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Understanding Limitations: Exclusions in Prenuptial Agreements in Arizona

In a prenuptial agreement, married couples decide certain issues about their property in advance. In Arizona, prenuptial agreements are legally binding and protect both spouses.

Prenuptial agreements can be viewed as a prelude to marriage. The purpose of this document is to demarcate your existing property from what you acquired during your marriage. There is less focus on determining how many rights each party has over the other’s property than on determining which pieces of property belong to which party at a given point in time.

As part of the prenuptial agreement, you can include anything you feel will be important to your marriage, from family heirlooms to long-term investments. Prenuptial agreements are legally binding, so only include items that are exclusively yours. By doing so, there will be no ambiguity regarding their ownership or liability if anything happens to them. A knowledgeable Prescott divorce attorney can help guide you through the prenup process.

Assets Covered by Prenuptial Agreements
Prenuptial agreements can cover anything of value between two people, but here are some of the most common assets covered:

Furniture and household items
Before getting married, you should consider which household items each of you owns and if you would keep them if the relationship ended.

Antiques, collectibles, and other personal property
Items such as artwork, sports memorabilia, musical instruments, and collections fall into this category. Check your prenuptial agreement to see if it allows you to keep these items if your marriage ends in divorce.

Vehicles
There is no provision in most prenuptial agreements regarding who gets which vehicle upon divorce, so this should be discussed beforehand.

Investments and Bank Accounts
In addition to covering bank accounts, stocks, and other investments, prenuptial agreements should include financial counseling between both parties. By doing so, you can avoid any conflicts or misunderstandings regarding your finances or investments after marriage.

It is generally possible to separate financial affairs during a marriage through prenuptial agreements. They may exclude certain assets from division in the event of divorce under Arizona community property laws, but prenuptial agreements cannot alter what is considered individual property.

Professional Practices and Businesses
Whether your business is a sole proprietorship, partnership, limited liability company, or corporation, many premarital agreements address ownership interests. Prenuptial agreements should specify whether bonuses or salary increases received during the marriage will be considered separate property or marital property.

Debts
If you pass away or become disabled, creditors may try to attach your spouse’s assets or vice versa, so it’s important to address debts in prenuptial agreements. A prenuptial agreement can prevent this by ensuring that each party’s estate is free and clear of any claims from the other’s creditors. A prenuptial agreement in Arizona also stipulates that if one spouse files for bankruptcy, the community property will not be considered.

Spousal Maintenance (Alimony)
Premarital agreements in Arizona cannot directly affect alimony payments because only a court can do this, but premarital agreements may address whether either spouse would be entitled to maintenance or spousal support in the event of a divorce.

Miscellaneous Provisions and Disagreements
Arizona prenuptial agreements often include:

• An agreement to waive attorneys’ fees in the event of a prenuptial dispute.
• A statement that no promises, representations, or inducements have been made other than those outlined in the prenuptial agreement.
• An agreement that outlines that neither party’s previous marriage has given birth to children living in the home of the other party at the time of the marriage.
• Former employer or benefit plan notification of potential prenuptial agreement’s effect on spousal benefits.
• Release of any claims against the other party by each party.

Arizona’s Legal Authority to Enforce Prenuptial Agreements
According to Arizona Revised Statutes Section 25-202, premarital agreements are legal in Arizona under the Uniform Premarital Agreement Act. The statute states as follows:

1. To be legally binding, a premarital agreement must be written and signed by both parties. It is enforceable without consideration.
2. Marriage makes the agreement effective.
3. As a result of a provision of a premarital agreement that modifies or eliminates spousal support, one party to the agreement may be eligible for assistance under a public assistance program at the time of separation or divorce. The court may, notwithstanding the terms of the agreement, order that the other party provide support to the extent necessary to avoid becoming eligible for such assistance.
4. Courts must determine the unconscionability of premarital agreements as a matter of law.
5. An agreement that would otherwise have been a premarital agreement is enforceable only if it is necessary to avoid an inequitable result.
6. For an agreement to be enforceable, the person who seeks enforcement must prove either of the following:
   1. The contract was not voluntarily entered into by the person.
   2. Before the agreement was executed, the person committed unconscionable acts:
      1. Did not receive a fair and reasonable disclosure of the other party’s property or financial obligations.
      2. Did not waive, in writing, any right to disclose the assets or financial obligations of the other party beyond what was disclosed.
      3. Did not have adequate knowledge of the other party’s property or financial obligations.

By entering into a valid and enforceable Prenuptial Agreement in Arizona, people are free to treat what would otherwise be community property as separate property for one of the spouses.

Prenuptial Agreements that do not thoroughly disclose assets and debts will be invalidated
A judge can find a prenuptial agreement unenforceable unless the parties waive, in writing, disclosure of each other’s assets and debts. Due to Arizona’s Premarital Act, a judge may do this if the parties have adequately disclosed the assets and debts of their soon-to-be spouse before signing a prenuptial agreement. Those same laws, however, allow spouses to waive disclosure.

Prenuptial Agreement Enforcement Against Creditors
Arizona’s Court of Appeals recently addressed the issue of whether a premarital agreement is binding on creditors in Schlaefer v Financial Management Service, Inc. Based on the court’s decision, the premarital agreement, in that case, was binding on the creditors, preventing the wife’s creditors from taking the husband’s assets for a debt she failed to pay.

Prenuptial Agreement Terms for Legality and Validity
Arizona laws control what financial interests each spouse will have on all assets, debts, and earnings of their spouse unless a prenuptial agreement is in place. The same laws apply to each spouse’s potential financial interests in the sole and separate property of the other spouse. Unless you have a prenuptial agreement, Arizona law determines what happens to all of your assets, even those you owned before getting married.

The Uniform Premarital Act governs prenuptial agreements in Arizona. Based on this act and some court decisions in Arizona, people can “opt out” of the Arizona community property laws if they get divorced. If you do not want to be surprised about what happens to your property if you divorce, a prenuptial agreement will allow you to bypass those laws and provide certainty as to what happens to your wealth (and the debts of your spouse) that you have accumulated before and during the marriage.

How to Make Sure Your Arizona Prenuptial Agreement Is Legal and Valid
In light of what prenuptial agreements can accomplish, the next thing you should know is that the process of signing a prenuptial agreement can be challenged in court.

Imagine what would happen if a person showed up at his or her wedding for the first time and was presented with a prenuptial agreement and told they either had to sign it or the wedding would be called off. If such a situation occurs, it could provide convincing evidence that the prenuptial agreement was forced.

The Importance of Choosing Well-Respected and Knowledgeable Divorce Lawyers in Prescott, AZ
It is also important for you to ensure your prenuptial agreement is drafted or reviewed by a well-respected and knowledgeable divorce attorney in Prescott, AZ, before you sign it. An attorney’s signature in a prenuptial agreement should specify that he or she has explained the terms of the agreement to the client, the client understands it, the client has received sufficient information, and the client is not under duress or coercion to sign the agreement.

Thus, if either spouse later files for divorce and challenges the prenuptial agreement on any grounds, that spouse effectively accuses the divorce lawyer in Prescott of not doing his or her job. If the spouse wants to enforce the prenuptial agreement, the lawyer can be called as a witness to contradict the spouse’s testimony. When you combine that with the fact that each party hired a respected family law attorney in Prescott, AZ, you make it virtually impossible for a judge to reject the prenuptial agreement.

According to family law in Prescott, AZ, prenuptial agreements are valid only if authorized by a court. Stephanie Willison, PC, can assist you in determining the validity of your prenuptial agreement.  For more information, click to call or fill out our online contact form.