Prenuptial agreement Invalidated? Incomplete financial discloser!

[Husband55]

Hi, we got married and live in Illinois and I believe that I failed to make a full and fair financial disclosure in our pre-nup.
Specifically, I

1) Failed to mention my student loans, that were roughly $100 000 at the time of the marriage.
2) Failed to mention that out of two properties that I had.
a) The one with a claimed $600K value had a $400K mortgage and its real market value was only $500K. So technically there was $0 equity and a $500K mortgage, that was never mentioned.
b) The one with a claimed value of $230K had only about $140 000 equity, and $90K mortgage that was never mentioned.
3) Overestimated the fair marked prices of my cars by a factor of 2 (the real values are $12K and $3K).
4) Overestimated the value of a $4K ring that I gave him by a factor of 2.5.

So no mentioning of the debts at all. However, our prenup has the following wording:

1.3 Disclosure. The parties executed a Financial Disclosure Agreement in Advance of Premarital Agreement on July 10, 2013 (the "Financial Disclosure", a true and accurate copy of which is attached hereto as
Exhibit 1), whereby each party made a full disclosure to the other of his or her income, property, and financial obligations to the best of his or her knowledge. Prior to signing this Agreement, each party made a full disclosure to the other of his or her income, property, and financial obligations to the best of his or her knowledge. Each of Wife and Husband acknowledges that he or she has made full disclosure to the other of his or her present income, property, and financial obligations.
The parties agree that (a) each has been provided with a full, fair, and reasonable disclosure of the income, property, and financial obligations of the other; (b) each has been given access to all information and documents that he or she deems material regarding the other's income, property, and financial obligations and also has been given an adequate time and opportunity to review and consider such information and documents; (c) each does hereby voluntarily and expressly waive any right to disclosure of the income, property, and financial obligations of the other beyond that provided by the Financial Disclosure and the exchange of information that has been made prior to this time; and (d) each possesses adequate knowledge of the income, property, and financial obligations of the other to enter into a binding and legally enforceable premarital agreement. The parties are willing to enter into this Premarital Agreement regardless of any changes that may occur in either party's financial condition.

EXHIBIT 1
Financial Disclosure Agreement In Advance of Premarital Agreement (attached).
[the page with this disclosure was left blank]

So does this language mean that the document will hold up in court despite the fact that I failed to mention these debts?

 

[Taxing Matters]

So does this language mean that the document will hold up in court despite the fact that I failed to mention these debts?

Not even close. That entire section is premised on the following, as stated in the agreement:

Each of Wife and Husband acknowledges that he or she has made full disclosure to the other of his or her present income, property, and financial obligations.

You certified something that was not true — that your disclosures were complete. And I must say, woefully incomplete. You didn't just fail to mention something relatively insignificant or forgot just one thing. You left out a huge amount of debt and misstated the value of at least one asset. There is really no way you didn't know at the time you gave her your disclosure that it was not a full disclosure of all your "present income, property, and financial obligations." That will give her what is likely a pretty good shot at getting that agreement tossed out if it is to her advantage to do so. You need to discuss this problem with a divorce attorney now even if divorce is not in the cards at the moment so you know what is likely to happen given your misleading financial disclosure and get advice on what you might be able to do now to minimize the downside.

 

[Husband55]

Not even close. That entire section is premised on the following, as stated in the agreement:


You certified something that was not true — that your disclosures were complete. And I must say, woefully incomplete. You didn't just fail to mention something relatively insignificant or forgot just one thing. You left out a huge amount of debt and misstated the value of at least one asset. There is really no way you didn't know at the time you gave her your disclosure that it was not a full disclosure of all your "present income, property, and financial obligations." That will give her what is likely a pretty good shot at getting that agreement tossed out if it is to her advantage to do so. You need to discuss this problem with a divorce attorney now even if divorce is not in the cards at the moment so you know what is likely to happen given your misleading financial disclosure and get advice on what you might be able to do now to minimize the downside.

Thank you, I will contact atn attprney to discuss it. Do you think that this (b) might save me?

(b) each has been given access to all information and documents that he or she deems material regarding the other's income, property, and financial obligations and also has been given an adequate time and opportunity to review and consider such information and documents

 

[Taxing Matters]

Thank you, I will contact atn attprney to discuss it. Do you think that this (b) might save me?

