Why You Should Use a Lawyer and Not Online Templates for Prenuptial Agreements.
We frequently see individuals turn to online sources and templates to generate their own legal documents instead of using a qualified prenuptial agreement lawyer. The reasons for this may be many. People say they don’t have enough time to go see a lawyer and it is less expensive or even free! They believe that they, online templates or Artificial Intelligence (AI) can do just as good a job as a lawyer. It is always a bad idea to do it yourself. A professional attorney is well worth the time and money because the attorney will help you avoid numerous mistakes.
The Requirements for a Valid Prenuptial Agreement.
The requirements for a valid prenuptial agreement are strict. For example, in Pennsylvania some of them are in Pennsylvania’s Uniform Premarital Agreement Act. See 23 Pa. C.S. § 3106. The requirements include signing the agreement voluntarily, with fair and reasonable financial disclosure. A prenuptial agreements lawyer knows these requirements, unlike generic online software.
Prenuptial Agreement Case Study.
Here is a case study from our practice, without any identifying information. An individual wanted to get married. He went to an online service with a catchy name and generated a prenuptial agreement. He completed it as well as he thought was enough and gave it to his bride several days before the wedding. She signed it without reading it. We have reviewed the agreement and discussed the circumstances surrounding it with the husband, and here are our conclusions.
Mistake Number 1: Using a Generic Online Template Instead of a Prenuptial Agreement Drafted Specifically for Him by a Professional Attorney.
The husband did not go to a prenuptial agreements lawyer, but that mistake is fairly obvious. Overall, the template he used from the online service was generic and rudimentary. It was not even specific to the state where the husband lived. For that matter, there was no choice of law provision or many other standard provisions that should be in the prenuptial agreement, such as waiver of estate rights. The template was full of strange language and provisions that made no sense. Finally, the husband did not complete some “fill-in-the-blanks” paragraphs correctly without the help of a professional attorney.
Mistake Number 2: The Online Template Gave the False Impression that it Protected the Retirement Plans.
The agreement purported to waive the rights in pension benefits and retirement accounts when it could not. Although it is not a terrible idea to have that language in the prenuptial agreement, and later confirm it in a postnuptial agreement, an unmarried person cannot waive rights in the future spouse’s retirement benefits. Only a married spouse can do that. That is federal law, followed in all states, which preempts any conflicting state law. Employee Retirement Income Security Act (ERISA).
The waiver could be validly made in a postnuptial agreement, but not a prenuptial one. A professional prenuptial agreements lawyer would have told him that. The husband did not have a professional lawyer to tell him that and relaxed with the knowledge that his retirement plans would be safe, only they weren’t. His now-wife owns half of the increase in value in all of his retirement plans since the marriage, such as 401K, IRA, and SEP.
Mistake Number 3: All Contractual Formation Defenses Apply to a Prenuptial Agreement.
A prenuptial agreement is a contract, so it is subject to all contractual formation defenses. Such agreements are a favorite thing for lawyers to challenge, even when the agreements are good, because of settlement leverage. The courts dislike prenuptial agreements when enforcing them would leave a spouse to be the ward of the state. In other words, the court do not like to leave someone reliant on various government benefits. The courts can refuse to enforce the spousal support or alimony waivers in such instances.
This prenuptial agreement was executed in the required “recordable format”, like a real estate Deed, signed with a Notary Public. However, the parties did not initial each page of the agreement, which makes it easier to challenge. Worse yet, the bride did not read the agreement, did not go to an attorney to conduct an independent review of the agreement, and in general did not even know the contents of the agreement. The prenuptial agreement is weaker for all those reasons.
Mistake Number 4: Timing when Signing a Prenuptial Agreement is Important.
The husband only offered the agreement to the bride several days before the wedding. A rushed prenuptial agreement, shortly before the wedding, is a common ground to challenge the agreement. The bride could say that she could not stand the humiliation of canceling the wedding, especially when all relatives and friends knew about it. Other reasons may include having the wedding venue booked and paid for, and the bride making the final alterations to her wedding dress so to speak.
Therefore, the bride’s argument is that she “had to” sign the agreement to keep the wedding on and marry. The argument is that she was essentially coerced or forced to sign the prenuptial agreement under pressure. That negates the requirement that the parties sign the agreement voluntarily. An attorney would have advised the husband to try to sign the prenuptial agreement as early before the wedding as possible, and to conduct an independent attorney review. Having two independent attorneys representing both parties to the agreement makes the prenuptial agreement much stronger.
Other reasons to challenge a prenuptial agreement include instances when the future spouse does not speak or read English. In such cases, to have a valid prenuptial agreement, the entire agreement needs to be precisely translated into the person’s native language or explained to the person in great detail.
Mistake Number 5: The Online Template was Subject to Strict Interpretation Rules Against the Husband.
Since the husband provided the prenuptial agreement to his bride, strict interpretation rules apply to him. That means that any ambiguity or doubt in the agreement would be interpreted against him. The online template that he used did not contain a waiver of the strict construction rules. If a professional attorney drafted the prenuptial agreement, the attorney would likely include such a clause.
Mistake Number 6: Failure to Provide Full, Fair and Reasonable Financial Disclosure.
The worst mistake of the prenuptial agreement became evident only towards the end. There was no full financial disclosure in the agreement because the husband did not include at least one company (business) he owned on the schedule of disclosed assets. The schedule was important because these assets were supposed to remain the separate property of the husband. The husband should have listed all of his businesses on the schedule.
The effect of that omission was two-fold. First, the business was not covered by the exclusion, so it would not be the husband’s separate property. Therefore, the wife could claim the company, or the appreciation in value of the company since the marriage, as a marital asset. That would subject the husband to very invasive financial disclosure concerning the company during the divorce. He would have to produce profit and loss statements, income tax returns, and bank account statements for several years. The valuation of the company by experts would be complex and expensive.
Second, one paragraph of the prenuptial agreement contained an express representation that the schedules were full financial disclosure. However, they were obviously not full disclosure because of the business omission. A professional attorney preparing the prenuptial agreement may have addressed that with a waiver of further financial disclosure. There was no such waiver of financial disclosure in the prenuptial agreement template.
Conclusion: You Should Rely on Professional Attorneys, not Online Templates.
As the result, the entire prenuptial agreement may be unenforceable due to failure to disclose the business. Failure to tell the truth on the financial disclosure statements is one of the most common reasons the courts invalidate or refuse to enforce the prenuptial agreements. Fair and reasonable financial disclosure is a requirement for a valid prenuptial agreement. The wife can contest the entire agreement because she signed the agreement based on incomplete, untruthful disclosure.
Using Online Templates Costs a Lot More than a Well-Drafted Prenuptial Agreement in the End.
You can probably count more individual mistakes than just six among these grouped issues. Unfortunately, the result of all those mistakes is that the prenuptial agreement is likely unenforceable. The husband will need to litigate and possibly go to a hearing to determine if any part of the agreement is salvageable. Since the marriage, the husband had bought a house, which he believed would be his separate property under the prenuptial agreement. That means the individual stands to lose hundreds of thousands of dollars from the equity in his house and the value of his business because he did not spend the time and money on a prenuptial agreement prepared by a professional attorney.
Avoid mistakes such as using online template, sources, or services to prepare legal documents, especially a prenuptial agreement. Remember that a good prenuptial agreement, prepared by a professional lawyer, is less expensive than a contested divorce.
Contact us Today to Discuss your Prenuptial or Postnuptial Agreement.
Call us at 215-357-1400 to schedule your appointment to discuss your prenuptial or postnuptial agreement, or separation and settlement agreement.
