Premarital Agreements in Colorado
Premarital Agreements, commonly referred to as “prenuptial agreements,” are contracts between spouses before they get married. The contracts provide for the distribution of assets and debts, if the spouses end up dissolving their marriage. They can also provide some terms for maintenance (alimony), and estate planning terms for the parties.
Basic Requirements of a Prenuptial Agreement
A premarital agreement, in order to be enforcement, must first be in writing and signed by both parties. There must be consent to the premarital agreement, it must be a voluntary agreement, and not a result of distress.
Need of Ability to Seek Counsel by Both Parties
One important requirement to ensure that a premarital agreement is enforceable, is to make sure that both parties have access to his and her independent attorneys. Having access to an attorney means the following: an unrepresented party must have had reasonable time to 1) decide whether to retain a lawyer to provide independent legal counsel; and 2) locate a lawyer, obtain a lawyer’s advice, and consider the advice provided. Essentially, a prenup signed on the eve of the wedding, without each party having an attorney, will not meet the requirements of having reasonable time to get advice from an attorney.
Furthermore, if only one party is represented, the other spouse must either have the financial ability to retain an attorney or the represented party must offer to pay for the unrepresented party’s legal fees to obtain independent counsel.
Disclosure of Financials
In order for a prenuptial agreement to be enforceable in Colorado, each party must adequately disclose his or her assets, liabilities, and income to the other party. It would be a good idea to attach the respective disclosures as attachments to the prenuptial agreement so there is no question as to what was disclosed.
There are certain provisions, no matter how drafted, that will be considered unenforceable in Colorado. The following terms are unenforceable: 1) adversely affects a child’s right to support; 2) limits or restricts a remedy available to a victim of domestic violence; 3) attempts to modify a court-decreed legal separation or marital dissolution; 4) penalizes a party for initiating a legal proceeding leading to legal separation or marital dissolution; 5) violates public policy; or 6) defines rights or duties of parties regarding custodial responsibility.
The waiver of maintenance by one party can be a gray area for enforceability in premarital agreements. Colorado allows an inquiry of whether a waiver or agreement about spousal support would be unconscionable. This means that despite language of both parties waiving maintenance upon divorce, the party is still able to review the circumstances of the parties, and determine whether this would be a “fair” result. If one spouse became a caregiver, developed poor health, or for marital reasons became unemployed, the waiver could seriously harm that person. Accordingly, even if you draft this language in your agreement, beware that it might not be enforceable at time of divorce.
Waivers of Rights at Death
Pursuant to a premarital agreement, parties can also waive certain rights that he or she may have as a surviving spouse. C.R.S. § 14-2-302 lists the rights a surviving spouse has in the estate of the decedent spouse. The rights include: 1) the right to make a claim in the deceased spouse’s estate for family and exempt property allowance; 2) the right to act as personal representative (unless another is named in decedent’s will; 3) the right to claim a share of the intestate estate; 4) the right to claim a homestead exemption in the estate; and 5) the right to claim an elective share of the deceased spouse’s estate.
If a party wishes to leave his or her entire estate to someone other than the surviving spouse, it is imperative that these rights be waived. Even a desire to devise a portion of an estate to a non-spouse could require a waiver of these rights. A spouse in a second marriage wanting to ensure that children from the prior marriage, could be disrupted by the survivor’s elective share claim of the decedent spouse’s estate.