A recent article in Huffington Post describes the circumstances surrounding the divorce of Peter and Elizabeth Petrakis. Peter, reportedly worth $20-30 million, executed a prenuptial agreement with Elizabeth before the marriage, but a trial judge declared the agreement unenforceable due to fraud in the inducement.
According to the story, Peter asked Elizabeth to sign a prenuptial agreement three months before the two were to wed in 1998. The agreement stated that Elizabeth would not be entitled to her share of the community property, but would be given $25,000 for every year of the marriage (a significantly smaller amount than the appreciation of assets she would stand to gain without the agreement).
Elizabeth refused to sign until four days before the wedding when Peter promised to terminate the agreement upon the birth of the couple’s first child. Although prenuptial agreements typically must be made in writing, the court determined that Peter’s unkept promise fraudulently induced Elizabeth to sign the contract.
Prenuptial agreements are a useful tool for couples who wish to determine the disposition of their own assets in the event of a future divorce – protecting businesses, personal property, and securing assets for children are common reasons that parties might seek a prenuptial agreement. Such agreements take the form of written contracts and are rarely overturned unless the agreement was acquired by coercion or misrepresentation, or because the documents themselves were not prepared in accordance with written law.
For Arizona prenuptial agreements, A.R.S. § 25-201 et seq. contains provisions outlining the necessary form of a prenuptial agreement, how the agreement should be enforced, and other requirements and restrictions. Although a prenuptial agreement is enforceable without an exchange of consideration (as is necessary for most other contracts), it must be in writing and must be signed by both parties, at minimum, to have legal effect.
The agreement becomes effective once the parties are married, but will not be enforced if one of the parties misrepresented (or failed to disclose) their assets, coerced the other party into signing, or if the agreement was “unconscionable” at the time of signing (a legal issue for a judge to decide). Needless to say, the existence of a prenuptial agreement is a critical issue when the marriage begins and if the marriage is dissolved.
If you would like to read the original article in Huffington Post, click here.