Are Prenuptial Agreements Valid in Arizona?
The validity of Prenuptial Agreements in Arizona
If you are wondering are prenuptial agreements valid in Arizona, you have come to right place. Arizona divorce laws favor prenuptial agreements. Arizona adopted the Uniform Premarital Agreement Act, which makes premarital agreements legal in Arizona. Prior decisions from the Arizona Court of Appeals held people are free to characterize what would otherwise be community property into the separate property of one of the spouses by entering into a valid Premarital Agreement.
However, written premarital agreements entered into before marriage are treated differently than post-nuptial agreements entered after the parties become married. A Premarital Agreement will be enforced as long as both parties had full prior disclosure of the financial condition of the other party or such disclosure of that information was expressly waived in the written agreement, both parties voluntarily entered into the agreement, and the court does not find the agreement to be unconscionable. A Post-Nuptial Agreement, however, is only enforceable if the court finds it to be fair and equitable; thereby making them significantly more prone to attack.
For more information on the factors a trial court is required to consider when determining whether to enforce a premarital agreement, please read our synopsis of the Arizona Court of Appeals decision in the case of Pownall v. Pownall.
The Arizona Court of Appeals in the case of Schlaefer v Financial Management Service, Inc. addressed the issue of whether a premarital agreement was binding upon creditors. The conclusion from the court of appeals, in that case, was that the premarital agreement, in that case, was binding on the creditors, which prevented wife’s creditors from going after the husband’s assets for a debt wife did not pay.
Steps to Make a Prenuptial Agreement Valid in Arizona
It is always good practice to record a Notice of Entry of Premarital Agreement with the county recorders office. This Notice does not state the terms of the premarital agreement and is intended only to provide official public notice to all creditors of the existence of possible changes to community property holdings and liabilities of the spouses before granting either spouse credit.
The Arizona Court of appeals, however, in the case of Industrial Commission of Arizona v. Wright held that a post-nuptial agreement entered into during the marriage is not binding on the creditor in that case. The reasoning of the court was that the spouses, in that case, were found by the court to have entered into the postnuptial agreement for the purpose of defrauding a creditor; which the court would not allow. You should also know that while the existence of a valid prenuptial agreement will simplify the Arizona divorce process, the existence of a postnuptial agreement will not if the agreement is contested.
Should You Get a Prenuptial Agreement in Arizona
There are many pros and cons to obtaining a prenuptial agreement in Arizona before you mary. The pros include the fact that a properly drafted prenuptial agreement will almost eliminate any litigation between the parties in the event of a divorce or legal separation. Another benefit of a prenuptial agreement is that each spouse can clearly define how their accumulation of assets and debts will be handled in the future leading to more certainty going into the marriage.
The cons are many. First, some people find it difficult to raise the issue of entering into a prenuptial agreement after the parties are already engaged. We would encourage couples contemplating an engagement to bring up the topic of a prenuptial agreement well prior to becoming engaged to be married. Doing so will leave the joys of a wedding proposal unscathed by a subsequent discussion of entering into a prenuptial agreement in Arizona.
Another con to prenuptial agreements in Arizona is that neither party can clearly foresee the future and what it may be to one or both spouses. For example, if a spouse were later disabled and unable to support himself or herself, they would not otherwise receive alimony if the prenuptial agreement forbids the award of alimony in the event of a divorce or, at a minimum, may limit what that spouse may receive in alimony.
Another related problem occurs when one or both spouses create an estate plan. It can create confusion (and litigation) if the estate plan of one or both of the spouses leaves assets to the other spouse in the event of his or her death. Some poorly written estate plans can actually be construed by the court as a postnuptial agreement that modified the prenuptial agreement. It is therefore important to get it right when you draft your estate plan.
Contact Our Scottsdale and Phoenix Arizona Prenuptial Agreement Attorneys
Call us at (480)305-8300 to schedule a consultation with one of our Scottsdale or Phoenix Arizona Community Property Attorneys regarding Arizona community property laws or any other Arizona family law matter.