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marriage prenuptial agreement

The Impact of Prenuptial Agreements: How They Factor into Dissolution Property Divisions?

Before entering into a marriage, the parties may create a contract, called a prenuptial (or antenuptial) agreement. This is a contract like any other, and enforced as same by the Courts. However, terms that are contemplated and contracted to prior to marriage may not be the current state upon the dissolution of the parties’ marriage.

One major and common recent example is the economic downturn and affect on employment, housing prices, housing sales, etc. If the parties contract in a prenuptial agreement to immediately sell and divide all residences/properties contemplated by the agreement or acquired during the marriage, but when the parties divorce, the properties are underwater or cannot be sold, what happens then?

The answer is, it depends. The prenuptial contract will be upheld, as long as there are not factors such as fraud, duress, or otherwise. However, each case will be examined individually to determine how to best follow the prenuptial agreement and divide the remaining assets and debts.

The Indiana Court of Appeals recently ruled on a case involving a prenuptial agreement which included a lump sum payment to Wife for a return of the funds she used as a down payment on a house for the parties.

Upon dissolution, the Wife was awarded the marital residence, subject to a mortgage on same and an amount of money to combine to refund the original down payment. The Court of Appeals held that this may be a double recovery for Wife, because she could receive the future appreciation of the value of the house and the lump sum and remanded to the trial court.

Each case involving prenuptial agreements needs to be individually examined because no two agreements are the same. Parties are free to enter into contracts prior to marriage, but what is intended may not be possible upon dissolution. It is important to create a solid and detailed prenuptial agreement that includes contingencies for potential changes.

A prenuptial agreement can be a means for both parties to ensure that if divorce occurs, their assets and property is protected. Prenuptial agreements are generally agreed to when the parties are communicating and working together, and can save headaches upon dissolution when this is not usually the case.

Being knowledgeable about options prior to marriage and the impact in dissolution proceedings can protect the interests of all parties. One is encouraged to consult with an attorney before creating a prenuptial agreement or interpreting same upon dissolution, to be sure his or her interests are best protected.

We hope that this blog post has been helpful in exploring an example of the impact of a prenuptial agreement in a dissolution. Ciyou & Dixon, P.C. practices throughout the State of Indiana. This blog post was written by attorney, Jessica Keyes.

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