The Complete Guide to Antenuptial Agreements in Minnesota

All About Antenuptial Agreements

Antenuptial agreements, commonly referred to as a pre-nuptial or simply pre-marital agreement, are contracts entered into prior to the marriage for which the primary purpose is to address the manner in which certain property, and/or certain rights, such as spousal maintenance (formerly known as alimony) or the right to make certain claims one against another in the future, will be treated during the marriage and/or upon the death of one of the parties, or upon the termination of the marriage. For purposes of the recognition of validity, these agreements must be in writing, signed by both parties, and signed after disclosure of material facts. The treatment of property and rights in the context of an antenuptial agreement when a divorce occurs at some time in the future are robust, but no longer unexpected, and all the more important when one considers the ramifications that flow from the loss of the ability to obtain or retain property, the payment of maintenance, etc., that will likely be ultimately determinative upon the filing of a petition for divorce. Minnesota courts will enforce antenuptial agreements generally speaking, except to the extent a restriction on spousal maintenance is determined to be unfair and inequitable in light of the circumstances as of the time of enforcement . In other words, as long as it is not unconscionable or unfair in light of the circumstances at the time of enforcement, no matter how imbalanced or one-sided the agreement may seem at the time of drafting. Antenuptial agreements are not to be confused with post-nuptial agreements. Post-nuptial agreements may or may not be court enforced, depending upon the extent to which the provisions contained therein run afoul of public policy (meaning, inconsistent with statutory provisions or judicial precedents concerning the irrefutable rights and obligations that flow from marriage, are intended only as a means of provoking a divorce, or otherwise contrary to law), or how the contract is executed, but post-nuptial agreements are not generally enforceable to the extent that they speak to the rights and obligations that presume the marriage has terminated or is in a dissolution action. Additionally, the terms and conditions of a post-nuptial agreement sometimes fail into the realm of a separation or settlement agreement, and will be treated as such and require approval for enforceability.

Legal Standards in Minnesota

Minnesota statutes outline the specific requirements for antenuptial agreements. According to Minnesota law, an antenuptial agreement must be made in writing and signed by both parties. The parties cannot modify the terms of this document after signing without a new written agreement. These contracts are enforceable in Minnesota unless the party against whom enforcement is sought proves the contract was unconscionable when made and that, before execution of the agreement, that party was not provided a fair and reasonable disclosure of the property or financial obligations of the other party; that the party did not "voluntarily and expressly" waive the right to disclosure of the property or provision of financial obligations beyond the contribution towards an amount determined to be sufficient to support the party; or that the other party did not have notice of the property or financial obligations.

The Advantages of Antenuptial Agreements

Antenuptial agreements (also known as premarital or prenuptial agreements) are important estate planning tools for many people. They are particularly valuable for people who want to specifically address asset protection issues, debt liability issues, and divorce issues, such as spousal maintenance.
Both parties to a marriage (or proposed marriage) can benefit from having an antenuptial agreement. In an antenuptial agreement, the parties can agree on how property, such as real estate, bank accounts, pensions, ordinary income, and principal and interest from other types of assets, will be classified as marital or non-marital property (the definitions of marital and non-marital property will be addressed more fully below) in the unfortunate event that they separate or divorce, and on how marital property will be divided between them.
Property that cannot be labeled as marital property or non-marital property until the spouse dies is often referred to as "quasi-marital property" and can include a life insurance policy or a pension that names someone other than one of the spouses as the named beneficiary.
When a spouse dies while the parties are still married, and there is no antenuptial agreement that appropriately addresses these issues, the surviving spouse often has a right to an elective share (which will be discussed more fully below). In making an elective share determination, the judge decides whether any property from the estate is marital property and determines the surviving spouse’s share from the portion classified as marital property.
Again, this is an area where the parties to a marriage can contract around and where an antenuptial agreement is very useful.
Debt liability is another important issue that can be addressed in an antenuptial agreement. If a spouse owns a business that has debt, or one or both parties owe student loans, an antenuptial agreement can supersede Minnesota law regarding the responsibility for paying the loans or paying claims made on the debt during the marriage. For example, if one spouse owns an auto repair shop business and has business debt, and the parties want their antenuptial agreement to provide that each party will be responsible for their own debts and that the auto repair shop owner will be responsible for paying the debt, an antenuptial agreement can help determine whether equity in the business may be protected from claims related to the debt.
Minnesota recognizes the enforceability of the parties’ determination of how debt liability will be handled. In addition, the parties can agree on which party will be liable for personal student loans incurred during the marriage.
Finally, a person faced with a divorce can find a lot of benefits when they enter into an antenuptial agreement with their spouse. While the parties can agree on other divorce-related issues in an antenuptial agreement, the most commonly agreed upon issue is the division of marital property.
In terms of dividing property at the time of divorce, an antenuptial agreement can provide for the division of property in a manner not provided for in the Minnesota divorce statute. For example, the parties can agree on a special formula to divide property that takes into account the financial contributions of both parties. They can also agree on formulas for dividing property based on how many years the marriage lasts, or in some cases, property division provisions for marriages that last less than five years.
Spousal maintenance is usually the second most common divorce-related issue that is addressed in an antenuptial agreement. Minnesota courts will approve the amount and duration of maintenance set forth in an antenuptial agreement unless the judge determines that the amount or duration is unconscionable.

