Prenups and postnups for high-net-worth couples may not be ironclad. Courts could set them aside if they are unfair or incomplete, or if they are missing required elements. For example, if one spouse hid offshore accounts he or she was supposed to disclose, the other spouse could successfully challenge a prenup.
Working with a high net worth divorce attorney is one way to create an enforceable agreement that you can customize to your financial circumstances. For help in Glencoe, call Silberman Law Group.
What Makes Prenups and Postnups Vulnerable to Legal Challenges?
Prenups and postnups can be smart financial planning tools. However, a court may question an agreement’s validity for common reasons.
Lack of Full Financial Disclosure
Illinois law requires both parties to disclose their finances fully before they sign prenups or postnups. Courts need to ensure that both spouses enter the agreement knowingly and voluntarily.
If one party hides income, debts, or assets, the other cannot make an informed decision. The agreement could end up one-sided. In fact, lack of disclosure is one of the most common reasons courts invalidate these agreements.
Challenging a prenup could be successful if a spouse does not disclose high amounts of credit card debt or business liabilities. It means the other spouse unknowingly could agree to terms that leave him or her financially vulnerable.
Similarly, if one spouse owns a rental property and does not include it in the financial disclosure when drafting the prenup, the agreement could be invalid since the other spouse signed it without full knowledge of all marital assets.
Coercion or Pressure Before Signing
Timing and circumstances matter. A prenup handed over days before the wedding, with an implied assign or canceled ultimatum, may be coercive. Similarly, postnups signed during severe marital stress may face scrutiny due to implied pressure.
Overly One-Sided Agreements
Agreements that take away basically all of one spouse’s rights may be too one-sided. For example, provisions that deny the right to ever get alimony, regardless of future circumstances, may be unenforceable.
Failure to Follow Legal Formalities
Prenuptial agreements must be in writing and signed voluntarily. If a contract is not executed properly or is missing required elements, it may be invalid. Postnups, too, must follow strict rules.
Key Protections High-Net-Worth Couples Need in Marital Agreements
Many individuals come to marriage with significant assets, family businesses, or complex investments. Their prenups or postnups must do more than cover basic property division.
Protect a Business or Professional Practice
About 1.3 million small businesses operate in Illinois. If one spouse owns a business, or a medical or legal practice, an agreement can prevent the other spouse from gaining a controlling interest in divorce.
To safeguard a business, a prenup or postnup should explain how to value the business, whether the valuation includes future growth, and what compensation the non-owner spouse would instead get.
Address Spousal Support
Illinois allows spouses to waive or limit spousal support, but the terms must be fair. High-net-worth couples often include formulas for calculating spousal support, tying payments to income levels or the length of marriage.
Protect Inheritances and Family Wealth
Agreements can specify that inherited wealth, trusts, or family assets remain separate property. A prenup or postnup can also clarify how to treat appreciation in value or income generated from those assets.
Define Property Division Rules
Couples can decide in advance what is marital property versus separate property. This offers peace of mind, especially with multiple homes, investment accounts, and international assets.
Plan for Tax and Estate Issues
Prenups and postnups can work alongside estate plans to protect heirs and beneficiaries. Provisions can ensure children from prior relationships receive inheritances, while also setting out spousal rights to property after death.
Include Review and Update Clauses
Circumstances do change. Businesses grow, children may join the family, and financial dynamics may change. It is wise to include a clause that requires periodic review of the agreement.
When Courts Override Prenups: Real Cases and Warning Signs
Real-world scenarios offer insight into prenuptial agreement enforceability.
Coercion Before a Wedding
Courts have invalidated prenups when one spouse is presented with the contract just days before the wedding and signs it without legal counsel. These circumstances create undue pressure and unenforceable agreements.
If one spouse is reluctant to allow enough review time or discourages the other from hiring a prenuptial agreement lawyer, the contract could be vulnerable.
Hiding Assets
In other cases, spouses have failed to disclose the full value of stock options and investment accounts before signing prenups. When divorces occurred, the court found that the lack of disclosure undermined the agreement’s validity.
Waiving All Support Rights
Some Illinois courts have invalidated provisions that completely waived spousal support, especially when the marriage lasted many years. A more strategic approach is to include conditional or capped provisions for calculating spousal support.
Business Valuation Disputes
If a prenup tries to freeze the value of a spouse’s business at the time of marriage, it may be vulnerable to challenge decades later if the business grows exponentially. In these cases, courts usually allow reconsideration due to outdated and unfair valuation methods.
FAQs About Prenups and Postnups for High-Net-Worth Couples in Glencoe
Are Prenups and Postnups for High-Net-Worth Couples Automatically Enforceable?
Illinois courts enforce these agreements only if they meet strict requirements of fairness, full disclosure, and voluntary execution.
Can a Prenup Completely Waive the Right to Alimony?
Courts may override an alimony waiver if enforcing it would be unconscionable. Including clear guidelines for calculating spousal support is safer than attempting a total waiver.
How Can I Protect My Business in a High-Net-Worth Divorce?
Work with a high net worth divorce attorney to draft a prenup or postnup that explicitly addresses business valuation, ownership rights, and treatment of business income.
Silberman Law Group can help with drafting enforceable prenups and postnups for high-net-worth couples in Glencoe, IL. Contact us today.
