What is a Prenuptial Agreement?
Marital agreements are often called prenups in Georgia. Simply put, a prenuptial agreement in Georgia is a contract. More specifically, it is a contract between two people who will be married for the purpose of establishing binding legal rights and obligations in the event they ever divorce. The Georgia statute governing prenuptial agreements is O.C.G.A. 19-3-66. This statute became effective January 1, 2011.
This statute allows parties to enter into prenuptial agreements in contemplation of marriage to acquire, hold, exchange and own property of any kind or character . It also allows for the waiver of spousal support and settlement of financial issues in the event of divorce. Basically, if it can be imagined, a prenuptial agreement can be drafted to address it. It is essential, however, that the parties enter into the agreement voluntarily. Thus, a Georgia prenuptial agreement must have both parties establish the following:
Essentially, a premarital agreement in Georgia that meets the above requirements is valid unless it would not pass a contract challenge.
Requirements to Establish a Prenuptial Agreement in Georgia
Georgia law requires some formalities that must be followed for a prenuptial agreement to be valid and enforceable. First, the agreement must be in a writing that is signed by both parties. The writing must also have language that makes clear the parties intended for the contract to be a prenuptial agreement. Mere labels such as "Prenuptial Agreement" or "Antenuptial Agreement" may be sufficient, but the use of one of those terms is especially critical to show the agreement was not always meant to be a postnuptial agreement.
Similar to other contracts, Georgia law prohibits the enforcement of a prenuptial agreement if the contract was obtained by fraud or duress. To avoid this result, the disclosure of assets on each party’s financial statement is strongly recommended. A statement detailing the financial situation of each party will make it difficult to argue that one party defrauded the other about the amount and types of property the party owned before the marriage.
For a prenuptial agreement that contains provisions relating to alimony, "full disclosure of the income and property of each party" is required. Such a statement is probably best contained within the body of the prenuptial agreement itself, although Georgia appellate courts have not yet decided if a separate statement would also suffice.
Advantages of Using a Prenuptial Agreement
In addition to identifying and allocating property, another important reason for entering into a prenuptial agreement is to ensure that both parties understand and incorporate provisions that reflect their opinions regarding spousal support (sometimes called alimony). In the case of a divorce, the parties might agree that spousal support is not appropriate or they could identify circumstances when spousal support should be provided. A prenuptial agreement can be particularly useful in a second or subsequent marriage or if one of the parties has a child or children from a previous relationship. In these cases, it is likely that the parties will want to consider how best to protect against a potential economic decline if a new marriage involves children or grandchildren from a previous relationship.
Another benefit of a prenuptial agreement is that it can reduce or at least identify the possibility of litigation if the marriage does not last. The agreement can establish when and how certain disputes are handled if the couple separates. There may be a wide range of these provisions. If the couple has established a family business before they marry, they can agree that any new debts created by the business are the responsibility of the spouse who owns the business. Practically speaking, this will help protect the spouse who has a business from the other spouse being able to seek compensation regarding the business, if the business is suffering economically. The agreement could also specifically assign who will be responsible for payment of certain marital obligations arising from the marriage. For example, payment obligations for property taxes and/or mortgage payments on property acquired during the marriage could be established. If property this property is transferred to a third party, the parties can agree that the non-titled spouse will pay for some or all of the new taxes, insurance and/or the mortgage obligation. Most importantly, entering into a prenuptial agreement can provide each spouse with autonomy regarding any post-marital or prenuptial assets and rights. In very specific detail, the agreement can award each person whatever portion of certain property, money or assets even if those items are acquired during the marriage.
Typical Terms and Provisions within Georgia Prenuptial Agreements
A well-crafted prenuptial agreement neatly addresses many contingencies that may arise during a marriage or in the event of divorce. Areas commonly covered include:
Asset Division
A prenuptial agreement signal parties’ intent to merge or keep separate investments and assets. A Court will not specifically perform a 50/50 division on any asset or debt, but generally, each spouse is entitled to his or her separate property and assets.
Like all contracts, prenups are subject to the four corners rule; which means that one spouse should not expect what he or she did not fully know about or read. A Court can look to the entire contract.
Debt Responsibility
Similar to asset division, debt responsibility is addressed in the agreement. Any debts brought into the marriage, and those that are created during the marriage could be addressed up front to secure provisions for payment so one spouse is not left responsible for an enormous amount of debt to the exclusion of the other.
