Arkansas Prenups Explained: What You Need to Know

Defining a Prenuptial Agreement

Prenuptial Agreements are contracts entered into by two people with the intention of marrying one another prior to the marriage and they have numerous uses and benefits. They are most commonly used in the context of protecting the rights of a party upon divorce or death. They can be used to protect against various risks including commingling of assets, claims by spouses of those married to other spouses, and to address treatment of pre-marital assets, change in law or business valuation .
The Arkansas Uniform Premarital Agreement Act defines a premarital agreement as an agreement signed by prospective spouses. Simply stated, it is a written contract between two people who are intending to be married.
Arkansas law requires that premarital agreements be signed at least 30 days prior to the marriage. It is a good idea that the parties make sure that they each have their own attorney review the agreement before they sign it so that each party fully understands the contract they are entering into.

Advantages of Getting a Prenup in Arkansas

Prenuptial agreements aren’t just a tool for the ultra-wealthy to protect their fortunes. They can be used by couples of any income level and may actually be more important to the middle-income couple than to someone who is worth millions. After all, when you start off with little, you’ve got not much to lose. On the other hand, if you had half a million and lost it all in a divorce, you’d be starting from scratch again — but you couldn’t really blame anyone but yourself.
For now, let’s assume that you’re in the $50,000 to $200,000 a year range as a combined income for your family. You both stand to do well and your assets are just coming together. You have some savings, but you’re not retired yet. You each have some student loans you’d like to pay off and you both would like to be able to buy a home in the near future. You could even think about having children.
The way Arkansas law works, unless you have a prenuptial agreement in place, the courts will take an equitable distribution approach to dividing your property if you get divorced. In other words, all of your property, which was before the marriage, plus what you acquired during the marriage, would be added up and then divided, at least half to each of you.
You both have some student loans and income from before the marriage. Does that mean that you should split all these debts up 50/50? Legally, yes. From a logical standpoint, splitting a student loan debt down the middle may not be fair. What if some of those were taken out to better one spouse’s earning potential? Should he or she bear 100 percent of the responsibility for paying those back? The courts don’t care. That’s why you want a prenuptial agreement — so you can decide against the courts which debts to take on individually and which to split.
The same may be true for some of your assets. You might own a car before you got married that the other spouse wants to keep. Is it really fair to make him or her pay half of the value of a car he or she intended to drive on his or her own anyway? These are the questions that come up in divorce situations that many people assume will be handled fairly by the courts when in fact, you might be as surprised as the next spouse by what the ruling ends up being.

Requirements for a Prenup in Arkansas

For a prenuptial agreement to be valid in Arkansas, it must comply with certain legal requirements. Those requirements include: (1) the agreement must be in writing and signed by both parties, and (2) there must be full and fair disclosure of assets and liabilities.
Arkansas law provides that a prenuptial agreement is enforceable without consideration if the agreement is in writing and signed by both parties. The agreement becomes effective on marriage. The full and fair disclosure requirement is established by case law.
In a leading Arkansas case, the Supreme Court of Arkansas addressed the issue of nondisclosure in the context of a marriage that was doomed to fail from the start. In Scully v. Scully, 372 Ark. 367, 276 S.W.3d 674 (2008), the husband prevailed on appeal. Wife had challenged, among other things, the trial court’s award of attorney’s fees when the trial court found that wife had engaged in frivolous or vexatious litigation in pursuing her claims against husband.
The supreme court affirmed the trial court. Specifically, it held that wife was frivolous or vexatious in her attempts to have a non-disclosure prenuptial agreement set aside. In reaching its decision, the court found that husband had made a full and fair disclosure of the property which he owned at the time the agreement was executed. Thus, wife could not demonstrate any basis for setting the agreement aside. Her claims were frivolous or vexatious because they were lacking in merit. The court noted that wife’s claims were among a litany of acts by wife that were frivolous or vexatious.
In another decision, the court of appeals upheld an award of attorney’s fees for a frivolous or vexatious claim where the trial court determined that the wife participated in a scheme to hide community property from the husband. In assigning fault to the wife, the court stated: "Marital agreements, like other contracts, are enforceable unless the party seeking enforcement obtained it by fraud or overreaching. . . . The trial court did not abuse its discretion in finding that the wife’s lawsuit was frivolous and vexatious."
A prenuptial agreement may be unenforceable if the court finds that the agreement was unconscionable when it was executed, that the party was not provided a fair and reasonable disclosure of the property or financial obligations of the other party, and that the party did not voluntarily and expressly waive the right to disclosure beyond what was provided.