(b) each has been given access to all information and documents that he or she deems material regarding the other's income, property, and financial obligations and also has been given an adequate time and opportunity to review and consider such information and documents

How do you figure that would help you? You didn't give her access to everything, did you? You withheld documents that disclosed the debts, right? If she didn't have the information to know about the debts then this isn't going to help you. The courts are pretty clear that there needs to be full disclosure so each party to the marriage makes an informed decision on the pre marital agreement. You won't get around that problem with that clause of the agreement.

 

[Husband55]

How do you figure that would help you? You didn't give her access to everything, did you? You withheld documents that disclosed the debts, right? If she didn't have the information to know about the debts then this isn't going to help you. The courts are pretty clear that there needs to be full disclosure so each party to the marriage makes an informed decision on the pre marital agreement. You won't get around that problem with that clause of the agreement.

I assumed that because of the following Illinois rules:

When Will the Court Refuse to Enforce a Prenuptial Agreement?
Courts generally enforce most prenuptial agreements. That one spouse receives a disproportionate share of assets won’t make the agreement automatically unenforceable. A judge won’t enforce the agreement under these circumstances:

• one spouse did not sign the agreement voluntarily (signed under duress)
• the financial terms of the agreement would make one spouse eligible to receive public assistance
• the terms of the agreement are severely unfair or unjust (also referred to as being “unconscionable"), and
  • one spouse failed to disclose assets and debts before signing the agreement
  • the spouse who did not receive the other spouse’s honest financial information did not waive the right to receive it, and
  • the spouse who did not receive the other spouse’s financial information could not have known the information any other way.

(Source :http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&ChapterID=59)

 

[Taxing Matters]

I assumed that because of the following Illinois rules:

When Will the Court Refuse to Enforce a Prenuptial Agreement?
Courts generally enforce most prenuptial agreements. That one spouse receives a disproportionate share of assets won’t make the agreement automatically unenforceable. A judge won’t enforce the agreement under these circumstances:

• one spouse did not sign the agreement voluntarily (signed under duress)
• the financial terms of the agreement would make one spouse eligible to receive public assistance
• the terms of the agreement are severely unfair or unjust (also referred to as being “unconscionable"), and
  • one spouse failed to disclose assets and debts before signing the agreement
  • the spouse who did not receive the other spouse’s honest financial information did not waive the right to receive it, and
  • the spouse who did not receive the other spouse’s financial information could not have known the information any other way.

(Source :http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&ChapterID=59)

And that helps you how? That summary specifically states that prenup agreements are not enforceable where a spouse failed to disclose assets and debts before they signed. And that is the problem you face here.

 

[stealth2]

I *think*, Husband55, you miss the point. You seem to think your nondisclosure will benefit you when your spouse files for divorce and the court invalidates your prenup. In reality, you should expect that your choices will place you in very poor light with the court, to the benefit of your spouse.

 

[LdiJ]

And that helps you how? That summary specifically states that prenup agreements are not enforceable where a spouse failed to disclose assets and debts before they signed. And that is the problem you face here.

I agree with Stealth. Its not going to help you, its going to help your spouse. You were the one who did not disclose a bunch of stuff, not her.

 

[not2cleverRed]

I assumed that because of the following Illinois rules:

When Will the Court Refuse to Enforce a Prenuptial Agreement?
Courts generally enforce most prenuptial agreements. That one spouse receives a disproportionate share of assets won’t make the agreement automatically unenforceable. A judge won’t enforce the agreement under these circumstances:

• one spouse did not sign the agreement voluntarily (signed under duress)
• the financial terms of the agreement would make one spouse eligible to receive public assistance
• the terms of the agreement are severely unfair or unjust (also referred to as being “unconscionable"), and
  • one spouse failed to disclose assets and debts before signing the agreement
  • the spouse who did not receive the other spouse’s honest financial information did not waive the right to receive it, and
  • the spouse who did not receive the other spouse’s financial information could not have known the information any other way.

(Source :http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2087&ChapterID=59)

In case the bolded in insufficient, I will restate: a court can choose to not enforce a prenuptial agreement if the terms are severely unfair or unjust AND one spouse failed to disclose assets and debts before signing the agreement, the spouse who did not receive the other spouse’s honest financial information did not waive the right to receive it, and the spouse who did not receive the other spouse’s financial information could not have known the information any other way.

So, would your spouse consider the prenup unfair or unjust in light of the revelation of your actual assets/debts? Then you have a problem.

However, if you think the prenup is unfair to you, trying to it thrown out just because you lied about your assets and debts is rather .