Spousal Support
Alimony and spousal support provisions are common in a prenup, but the agreement must not set alimony to be a penalty for non-performance of the marriage. If you agree to take $5000 per month for the next five years, this is valid. But if you agree to take 1,000,000 if you ever find out your spouse had an affair, this is likely unenforceable. Thus, it is very important to accurately state intentions in a prenup.
Financial Provisions
A prenuptial agreement generally includes a few specific financial provisions:
It is common for a prenup to address taxation issues. The spouses agree to be responsible for filing their own taxes in the event of divorce.
These terms are often written in very specific detail with a set plan for the advantages and disadvantages of a changing market. For example, the use of any investment account during the marriage will go toward a joint account.
As marital relations become unique to the couple during the course of the marriage, so too, the prenuptial agreement provisions may change within the marriage. Changes are often kept in writing as an amendment.
Limitations and Restrictions
Limitations and Restrictions of Prenuptial Agreements
The Premarital Agreement Statute in Georgia contains section 19-3-66(b) which defines the limitations of what you can include in a post nuptial agreement or prenuptial agreement. Neither party may be compelled to make certain types of payments that may affect the couple’s children , nor may either party contract away their individual right to alimony upon dissolution of your marriage.
The provisions to be included in the statutory language are the following:
While the Georgia Prenuptial Agreement Statute is a fairly simple list of information, and does not include some of the complicated legal requirements and restrictions that may vary from state to state, it is a good basic guideline to follow when putting together preliminary information for a premarital or post nuptial agreement.
How to Prepare a Prenuptial Agreement in Georgia
To secure an enforceable and comprehensive prenuptial agreement, it is imperative that each party be represented by competent legal counsel. Unless specifically permitted, the courts in Georgia will not enforce a prenuptial agreement unless it is in writing and signed by both parties. If representation is unreasonably refused by one of the parties, to the extent that this failure will undermine the intent of the parties, a court may find the prenuptial agreement invalid. In addition to requiring each party be represented by legal counsel, the parties must act in a fair and honest manner towards each other when deciding on the terms of the agreement. The prenuptial agreement should not violate public policy or include otherwise illegal provisions. Each person must have adequate time to review the agreement. A judge might refuse to recognize a prenuptial agreement if he or she believes any provision would be inequitable if enforced. This means that the judge will look at the fairness and reasonableness of the provisions when signing off on the divorce settlement, as he or she may invalidate any prenuptial agreement deemed unfair.
Challenges in Enforcing a Prenuptial Agreement
The presumption in Georgia is that a properly-executed prenuptial agreement is enforceable. However, there are several potential pitfalls that can come into play. In many cases, people will not bother to bring them up because the fundamental issue is usually money. But, the prenuptial agreement itself, as a document, may have defects in the way that it has been executed. If those defects are brought to the attention of a Judge, then the otherwise-ironclad presumption of a valid agreement may be called into question. The one that most commonly shows up in the divorce context deals with nondisclosure of assets. In general, each side of a prenuptial agreement is supposed to have provided a full disclosure of their assets and debts. What constitutes "full disclosure" – and whether there is going to be a "fraud on the marriage" issue – often times comes down to credibility, control over the records, and a determination of whether either party had any sort of unfair advantage in discovering whether all relevant disclosures were made. Another issue where prenuptial agreements are voided deals with the timing of the execution of the agreement. Georgia law requires that the agreement be executed at least 30 days before the date of the marriage. If the prenuptial agreement was drafted one day before the marriage, then it is far more likely to be declared invalid. The closer the draftsman gets to the actual date of the marriage , the more likely it is that the court is going to disallow the prenuptial agreement as unaffordable at the time that it was executed. Likewise, if the agreement itself sets up obligations one or more days subsequent to the date of the marriage, that may impact the enforceability of the agreement as well. For example, I was recently involved in a case where there were two documents presented at the time of the marriage. One document was a prenuptial agreement that had to be signed upon the day of the marriage, and the other document concerned a real estate sale between the husband and wife that was not to take effect until a date certain sometime after the marriage. In this particular instance, the prenuptial agreement was void for giving rise to future considerations. The general rule in Georgia is that prenuptial agreements may concern only rights and obligations that relate to divorce and death – ordered at or prior to the marriage, but not ordered after the marriage – and if the document falls outside those parameters, then it pretty much falls outside the available remedies to the parties who are attempting to enforce those agreements. Again, the fundamental rule is that the parties have to get it right coming in the door. If they do not, then the prenuptial agreement may well be set aside, to the detriment of parties who might expect to rely on its provisions.
