Are Prenuptial Agreements Valid in Arizona?
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 valid Post-Nuptial Agreements.
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.
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 post-nuptial agreement for the purpose of defrauding a creditor; which the court would not allow.
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