Tom Cruise and Katie Holmes reached a private settlement of their highly publicized divorce earlier this month. The couple and their lawyers have taken steps to ensure that the settlement terms will not be disclosed in any public documents. Although the settlement is confidential, news reports indicate that their property division -- including the couple's home in Telluride, Colorado -- was governed by a prenuptial agreement.
Prenuptial agreements are entered into before the marriage. Postnuptial agreements are entered into after the marriage, but before any divorce proceedings are commenced. These agreements are not uncommon in high-asset divorce cases. But their use is not limited to wealthy or high-profile couples. It may not be pleasant to think about the possibility of divorce, but an agreement that meets the requirements of state law can prevent a lot of expensive litigation down the road.
Prenuptial and postnuptial agreements are recognized and enforced in Colorado. They are governed by the Colorado Marital Agreements Act, which provides that the parties may agree on certain matters, including property division and spousal maintenance. The statute provides, however, that an agreement may not adversely affect the right of a child to child support.
Colorado courts will generally enforce marital agreements as long as each spouse made a full disclosure of his or her assets to the other. With respect to spousal maintenance, the court may determine that an agreement is unenforceable if it is unfair or unjust at the time of enforcement.
A prenuptial or postnuptial agreement can be an effective way to avoid protracted and costly fights over property valuation and division. But it must be carefully drafted to comply with Colorado law, and it is critical that both spouses make a complete disclosure of their assets and finances before entering into the agreement.
Source: Los Angeles Times, "Katie Holmes - Tom Cruise divorce details to remain private," Richard Winton, July 10, 2012