Oregon Premarital Agreement Act ORS 108.700 et seq
A premarital agreement must be in writing and signed by both parties.
No consideration is necessary.
May relate to rights and obligations relating to property of either party, the right to buy or sell or control property; the disposition of property upon separation, divorce or death; spousal support, making wills or trusts; ownership rights in a life insurance policy. Any other matter that is not in violation of public policy or criminal statute.
The agreement is only effective upon marriage.
It is not enforceable if:
- The party did not execute the agreement voluntarily
- The agreement was unconscionable when it was executed and before execution, that party:
- Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party
- Did not voluntarily waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided
- Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.
- If spousal support is eliminated, and that causes one party to be eligible for support from public funds, a court may require the other party to provide support.
The most common reason for premarital agreements is that one party is the beneficiary of a trust from a family member, and that family member wants to make sure that the family property in the family trust is not part of a divorce proceeding or that the family property does not pass to the spouse upon the death of the beneficiary.
I have a case right now which is exactly that simple. At the time the parties married 25 years ago, Wife was a trust beneficiary in her parents’ trust. Any interest in the trust was protected from Husband, and any transfers from the trust to Wife that were kept separately were protected from Husband, such as a vacation home. Anything acquired during the marriage was marital property, no provisions about spousal support. It still raises issues such as whether it is “just and proper” to divide up all of the marital property taking into account the assets that Wife separately holds. Wife also doesn’t work, and Husband makes really good money, but Wife gets enough income from the trust that spousal support may not be an issue. There is also a substantial amount of marital property for division.
Where the “just and proper” analysis comes into play is when there are not a great deal of marital property, and if the marital property were to be divided, one party has a significant amount of assets, and the other party has almost nothing. For example, the house was Husband’s prior to the marriage, and subject to a premarital agreement. The only marital asset was a bank account that had $20,000 in it. The parties were in their mid-60s. Wife was awarded the entire bank account, because Husband would be receiving the only significant asset.
I have another current case with the following facts:
- Parties have been married for 25 years, now in early 70’s.
- At the time of the marriage, the parties both had lawyers who were discussing a premarital agreement, then all work stopped on the agreement, including no specific disclosures of property.
- Six months later, Husband tells Wife that any premarital agreement that she signs will only be valid for a few years, then presents her with a premarital agreement, telling her that they could get married tomorrow if she signs it immediately before the wedding. There were no financial disclosures.
Valid prenuptial agreement?
The real issues start coming up when the parties get on with their married lives and don’t necessarily keep the premarital agreement in mind. Money from the separate asset covered in the prenuptial agreement is then used to buy a joint asset. The spouse who doesn’t own the house then starts putting work into maintaining and improving the residence. Then it starts to become unclear as to what is a marital asset and what is a separate asset. The current caselaw says that you go asset by asset. For example, the residence where both people reside and presumably both people put effort and money into preserving and improving is much more likely to treat appreciation as a marital asset. A raw piece of land that was owned by one party, and was held as investment would probably be kept as a separate asset.
Retirement assets are complicated as well, because the premarital agreement might have covered that retirement assets are kept separate, but then the parties discuss both of their retirement assets in their estate planning and how things would be paid for in the future. Then the parties agree that Wife will not contribute to a separate retirement asset, but rely on Husband’s asset, so that Wife can stay home and raise children.
Sometimes it gets really complicated. In my current case, the prenuptial agreement kept the parties’ premarital property separate, but stated that any income coming in from the separate asset (in this case a dairy farm) would be put into a joint marital asset. Husband did that for about six months, then took all of the income coming in and put it into separate assets held only in his name. There was a certain number of cows specified in the premarital agreement, but that any cows beyond the number specified in the premarital agreement would be marital. Then the entire herd was sold 23 years ago with no accounting for how many cows were sold. Then a new herd was purchased 21 years ago, again with no record. Then a barn fire happened, and the herd was sold, with no accounting. Husband then took the money and invested in real property, held in his name, then sold the real property which required Wife to sign off as it was in a community property state. The parties’ joint property was then sold to purchase a new home which Husband put only in his name. At the current time, there is about $4 million in assets, all but about $300,000 is in Husband’s separate name. My argument is that because income and increases in wealth were supposed to have been put into joint names, and it wasn’t, now all of the assets 20 plus years later are so commingled that you cannot separate out what was supposed to be identified as marital property and what continued to be separate property.
It is also significant to note that anything to do with custody and children are not part of what is considered to be appropriate subjects for premarital agreements. This is often more of a cultural issue. If the couple is coming from a Middle Eastern culture, children are often treated as “belonging” to the father. When the parties then come to the US and are planning to marry, Husband wants to put in language that he has all of the separate assets, no liability for spousal support, Wife is not expected to work, but rather to raise the children, but if they divorce, the father will have full custody and Wife will return to whatever country her parents lived in without the children. It is highly unlikely that this part of the agreement would be enforceable as it would be considered as against public policy. However, every time I have recommended that the Wife not sign such an agreement, the Wife does sign it, because culturally the Wife being completely vulnerable is just accepted, and Wife needs to prove her trust by being completely vulnerable.
When I start talking about a prenuptial agreement, here are the top questions that I ask about.
- What is the respective wealth? There is always one party who has significantly more.
- What is the respective earning capacity?
- What is the intent with assets acquired during the marriage?
- What is the intent with the appreciation on separate assets, particularly if one party owns the house prior to marriage?
- Is one party likely to stop working particularly to raise children?
- If so, will there be agreement to build assets in that party’s separate name, such as retirement assets?
- How much time between the time that the parties are negotiating the premarital agreement and when the wedding is scheduled?
I think premarital agreements are a very good idea, particularly if it is a second marriage, and there are children from the first marriage. People often need to make provisions for prior family members as well as toward future spouses. It is important to define what the expectations are going forward.
The most common statement that I hear is how weird it feels to be talking about committing to each other in sickness and in health, for better or worse, but that you are planning for the worst before it happens. It doesn’t need to be a trust issue, but it does need to be fair, especially in terms of the process. If there is a significant difference in power and influence, extra care needs to be taken to make sure that the disadvantaged spouse to be knows what is going on, and has choices. Another current case I have is where the parties are getting married because of concerns about Husband’s immigration status, but Wife wants to protect her assets in case the marriage doesn’t last, or there is a deportation issue. There is more than a bit of pressure for Husband to want to give up anything so that he can get immigration protection. Fortunately, Wife wants to make sure Husband is protected, so is willing to be reasonable. Otherwise, it is hard to imagine that the spousal dynamics going forward are going to be conducive to a positive relationship.