Pasternak & Fidis Reporter

April 1, 2013

The New Uniform Premarital and Marital Agreements Act

In July 2012 the Uniform Law Commission (ULC) approved a new uniform act, the Uniform Premarital and Marital Agreements Act (UPMAA). The ULC (also known as the National Conference of Commissioners on Uniform State Laws) is a 121 year old organization of legal scholars and practicing lawyers. It researches, drafts and promotes enactment of uniform state laws on subjects that would benefit from uniformity. For example, it created the Uniform Commercial Code, the Uniform Interstate Family Support Act, and the Uniform Enforcement of Foreign Judgments Act. It is up to the legislature of each state whether to adopt a uniform act, and whether to make any changes to the text.

The UPMAA, if adopted, would replace the 1983 Uniform Premarital Agreement Act (UPAA). Twenty-seven states, including the District of Columbia and Virginia, but not Maryland, adopted the UPAA.

The UPMAA proposes a new set of standards for validity of premarital agreements.  In addition, the UPMAA, for the first time, creates proposed uniform standards for recognition and validity of marital agreements. The UPMAA defines a marital agreement as an agreement executed by spouses who intend to stay married. These agreements often serve the same purposes as a premarital agreement. Some marital agreements are executed by parties who intended to sign a premarital agreement, but ran out of time to conclude the negotiations before the wedding. A couple who becomes estranged may decide to try reconciliation but want an agreement that resolves all financial issues in the event the reconciliation is not successful.  Some marital agreements are done as part of estate planning.  Under the UPMAA the standards for validity of a marital agreement would be the same as for a premarital agreement.

The UPMAA would alter the current rules governing the process for entering into a premarital or marital agreement.  These new rules seek to strike a reasonable balance between the desire of the person seeking such an agreement for predictability of enforcement and the need of the economically disadvantaged spouse or prospective spouse for a genuinely fair process.  Under the UPAA, a court must uphold a premarital agreement that was unconscionable (i.e., extremely unfair) at execution as long as the challenging party got adequate financial disclosure or signed an effective waiver.  The UPMAA rejects enforcement of an agreement that was unconscionable at execution. However, a marital or premarital agreement that was unfair at execution (but not in the extreme), will be enforceable.

A persistent problem, from the perspective of economically weaker parties, is the practice of presenting a proposed premarital agreement close to the wedding date, when plans have been made and paid for, and when the rush of pre-wedding activities makes it difficult or impossible to get legal advice and engage in an actual negotiation.  The most important feature of the UPMAA is the requirement that the party receiving a proposed agreement have access to independent legal representation before execution.  Access to legal representation necessarily means both the money to hire a lawyer and the time to find one, get advice, and consider that advice. This requirement should make the process of entering into a premarital agreement more fair by forcing the party seeking the agreement to present the proposed agreement well in advance of the wedding date and, in some cases, to pay the legal fees of the weaker party to enable him or her to retain counsel. The same requirement for access to independent legal advice would apply when parties are already married and seek to enter into an agreement that will govern their property and support obligations at death or in the event of a future separation or divorce.

The UPMAA does not mandate legal representation, only a meaningful opportunity for legal advice.  The UPMAA also requires a plain English notice of the rights affected by the agreement when one party is unrepresented.

The UPAA sought to create uniformity in the standards for validity of premarital agreements, but it had many flaws.  One of the biggest flaws is the provision that permits an unconscionable agreement to be enforced. Many scholars have questioned the propriety of permitting an unconscionable marital contract when such contracts are not permissible in a commercial setting. The UPMAA is a significant improvement over current law. The requirement for meaningful access to legal advice should give economically disadvantaged spouses and prospective spouses a better chance to negotiate acceptable terms.

 

To read more about UPMAA, click here.

 

Linda Ravdin is the author of Premarital Agreements:  Drafting and Negotiation, published by the American Bar Association in 2011. She served as the Co-Advisor from the ABA Family Law Section to the Uniform Law Commission’s Drafting Committee on the Uniform Premarital and Marital Agreements Act.