 

[Husband55]

In case the bolded in insufficient, I will restate: a court can choose to not enforce a prenuptial agreement if the terms are severely unfair or unjust AND one spouse failed to disclose assets and debts before signing the agreement, the spouse who did not receive the other spouse’s honest financial information did not waive the right to receive it, and the spouse who did not receive the other spouse’s financial information could not have known the information any other way.

So, would your spouse consider the prenup unfair or unjust in light of the revelation of your actual assets/debts? Then you have a problem.

My spouse would LOVE to invalidate the prenup, but the court is likely to find the terms fair because the prenup does not say anything like "husband gets all the equity while wife gets all the debts."

My wife would wont to invalidate the document because the prenup specifically states that
i) she shall not get any alimony (she would get a LOT in case the prenup is deemed invalid)
ii) she has to pay her attorney fees, etc
iii) she shall not be compensated for improving any of my pre-marriage assets (and she did a lot)

So, technically, the prenup is fair, it's just a bad deal for her at his point. Simply entering into a bad deal does not mean that the prenup is invalid. This is what I hope for.

Do you think the court will enforce the prenup?

 

[paddywakk]

My spouse would LOVE to invalidate the prenup, but the court is likely to find the terms fair because the prenup does not say anything like "husband gets all the equity while wife gets all the debts."

My wife would wont to invalidate the document because the prenup specifically states that
i) she shall not get any alimony (she would get a LOT in case the prenup is deemed invalid)
ii) she has to pay her attorney fees, etc
iii) she shall not be compensated for improving any of my pre-marriage assets (and she did a lot)

So, technically, the prenup is fair, it's just a bad deal for her at his point. Simply entering into a bad deal does not mean that the prenup is invalid. This is what I hope for.

Do you think the court will enforce the prenup?

NO. You lied.

 

[not2cleverRed]

My spouse would LOVE to invalidate the prenup, but the court is likely to find the terms fair because the prenup does not say anything like "husband gets all the equity while wife gets all the debts."

My wife would wont to invalidate the document because the prenup specifically states that
i) she shall not get any alimony (she would get a LOT in case the prenup is deemed invalid)
ii) she has to pay her attorney fees, etc
iii) she shall not be compensated for improving any of my pre-marriage assets (and she did a lot)

So, technically, the prenup is fair, it's just a bad deal for her at his point. Simply entering into a bad deal does not mean that the prenup is invalid. This is what I hope for.

Do you think the court will enforce the prenup?

Please explain how it is "fair" that she not to be compensated for the increased value/equity of your pre-marriage assets and debt reduction?
By your own admission, your assets have been enriched a lot during your marriage due in no small part to her efforts.

And by your allusions to alimony, how is it "fair" that she gets less in alimony than she would otherwise have a legal claim to?

Small wonder your marriage failed - you've been wanting to give her the shaft from the start.

FYI: You misrepresented your assets and debts. Therefore, her signing of the prenup was not and could not be considered an informed decision. When entering into an agreement, when one party fraudulently misrepresents the facts (and it sounds like fraud when you conveniently omit student loans, and overstate the value of the ring by more than a factor of 2), the agreement can be voided.

 

[cbg]

As I've always said, fair is in the eye of the beholder.

 

[Husband55]

Please explain how it is "fair" that she not to be compensated for the increased value/equity of your pre-marriage assets and debt reduction?
By your own admission, your assets have been enriched a lot during your marriage due in no small part to her efforts.

And by your allusions to alimony, how is it "fair" that she gets less in alimony than she would otherwise have a legal claim to?

Small wonder your marriage failed - you've been wanting to give her the shaft from the start.

FYI: You misrepresented your assets and debts. Therefore, her signing of the prenup was not and could not be considered an informed decision. When entering into an agreement, when one party fraudulently misrepresents the facts (and it sounds like fraud when you conveniently omit student loans, and overstate the value of the ring by more than a factor of 2), the agreement can be voided.

Well, at the time of signing a prenup BOTH of us were self-supporting and we agreed to wave alimony rights both ways in the prenup.

It was a fair provision.

In theory, the court might say that unforeseen circumstances that arose during the marriage the agreement unfair, so I need to prepare counter-arguments.

 

[LdiJ]

Well, at the time of signing a prenup BOTH of us were self-supporting and we agreed to wave alimony rights both ways in the prenup.

It was a fair provision.

In theory, the court might say that unforeseen circumstances that arose during the marriage the agreement unfair, so I need to prepare counter-arguments.

It was not a fair provision because you hid material financial information. I don't see how you can possibly prepare counter arguments.