As of July 1, 2014, a new marital agreement statute with a primary legislative goal of providing greater protection to unrepresented parties will become effective. The new statute, entitled the Uniform Premarital and Marital Agreements Act, Colo. Rev. Stat. §§14-2-301 et seq.(“Colorado’s New Act”) is Colorado’s adapted version of the Uniform Premarital and Marital Agreement Act.
The following are the most significant requirements under Colorado’s New Act:
- In writing. A premarital or marital agreement must be in writing and signed by both parties.
- Voluntary consent. Parties must voluntarily consent to the terms of the agreement and not be under duress.
- Access to Counsel. Under Colo. Rev. Stat. §§14-2-309 of Colorado’s New Act, a premarital or marital agreement will be unenforceable if a party to the agreement did not have meaningful access to independent legal representation. Before signing the agreement, an unrepresented party must have had time to (i) decide whether to retain counsel to provide independent legal advice and (ii) locate counsel, obtain counsel’s advice and consider the advice provided. If only one party is represented by counsel, the unrepresented party must either have the financial resources to engage counsel or the other party must agree to pay the reasonable fees for the unrepresented party to have independent legal representation. Note, the practical effect of this new requirement will mean that the presentation and execution of an agreement under an expedited time frame will not be possible – particularly if one party is unrepresented. Therefore, although independent representation by counsel for both parties is not specifically required under Colorado’s New Act, best practices still recommend this approach. If either party is unrepresented by counsel, Colo. Rev. Stat. §14-2-309(1)(c) and (3) of Colorado’s New Act requires specific language which must be prominently included in the agreement. Failure to include the language will invalidate the agreement.
- Financial Disclosure. Adequate financial disclosure must be made which includes disclosure of income. Specifically, a party must receive a reasonably accurate description and good-faith estimate of the value of the property, liabilities and income of the other party or have an adequate knowledge or a reasonable basis for having adequate knowledge of such property, liabilities and income.
- Waivers of Maintenance and Attorney Fees. Colo. Rev. Stat. §14-2-309(5) of Colorado’s New Act includes limitations on the ability of parties to prospectively determine, modify, limit or waive maintenance and the payment of attorney’s fees in the event of divorce. While such terms may be included in an agreement, determinations as to whether such modifications or waivers are unconscionable will be determined by the court as a matter of law at the time enforcement is sought.
- Waiver of Marital Rights at Death. Of additional note, beginning July 1, 2014, a unilateral waiver of a marital right or obligation on the death of a spouse is unenforceable unless the waiver is made in a premarital or marital agreement consistent with Colorado’s New Act.
Colorado’s New Act also specifically delineates unenforceable terms in a premarital or marital agreement. Examples of unenforceable terms include, but are not limited to, terms that (i) adversely affect a child’s right to support, (ii) limit remedies available to victims of domestic violence or (iii) penalize a party for initiating a legal proceeding for legal separation or divorce.
Applicability to Prior Agreements
Colorado’s New Act does not affect premarital or marital agreements executed prior to July 1, 2014 and such agreements will continue to be enforceable subject to the laws in place at the time of execution. However, amendments from and after July 1, 2014 to previously executed premarital or marital agreements must comply with Colorado’s New Act. Consistent with existing law, Colorado’s New Act is also applicable to parties to a civil union.
The use of premarital and marital agreements continues to grow for all types of couples as these agreements can be as broad or as narrow as desired by the parties. For younger couples, such agreements can be the best way to ensure that current and future interests in gifts, inheritances and interests in trusts are protected and remain separate. For couples who are marrying later in life or with children from a prior relationship, agreements with a broader scope can ensure that previously created wealth is protected for children, grandchildren and charitable endeavors. Colorado’s New Act enables couples to contract prior to or during their marriage or civil union regarding their property rights in the event of the death of either party or in the event of a legal dissolution of the relationship. In addition to the statutory requirements, practitioners should follow three basic best practice points for a valid premarital or marital agreement: (i) allow sufficient time to review, consider and negotiate the agreement: (ii) provide financial disclosure including all assets, liabilities and income sources; and (iii) obtain independent counsel for each party.