Typical Provisions of Antenuptial Agreements in Minnesota

In addition to the aforementioned introduction, it is also necessary to outline what clauses are often found in a Minnesota Antenuptial Agreement.
Property Division
A primary function of an Antenuptial Agreement is to define the property that each party will retain as his or her own property in the event of entry of a Judgment and Decree of Dissolution of Marriage. In a traditional Minnesota Antenuptial Agreement, the Agreement typically sets forth a list of property that each party will retain as his or her nonmarital property.
Spousal Maintenance
Paragraphs are typically included in a Minnesota Antenuptial Agreement that deal with spousal maintenance. Sometimes the parties agree that no spousal maintenance or limited spousal maintenance will be permitted in the future. Spousal maintenance is a very difficult subject area upon which to agree. First of all, the parties are often young and just starting out in their careers, therefore they have no historical income figures to use. The parties are signing the Agreement prior to the actual marriage. If there are children born during the term of the marriage and the parties have different duties regarding the care of the children that then leads to one party earning less money than the other or allowing the other party to advance in his or her career, a spouse that is disadvantaged by the functioning of the marriage can find themselves at a severe disadvantage at the time of the dissolution. Additionally, a party may have stayed at home with children until a young age, thereby limiting his or her ability to support himself or herself in the future. Many Antenuptial Agreements limit spousal maintenance or eliminate it, however, the court will not uphold such a provision if it is found to have been unconscionable at the time of the dissolution. The court has the equitable power to ignore an Antenuptial Agreement on the issue of spousal maintenance.
Lifetime Income
All Antenuptial Agreements are required to address whether or not spouses waive any rights to each other’s estates. Typically a Minnesota Antenuptial Agreement will contain a clause waiving any right to elect an elective share or any right to intestate succession. Therefore, if one spouse dies, the other would have no rights to any spousal support that would otherwise be available under statute. There is a special consideration in Minnesota that if an election is not made within nine (9) months of the date of divorce, it is considered waived. Therefore, if spouse A divorces spouse B, but spouse B dies before spouse A has filed for his or her elective share, spouse A will have no rights to the estate of spouse B.
Inheritance Rights
By law, a spouse waives any right to inherit property from the other spouse over the course of the marriage. This presumption can only be overcome by clear and convincing evidence that a spouse intended to benefit his or her spouse in some way. For example, if each spouse has children from a prior marriage and they marry and put all assets into joint tenancy of both parties, but execute wills that specifically state that all assets will be divided only amongst themselves and that all children are to inherit nothing, such a situation may not constitute spousal inheritance. A spouse needs to be specific in drafting his or her will and will the proper property such that spousal rights of inheritance may be waived.

Limitations and Potential Issues

Challenges and Limitations of Antenuptial Agreements in Minnesota
While antenuptial agreements serve as a useful way to minimize disputes, they are not without their challenges and limitations. One major issue is the possibility of coercion. An agreement signed under threat or threat of breaking off the engagement generally is not considered valid. Similarly, if one spouse forced the other to sign an agreement by fraud or deceit over the true financial situation, such an agreement is unlikely to stand up to judicial review. Some agreements may even be questionable if the period between signing and the wedding was deemed to be too short to permit adequate deliberation.
Lack of disclosure is another concern. For an agreement to be enforceable, both parties need to be fully aware of one another’s assets and liabilities. If a spouse conceals certain assets or is not upfront regarding the extent of his or her debts, the agreement may be deemed unenforceable. Similarly, an agreement may not be enforceable if one spouse claims ignorance that the disclosure provided by the other spouse as to assets and liabilities was not complete. Thus, a spouse who is unwilling to provide full disclosure is only harming his or her own interests in the long run.
A potential public policy limitation arises if the terms of the agreement unfairly omits basic provisions of marital property rights provided by statute . In re Marriage of Anderson, 400 N.W.2d 270 (Minn. Ct. App. 1987). This is somewhat related to the discrimination rule for the exercise of discretion by the trial court in divorce proceedings. Parents of minor children may not deprive their children of the statutory rights and rights granted by county code. Davis, 415 N.W.2d at 89 thus causing an issue if the circumstances pose such a threat to the well-being of the minor children of the marriage. C.R.B. v. J.L.H., 415 N.W.2d at 387. This is also tied with the limitations imposed by the "best interest of the child" standard. Such agreements will be enforced if the subsequent child support awards are consistent with the best interest of the child and the actual needs of the child. Id.
Pre- or post-marital agreements are not recognized with regard to enforcement of child support obligations. Lukens v. St. Paul Cos., 418 N.W.2d 188. Pre- or post-nuptial agreements are not a substitute for divorce proceedings. Clausner v. Clausner, 543 N.W.2d 656. Spouses may not contract away the court’s authority to enforce validly entered judgments and orders. Kingston v. Preston Thomas, Inc., 691 N.W.2d 407 (Minn. App. 2005). Public policy prohibits contracts for divorce. Davis v. Davis, 60 N.W.2d 634 (Minn. 1953).

