Most people are familiar with the terms “pre-nuptial agreement” (often called a “pre-nup”) or “pre-martial agreement”. As the name suggests, “pre-marital agreements” are entered prior to marriage.
The purpose of such an agreement is (generally) for the parties to mutually declare their rights, agreements and understandings about how property, debt, income, etc… will be treated during the marriage and/or in the event of dissolution of the marriage. Many times the parties are essentially agreeing to “contract out” of certain provisions of community property law.
Arizona follows the Arizona Uniform Pre-Marital Agreement Act (hereinafter “AUPMAA”) which has been codified in A.R.S. §25-201 – A.R.S. §25-205.
A.R.S. §25-202 provides the circumstances under which a pre-nuptial agreement is enforceable or may not be enforceable as follows:
A. A premarital agreement must be in writing and signed by both parties. The agreement is enforceable without consideration.
B. The agreement becomes effective on marriage of the parties.
C. The agreement is not enforceable if the person against whom enforcement is sought proves either of the following:
1. The person did not execute the agreement voluntarily.
2. The agreement was unconscionable when it was executed and before execution of the agreement that person:
(a) Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party.
(b) Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided.
(c) Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.
D. If a provision of a premarital agreement modifies or eliminates spousal support and that modification or elimination causes one party to the agreement to be eligible for support under a program of public assistance at the time of separation or marital dissolution, a court, notwithstanding the terms of the agreement, may require the other party to provide support to the extent necessary to avoid that eligibility.
E. An issue of unconscionability of a premarital agreement shall be decided by the court as a matter of law.
F. If a marriage is determined to be void, an agreement that would otherwise have been a premarital agreement is enforceable only to the extent necessary to avoid an inequitable result.
A.R.S. §25-203 provides for the types of issues which can be included in and governed by a valid pre-nuptial agreement as follows:
A. 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 or create a security interest in, mortgage, encumber, dispose of or otherwise manage and control property.
3. The disposition of property on 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.
8. Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.
B. The right of a child to support may not be adversely affected by a premarital agreement.
A.R.S. §25-204 specifies how a valid pre-nuptial agreement can be amended or modified as follows:
After marriage, a premarital agreement may be amended or revoked only by a written agreement signed by the parties. The amended agreement or the revocation is enforceable without consideration.
Pre-nuptial agreements are complex legal documents that should only be prepared by a licensed attorney familiar with preparing such agreements and who is also familiar with the requirements and restrictions of the AUPMAA. In addition to the statutory requirements there is also a substantial amount of case-law relevant to interpretation of the terms of pre-nuptial agreements (in the event of a dissolution or legal separation).
Pre-nuptial agreements are of significant value to anyone contemplating marriage. They are not only for “wealthy” individuals. A valid pre-nuptial agreement can potentially save both parties tens of thousands of dollars in attorney fees in the event of dissolution of the marriage or legal separation. More importantly, a valid and well prepared pre-nuptial agreement can be of immense value in protecting separate property assets and income.
This answer is for informational purposes only. It is not intended, nor should it be construed as legal advice. No attorney-client relationship shall exist unless and until an agreement for legal services is reached between attorney and client, and a legal services contract is fully executed by and between attorney and client.