Prenuptial agreements have been in the news recently because of the surprising decision in the Petrakis case which involved a couple from Nassau County who executed a prenuptial agreement just days before their wedding.
The Second Department threw out the agreement, ruling that millionaire real estate developer Peter Petrakis, from Old Brookville, Long Island, had “fraudulently induced” his wife Elizabeth to sign the prenuptial agreement just four days before their 1998 wedding.
Mr. Petrakis never followed through on the promises he made to his wife to get her to sign the agreement. Among other promises, Mr. Petrakis assured his bride that he would add her name on the deed to his house and tear up the agreement once they had children.
The laws governing prenuptial agreements vary from state to state. In New York, prenuptial agreements are governed by Domestic Relations Law 236(B)(3) which allows couples to enter into contracts, either before or during the marriage, to protect their assets in the event of a divorce.
The decision is being hailed as unprecedented because prenuptial agreements have long been thought of as virtually ironclad contracts not subject to challenge. However, there are pitfalls to avoid if you want to ensure that your prenuptial agreement will hold up.
Some common pitfalls to be wary of are:
- Waiting until the last minute to present the agreement to your future spouse. A factor in the court’s decision to rescind the Petrakis’ prenuptial agreement was that the agreement was executed four days before the marriage even though the parties had been engaged for nearly two years.
- Not putting everything in writing. All the terms of the couple’s agreement should be reduced to writing, and the agreement should state clearly that no oral promises were made outside the agreement to induce one of the parties to sign off.
- Giving the non-monied spouse nothing in the agreement. Any waiver of spousal support, for example, will be scrutinized to determine if it was fair and reasonable when the agreement was executed or if the spouse will become a public charge without spousal support.
- Not disclosing all your assets. Both parties must disclose all their assets and debts so that the parties enter the agreement knowing what they are giving up. If a major asset is not disclosed, it can cast doubt on the entire agreement
- The agreement cannot be unconscionable or procured by duress. Unconscionability and duress are legal terms which have been given specific meanings by various court decisions. An experienced matrimonial attorney will understand how to draft the prenuptial agreement so that it is in accordance with the prevailing New York law and safe from attack.