Common Clauses in an Arkansas Prenup

When drafting a prenuptial agreement in Arkansas, the provisions will generally address a number of key issues – asset division, debt responsibility, spousal support, and estate plan, to name a few. The following subsections provide additional detail on these common provisions:
In Arkansas, there are two main types of assets: marital and nonmarital. A prenuptial agreement can be used to determine how assets will be divided into each category, especially in cases where a spouse brings a significant amount of property into the marriage. For example, let’s say that before marrying, one spouse owned a car, a motorcycle, a TV, a home, and two bank accounts with a total balance of $10,000.
Then, after the marriage, the spouses decide together to purchase a motorcycle and a truck, and the wife funds those purchases from her own bank account. In addition, during the marriage, the couple purchased a home, a boat, and a jet ski.
The pre-marriage car, motorcycle, TV, and bank accounts are nonmarital assets. All of the marital assets, however, belong to both spouses because they were acquired during the marriage. The prenuptial agreement can set out specific who-gets-what terms regarding each asset. With the car and TV, for instance, it can state that they are the other spouse’s nonmarital property. The agreement can also specify that the wife is entitled to the motorcycle, truck, and bank accounts, while the husband will keep the house, boat, and jet ski.
Before entering into a prenuptial agreement, it is essential that each spouse disclose all of their financial information. If they don’t, and one or both of them later decides to file for divorce, the agreement may not be enforceable.
It also must be voluntary. In other words, no one can force someone else to sign a prenuptial agreement.
For a prenuptial agreement to be valid, each spouse must have an opportunity to have independent legal counsel review the document before signing. Now, to be clear, this does not mean that each spouse must have separate lawyers, but each spouse must be given the chance to do so before signing. This is just a way to ensure that everyone has the ability to make informed decisions when entering into a prenuptial agreement.
In Arkansas, prenuptial agreements are enforceable with some limitations. The parties’ agreement can address matters such as how the property will be divided upon divorce, the entitlement to spousal support (also called maintenance), and expense responsibilities while married. However, the court cannot enforce provisions that address certain issues, such as child custody and child support.
Arkansas makes many types of prenuptial agreements enforceable, including but not limited to those addressing the following matters:
Arkansas courts generally enforce prenuptial agreements. However, there are two scenarios when a court won’t do so – when they’re imposing a public policy or if the agreement doesn’t comply with state law’s formalities.

How To Draft a Prenuptial Agreement in Arkansas

The process for creating a prenuptial agreement in Arkansas involves important legal and practical steps. Because you’re making decisions about assets and property rights that are as precise as they are consequential, the document should be crafted in consultation with your lawyer who is familiar with the Arkansas Uniform Premarital Agreement Act. Further, because the executing of a prenuptial agreement in Arkansas requires the mutual assent of both parties, it is important that you thoroughly review all aspects of the agreement and allow for sufficient time to do so. Failure to do so may mean you might not be able to enforce the agreement later under the premarital agreement law.
A prenuptial agreement should be in writing and be signed by both parties. Practically speaking, if agreement is not signed until the day of the wedding, the parties still must agree to the terms of the agreement before the marriage takes place. In some cases, such as in the case of a waiver of spousal allowance, under Arkansas law at least 30 days should elapse between agreement being signed and marriage, to give the parties time to review it . The agreement should be acknowledged by a notary public or witnessed by someone who can testify in court as to the authenticity of the signatures. Finally, parties should keep a copy of the agreement as an official record.
Again, if a prenup is not entered into voluntarily, it is unenforceable under Arkansas law. Further, the prenuptial agreement must be unconscionable, such that the failure to disclose assets of one party at the time the agreement was made caused the agreement to be overly favorable to the other party. Another base for finding a premarital agreement unconscionable is if there was fraud in the execution of the document. As mentioned previously, a prenuptial agreement is unenforceable if the party was not given a fair opportunity to know its terms and effect. Under the Arkansas Uniform Premarital Agreement Act, a spouse can not be found to have voluntarily and knowingly waived their right to spousal support or spousal allowance if the agreement was unconscionable at the time of the marriage.