The Process of Drafting a Valid Antenuptial Agreement

The creation of an antenuptial agreement in Minnesota is governed by a statute that provides for the steps that must be followed. Included in the statute are examples of how an agreement may be invalid if not done in accordance with these requirements: The process for a valid antenuptial agreement begins with a draft of the agreement itself. The draft should include an itemization of the property that is being contributed by each party to the marriage and a projection of what the property disposition will be upon the death of one or both parties (including the rights of election of the spouse to the other party’s estate). The drafting process should also include a full and fair disclosure of all assets and liabilities that each party has owned and held prior to the marriage. In some cases, this type of disclosure requires production of income statements for a period of time prior to the marriage. Since the agreement will become effective once the marriage is entered into, both parties should have sufficient opportunity to review the agreement. This means that the agreement proposal should be entered into prior to the marriage and the parties should cooperate to make any changes or modifications prior to the marriage. The agreement should contain a signature block for each party and a notary public. After the signature block, the agreement should state the date and the location (town or city) where the marriage will occur. Minnesota law requires that this information be recorded on the agreement itself. Once there is a completed draft of the agreement, it should be reviewed and analyzed by each of the parties with a family law attorney. The attorney should assist the party throughout the process. In some cases, the attorney will assist with the negotiations leading up to the agreement and the consultations. In other cases, there may be little consultation except to review the final result and provide the party with the opportunity to ask questions. The spouse should then wait until the date prior to the marriage to sign the agreement. The date of the marriage should be filled in on the final version of the agreement. After the agreement is signed, it should be dated and notarized. In some cases, the agreement can be filed with the court, although this is not always the preferred route. Once the signed copy of the antenuptial agreement has been executed, it is advisable to keep it in a safe place such as a safe deposit box.

Enforcement and Modification of Antenuptial Agreements

Minnesota law does allow modification of antenuptial agreements. The first way of modifying a premarital agreement is by mutual consent of the parties. A new agreement can be written and signed by both parties to modify the terms of the original agreement. A court will generally enforce a subsequent premarital agreement, unless one of the statutory requirements is not met or one of the parties falsified the circumstances relating to the property or hid assets.
A court can also grant a modification of the terms of a premarital agreement if the party seeking the change proves that there was a substantial change in circumstances and the original terms were unconscionable at the time the agreement was signed. The substantial change must be experienced by the party seeking the modification. For example, if one spouse left the workforce to raise children, a court could grant a modification for the stay-at-home spouse to prevent the other spouse from receiving the entire marital estate as outlined in the original premarital agreement. In this circumstance, the stay-at-home spouse could not be considered to have been acting in good faith if he or she refused to agree to a modification to allow him or her to be provided for after divorce.

Final Thoughts: Should You Make an Antenuptial Agreement?

The question of whether you should or should not enter into an antenuptial agreement is a deeply personal one. In some situations, it will seem fairly easy to decide, while in others, it may prove much more difficult. If this article has led to your considering whether an antenuptial agreement is right for you, the most important thing is to discuss that with your potential spouse. You both need to simply be honest with yourself and each other about what you want as individuals and as a couple. That means discussing your finances as they exist now, your plans for the future, and how you see your relationship functioning once you’re married.
Once you’ve made the decision to discuss an antenuptial agreement , the first step is to consult an experienced and reputable family law attorney. During this consultation, your attorney will outline the process necessary to draft an antenuptial agreement. If your spouse is supportive of the idea, then he or she should also consult a family law attorney on his or her own in order to understand the ramifications of an agreement and to be assured that the document is fair.
If an agreement is essential to your individual needs, a thorough discussion with your attorney should lead to a draft you are happy with. You will work together to reach an acceptable agreement, and once you do, you’ll both need to sign it as a true expression of your joint consent.