louisiana lawyers often advise non-resident clients about how to draft enforceable prenuptial agreements provided certain tests are met.
Common Law Terms Diversion: This is a common law term that is thrown around by Louisiana lawyers because it does not have a clear Louisiana equivalent. It could easily be replaced with "commuted" in the code comment. Remnants: This is a common law term that is also used by Louisiana lawyers because it does not have a clear Louisiana equivalent. It could easily be replaced with "the separate property of …." in the code comment. Concession: This is a problem for even the best lawyers. This is perhaps one of the most over-used and misunderstood terms. In short, a concession means giving up something. In a prenuptial agreement it would be something other than rights.
Oh we all have heard stories of prenups that went terribly wrong, Right: How many times have we heard that an athlete’s prenup may have been lost in a fire? Or that the prenup was written on a napkin and not even notarized? Or something else foreign to the Louisiana attorney who is unfamiliar with common law concepts? Louisiana’s version of a prenup is codified at Civil Code articles 2328-2358 and that article even recognizes common law terminology used in some cases but not all. So next time you hear that a prenup had to go to court, ask the person questions to determine if it really was a Louisiana prenup or something else.
Your guide to drafting a prenuptial agreement in Louisiana
While some couples might want to take the DIY approach with the creation of a prenuptial agreement, this is never recommended, especially in the State of Louisiana. Negotiations can get emotionally charged and it is always best to have a neutral party, like a family law attorney, work with you and your spouse when creating the document. Once your prenuptial agreement is drawn up, both partners should be given time (typically 30 days) to review the document and have their own family law attorney look it over. If there is high conflict, it might also be advisable for one, or both, parties to undergo mental health assessments as well, especially if there is a long-term history of abuse (emotional, physical, sexual, or otherwise).
It is important to understand that both partners will likely need to disclose personal information about their respective assets and debts. The essential information on both sides of the financial equation should be provided for the prenuptial agreement to be legally binding. This is why the document should also include a statement by each partner , attesting to the fact that the document was explained to them in detail by their own respective attorney and stating that each partner had the opportunity to review the document before signing.
There are numerous types of assets that are commonly covered in Louisiana in a prenuptial agreement. General categories of assets tend to include:
However, assets owned by a spouse prior to the marriage are typically seen as separate, especially when there is proof of ownership in the form of a title or deed. Whether or not the assets are held in a community property or common-law estate is not as relevant in the state of Louisiana, unlike other states where the legal definition is more important than the actual, physical evidence of a title or deed. If the marriage dissolves, the nature of the assets could determine whether or not they are divisible according to the property laws of the state. That is why it is so important to have an attorney assist during the negotiations and writing of the agreement.
Enforceability of a prenuptial agreement
The enforceability of prenuptial agreements in Louisiana can be affected by several factors. Common among these are procedural issues such as when the agreement was signed, how long before the wedding it was signed, whether either party had legal counsel, and other similar considerations. However, what may be a more common challenge to the validity of prenuptial agreements is the presence of an unconscionable provision in the agreement itself, or "fatally" ambivalent or unclear provisions.
Procedural Complications
While courts bestow great deference on the terms of agreements freely entered into by parties to a marriage, there are limits. Thus, if an agreement is forced upon one party, made under duress, or signed at the last minute before the wedding, it may be deemed unconscionable. For example, a couple may go into an engagement with a strong belief that they agree on financial matters and issues related to children. Therefore, one of the parties may decide, a few days prior to the wedding, that a prenuptial agreement is not necessary. The other party may disagree. An agreement is prepared and provided to both parties and written instructions given to one to bring it to the wedding for their signatures. The agreement was prepared and presented mere days before the wedding which gives the court pause to agree that it was the product of free will. In this case, the agreement will likely be determined unenforceable.
Substantive Challenges
Agreements may contain provisions that are in conflict with Louisiana public policy. Examples of these are creating parenting schedules for children, blanket waivers of child support through visitation rights, and pre-determined spousal support obligations when not tied to specific behavior. If the court finds that the parties have attempted to limit their future parenting obligations, child support obligations, or spousal support obligations, it will likely declare the clauses unenforceable. If provisions contain vague language, the court may find them ambiguous and, therefore, unenforceable. For example, language that was quoted in a February 2010 3rd Circuit opinion attempting to revoke a rights of first refusal (the right of one parent to get the child back from a third-party babysitter or care provider before someone else has the opportunity to do so) provision currently in the Louisiana Civil Code and adopted by the trial court at the request of the parties. In that case, the trial court found the provision valid, but the 3rd Circuit Court of Appeals reversed. The clause read, "If, for any reason, [Mother] leaves the kids with someone who is not related [to Mother], then [Father] has a right of first refusal to keep the kids for the weekend." The appellate court determined this language was too vague to support the clause. This is a classic example of the risks of including "marketing agreement"-style language such as "Weekend Warrior Parenting," "Every Other Weekend," and other unrelated, pop culture tropes. While these provisions may make sense to the drafting party, they may not make sense when placed within the entirety of the agreement.
Alternatives to a prenup
There are some alternative options available for couples who wish to spell out the property rights of each spouse. You may want to consider one of these alternatives if a prenuptial agreement does not suit your personal situation.
Postnuptial or "Postmarital" Agreements
In terms of their overall effect, a postnuptial agreement is similar to a prenuptial agreement. However, such agreements take place after the marriage (rather than before) and are subject to slightly different rules. Like a prenuptial agreement, the postnuptial contract must be made voluntarily (as a voluntary waiver of property rights), and each party must fully disclose his or her assets. Louisiana law requires a postnuptial agreement to be in writing and notarized by two witnesses.
Married Couples’ Property Agreement
Similar to a pre or post-nuptial agreement, a "married couple’s property agreement" allows a husband and wife to choose the monetary or property rights of each, and therefore, what regime will apply to the marriage. However, such an agreement cannot be enforced or made once the marriage has begun. Because of this, it can be used only before the marriage has actually taken place, although it can be used at any time prior to the wedding so that "married couple’s property agreement" would be essentially just a pre-nuptial agreement .
If the parties wish to use this option, they may execute the "married couple’s property agreement" prior to the beginning of their marriage, receive the notary signatures, and then file it during the course of their marriage. Like pre or post-nuptial agreements, the married couple’s property agreement must be signed and notarized, and must involve a voluntary waiver of property rights of each spouse.
Separate Property Agreement
A separate property agreement may be used to keep specified property separate, rather than as marital property. A husband can execute a separate property agreement to keep his property separate from that of the wife, or vice versa, whether or not married. Alternatively, a couple may use a family or joint separate property agreement to establish certain property as joint property.
In either case, the separate property agreement must be executed before the marriage takes place. It will allow the property to become community property if one of the spouses dies or the parties divorce. Such agreements must be signed before the marriage takes place, although a "family or joint separate property agreement" can be executed at any time before or during marriage.
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