Potential Hurdles to a Prenup in Arkansas

Challenges and Limitations of Prenuptial Agreements in Arkansas
Despite their popularity, prenuptial agreements are not without challenges and limitations. If not executed properly, a prenuptial agreement can be vulnerable to full or partial invalidation. The enforceability of a prenuptial agreement hinges critical on timing, execution, and disclosure.
Timing: When an agreement is signed is critically important. If one party is under significant emotional distress or pressured into the agreement, a court may consider that coercion and invalidate the agreement. There is also the important notion that agreements must be signed well in advance of marriage. Many states hold that agreements signed on the eve of the wedding are invalid. Arkansas does not have a specific unenforceability provision that applies to agreements signed within a certain period prior to the marriage. But a prenuptial agreement could certainly be considered unconscionable under the circumstances when it was executed. It is never too early to begin negotiating a prenuptial agreement.
Execution: In Arkansas a prenuptial agreement must be in writing and signed by both parties. There is no requirement that the agreement be witnessed. Strict adherence to the form requirements is necessary because failure to do so can render the agreement unenforceable. Because these agreements alter property rights, courts often hold them to a higher standard than other types of contracts. Parties involved in prenuptial contracts should consult with an experienced attorney who will ensure that the agreements are properly drafted and executed.
Disclosure: Courts require full disclosure. If one party is able to conceal key aspects of their financial picture or business interests, the other party may have grounds to void the agreement. Inadequate financial disclosure can be shown through failure to exchange financial information or through a complex business valuation that keeps one party from understanding the value of the other’s assets.

Sample Cases: Prenup in Arkansas

Consider the following hypothetical scenario:
James, 32, and Amanda, 30, have been dating for four years. They both have stable careers: James is an architect and Amanda is a lawyer. They both own homes and have substantial assets, but they are entering into marriage on the same page when it comes to finances – and both are eager to keep things that way. They’ve heard rumors about the litigation battles fought by divorce lawyers over the content of prenuptial agreements. Having consulted with an attorney, James and Amanda are able to circumvent some of these types of issues with foresight and sound documentation. With their attorney’s guidance, they make their intentions clear. They negotiate a prenuptial agreement that considers their assets, debts, concerns, and one of their family heirlooms in particular – Amanda’s grandmother’s engagement ring. To set things up properly, they include terms like these:

• The engagement ring will remain Amanda’s separate property, in keeping with her grandmother’s wishes to keep it in the family .
• In the event of a divorce or death, all of Amanda’s non-marital property (including her home and a substantial cash savings account from her late mother’s life insurance policy) will remain hers.
• All joint debt will be divided, with each spouse carrying half of the balance forward.
• Jointly owned property (mainly the home they purchased after the wedding) will be divided by how much equity has built for each spouse by that time (should they divorce two years later, for instance, they’d split the home’s appreciated value based on its value at that time and how much they’ve paid down the mortgage). Similar rules apply to jointly held investment accounts.
• Should they have children, the above terms will have some exceptions in terms of the children’s college education and health insurance.

As this example illustrates, terms can be crafted to individual needs. Regardless, the benefit of a prenuptial agreement can be in the clarity and transparency it provides – ideally both spouses will enter marriage knowing precisely where they each stand.