Prenuptial and Postnuptial Agreements in Maryland: What to Consider

Prenuptial and postnuptial agreements are signed, legal contracts that lay out a range of financial expectations. Many people think prenuptial and postnuptial agreements are only for the wealthy. Others think they need them even though they have no assets and work minimum wage jobs. Still others are threatened by them because they think signing a prenup (or a postnup) is planning to fail.

We would like to clear away the misinformation and the myths, so you have the facts you need to decide whether or not you want a prenuptial agreement if you are not yet married or a postnuptial agreement if you are already married.

What Are Prenuptial and Postnuptial Agreements?

 Prenuptial Agreements

A couple signs a prenuptial agreement before marriage. Most people know that a prenuptial agreement can protect sizeable assets one or both parties bring into the marriage. Prenups have long been standard to protect assets of those with generational wealth, but they can benefit many couples not just the wealthy. In addition to protecting wealth, prenups may also address who is responsible for specific debts.

Another common reason to sign a prenuptial agreement is to set aside specific assets for children from a prior marriage, whether or not the assets were acquired before or after the marriage.

Prenups can also help protect an existing family business. The owner of the business may have spent years and extensive resources building up that business, so may not want it to be distributed in the same manner as other assets.

Let’s not forget the prenuptial agreements should protect both parties. A prenup can ensure that a spouse gets a certain level of spousal support should the parties terminate the marriage. It also ensures that there is full financial disclosure between the parties, so there are no surprises after they are married.

To sum up, prenuptial agreements can cover

• Classification of separate vs. marital property, allocation of property upon death or divorce, and asset protection,
• Debts
• Spousal support
• Business interests
• Inheritances for children from prior marriages
• Retirement, insurance, and estate planning provisions such as outlining trust terms
• Future alimony or waiving the right to ask for it

Postnuptial Agreements

Where a prenuptial agreement is signed before marriage, a postnuptial agreement is signed after marriage. They may offer similar protections and cover similar issues, and sometimes a couple creates a postnuptial agreement simply because they did not get around to creating a prenup before they married.

But often the trigger for a postnuptial agreement is some kind of change. If finances change due to inheritance, business success or extreme debt, one or both parties may be moved to seek a postnuptial agreement.

Another reason a couple may create a postnuptial agreement is that they are considering divorce, and they want to clarify financial issues.

Requirements and Enforcement of Prenuptial and Postnuptial Agreements in Maryland

In Maryland, prenups and postnups are enforced through contract law until they are incorporated but not merged into a court order. They are generally enforceable as long as contractual requirements are met.

What Are the Requirements?

To be enforceable, prenups and postnups in Maryland must meet the following requirements:

• Voluntary: Both parties must enter into the agreement willingly and without duress.
• Fair and Reasonable:A court is not going to enforce terms that are not fair and reasonable. It will consider each party’s age, health and earning capacity. You do yourself no favors by trying to take advantage of the other party in a prenup or postnup. It follows that though it’s not technically a requirement, both prenuptial agreements and postnuptial agreements are much more likely to be upheld if both parties were represented by their own separate attorneys.
• Full Disclosure and Transparency:The couple must fully disclose their financial situations, including assets and income, business interests and debts.
• Written and Signed: Prenuptial and postnuptial agreements in Maryland must be written and signed. Under no circumstances will a court entertain evidence that there was an oral agreement.

What Makes a Prenup or Postnup Unenforceable in Maryland?

To challenge a prenuptial agreement or postnup agreement in Maryland, you will need to prove one of the following:

• Fraud: Did one of the parties fail to disclose their total financial situation (or other important and relevant issues) or intentionally misrepresent them?
• Duress: Was one of the parties pressured, coerced or even forced to sign the agreement? An example of this would be that one partner hurried the other to sign the agreement without giving ample time for it to be properly reviewed by their independent lawyer.
• Undue Influence: Did one of the parties unfairly influence the other into signing the agreement through an imbalance of power or unfounded trust? Did one of the parties trust that the other was acting in their best interests simply because that person was their spouse? In contract law, a confidential relationship exists when one party places a high degree of trust and confidence in another. This could cause one spouse to place a high degree of trust in the other and impose a duty on the other spouse to act in the best interests of the trusting spouse.
• Technical mistake: This would be something like one of the parties did not sign the contract.
• Unconscionability: This is where the agreement is just so unfair that the court refuses to enforce it.

