With divorce statistics indicating one in two marriages ends in divorce, many people—from those who have heard divorce horror stories to those who have had their own divorces—sometimes contract for terms to divide their estate (assets – liabilities = net marital estate) in the event of a divorce. There are three ways to do so, all with risks and specific requirements.
The most obvious and well known is the pre-marital agreement. This is made in contemplation of divorce and has existed in Indiana as a matter of contract law for decades. In 1995, this was reinforced by the Uniform Premarital Agreement Act which backed up caselaw with statutory scheme. In essence, assuming full disclosure and free bargaining power, an Indiana trial court will enforce this agreement’s provisions on divorce. Thus, the parties know in advance what will occur with a divorce.
A less common type of agreement is a post-nuptial agreement. This type of contract is entered into when the marriage is in trouble and a divorce is filed. The parties can reach similar terms as a pre-marital agreement. The reason it is enforced, technically the “consideration” is continuation of the marriage and/or dismissal of the divorce case. Where a divorce has not yet been filed, there is more chance the “contract” might have enforcement issues in a later divorce. The Indiana appellate courts have recently approved of this type of contract.1
The third type of “contract” is where the parties, who perhaps never got around to entering into a pre-nuptial, is a post-nuptial when the marriage is operating on stable ground. There are many reasons parties may want to do this, such as if they have children from a prior relationship they wish to account for in the event of divorce regarding marital assets. The law is not as clear that these agreements are enforceable. However, they are likely governed by Indiana contract law and enforceable, unless there is some attenuating situation that would indicate bad faith, duress, fraud or the like.
Thus, Indiana has a wide array of ever-developing tools to help parties address marriages and how they are treated on divorce. The key is understanding these and taking the time to consider the need relative to your situation in advance.
Ciyou & Dixon, P.C. attorneys are routinely involved with such contacts and their litigation. We hope this blog post provides useful information for you. It is not intended to provide specific legal advice or solicit services. Ciyou & Dixon, P.C. attorneys practice throughout the State of Indiana.
