Basics of Prenuptial Agreements
Maryland law recognizes the validity of prenuptial agreements and postnuptial agreements. Prenuptial agreements (also called “antenuptial agreements”) allow couples to settle issues like alimony and/or property rights in advance of marriage.
Maryland is an equitable distribution state, meaning that a couple’s marital property is distributed equitably by a court upon divorce. Typically prenuptial agreements will have a section wherein parties agree that certain property and/or assets will be excluded from the definition of marital property, and therefore not be subject to equitable distribution.
Prenuptial agreements cannot determine child custody or child support, because doing so would go against public policy. Custody decisions are based on the best interests of the child, and children have the right to benefit from the resources of both parents.
Prenuptial agreements are subject to many of the same tenets of contract law. Accordingly, a prenuptial agreement can be ruled unenforceable or invalid if any of the following are demonstrated;
- Undue Influence
- A party’s incompetence
Legal standard for evaluating prenuptial agreements
Although contract law applies to prenuptial agreements, unlike with most contracts, courts presume that the parties entering prenuptial agreements have a confidential relationship. Thus, “to establish the validity of such a contract, the agreement’s proponent must show that there was no ‘overreaching'” Stewart v. Stewart, 214 Md. App. 458 (2013), citing Cannon v. Cannon.
The standard for evaluating a prenuptial agreement in Maryland is whether there was “overreaching”. To do so, the court looks at the circumstances surrounding the execution of the agreement. There are two prongs of the test: a procedural and a substantive one.
- Procedural: whether the person seeking to repudiate the agreement entered it freely and understandingly.
- Substantive: whether the rights being waived were commensurate with potential benefits, so that the agreement was fair and equitable under the circumstances. Stewart v. Stewart
Written financial disclosures
One of the best ways to assure a court that there was no overreaching is to demonstrate that the prenuptial agreement “documents a full, frank, and truthful disclosure,” of the value of an assets or property being being waived, so that a waiving party can know what he or she is waiving. Hartz v. Hartz, 248 Md. 47, 56-57 (1967).
Important to create detailed, exhaustive written disclosures of assets. Complete and honest financial disclosure helps ensure transparency and, thus, enforceability of an agreement.
It is important to have independent counsel review any prenuptial agreement. Before signing something your future spouse has given you (and possibly created with their own lawyer), seek out competent legal advice from an attorney experienced with prenuptial agreements and divorce law in your state.
Contact an Experienced Maryland Family Law Attorney
For years, Bethany G. Shechtel, Esquire has been by her clients’ side, protecting their rights. If you are considering a prenuptial agreement, contact BGS Law, LLC today to discuss your situation.