Tax 7-8 Identify characteristics of a valid and enforceable premarital agreement.

Question 1

Premarital Agreements

What is the purpose of a premarital agreement, and how is it commonly structured?

(LO 7-8)

Answer 1

The purpose of a premarital agreement is to limit the presumed effect of marriage on property acquired prior to, or during, the marriage. Normally, there is a transfer of property from the more affluent spouse to the other spouse in exchange for a release of all marital claims.

Question 2

Premarital Agreements

Identify four requirements that must be met if a premarital agreement is to be held enforceable by a court of law.

(LO 7-8)

Answer 2

a. It must be in writing and be signed by both affected parties.
b. Full and complete disclosure of each party’s net worth must be made (i.e., there must be no designed concealment).
c. It must not be intended to promote the procurement of a divorce.
d. It must be shown to have been executed willingly by both parties without duress or coercion.

Question 3

Premarital Agreements

Module Check

15. Which one of the following is not a characteristic of a valid and enforceable premarital agreement?

It may be orally executed by the parties that are affected.

There should be a full and complete disclosure of each party’s net worth prior to signing.

There should be a written agreement signed by both parties.

(LO 7-8)

Answer 3

It may be orally executed by the parties that are affected.

A valid and enforceable premarital agreement should be a written agreement signed by both parties, and it should include a full and complete disclosure of each party’s net worth prior to signing.

Question 4

63. Which of the following are characteristics of a valid and enforceable premarital agreement?

I. It may be orally executed by the parties that are affected.

II. There should be a full and complete disclosure of each party’s net worth prior to signing.

III. It may be used to regulate an award of alimony upon divorce of the parties.

IV. There should be a written agreement with the willingly executed signatures of both parties.

I and II only

II and III only

II and IV only

III and IV only

I, III, and IV only

(LO 7-8)

Answer 4

II and IV only

To be valid, a premarital agreement must be in writing and contain a complete disclosure of each party’s financial situation. It may not be used to regulate an award of alimony.