Tips for Avoiding Challenges to Prenuptial and Postnuptial Agreements

What can you do to ensure that your prenuptial or postnuptial agreement is enforceable in Maryland?

• Independent counsel: First of all, a prenup or a postnup is not something you want to draft yourself. This is not a time to download a template off the Internet. Have an experienced lawyer draft the document. But that’s just the start. Your spouse should have their own independent attorney review the document and submit revisions. The attorneys can work to a final document which both parties find fair. If you and your spouse do not have separate attorneys, you are opening yourself up to a challenge.
• Adequate time: Make sure both partners have adequate time to consider the terms of the agreement and have their attorneys review it. In the case of a prenup, you should be working on it several months before the wedding. If you try to shove a prenup at your spouse just before the wedding or insist on a hurried signature on a postnup after you are married, a court may very well find it invalid on the basis of duress.
• Technical requirements: Be sure you are meeting all technical requirements under Maryland law, and even go beyond them. For example, though witnesses and notarization are not required by law, they can help to defend against later challenges for duress.
• Severability clause: Include a severability clause that will protect the validity of the agreement as a whole even if a court deems one part to be invalid.
• Disclosure: Attach financial documents and all disclosure information as appendices to the agreement.
• Fairness: Double-check for fairness even if your partner agrees to the terms. Remember, if a court finds a prenuptial agreement or postnuptial agreement too one-sided, the court can void it. You should seek advice from your attorney.
• Specific revision procedures: Lay out how the agreement may be revised.
• Irrelevant issues: Avoid inserting language about topics that cannot be covered under prenuptial and postnuptial agreements in Maryland. For example, if you add a section about child custody, the court may take a closer look and invalidate your entire agreement rather than just throwing that section out.

Does Creating a Prenuptial Agreement Mean I Expect My Marriage to Fail?

Some people resist signing a prenuptial agreement, because they think it indicates the couple is expecting to divorce. But in reality, working through terms for a prenuptial agreement or postnuptial agreement can help a couple understand each other’s expectations and work out how they will handle their finances, property and debts heading into the future. When both parties understand each other’s expectations and reach an agreement, this can go a long way to preventing discord in a marriage.

Can Prenuptial and Postnuptial Agreements Be Changed or Terminated?

It is possible for a couple to change a prenuptial agreement after marriage or change a postnuptial agreement at a later time if the parties agree. If the couple cannot agree, they may want to consider mediation to work through the issue. To be valid, both parties must sign the new written agreement that voids the prenup or postnup or lists different terms.

The only way to terminate a prenuptial or postnuptial agreement if a spouse does not agree is to go to court on the basis of one of the reasons already discussed such as duress, fraud, and so on. In that case, you will have to follow proper legal process to take your spouse to court such as serving your spouse, waiting the set amount of time for them to answer, filing an action with the court, and all the other processes required to sue a party on a contract in Maryland.

Considering a Prenuptial Agreement or Postnuptial Agreement in Maryland?

Creating a valid, transparent prenuptial or postnuptial agreement that resists challenges is complex. It takes a lot of advance planning, good faith and attention to detail. But in the end, a solid prenuptial or postnuptial agreement can strengthen your relationship, get you on the same page with your partner and give you peace of mind.

Those who have substantial assets, children from a prior marriage and business interests should almost certainly have a prenuptial agreement. Those who are facing changing finances in their marriage will be particularly well-served by a post-nuptial agreement. But people in many other situations may also benefit from one of these types of agreements.

If you are ready to discuss either a prenuptial agreement or postnuptial agreement, set up a consultation with one of our experienced attorneys at Jimeno & Gray, contact us.