Indiana law allows individuals to enter into agreements governing their property and finances prior to a marriage, most commonly referred to as a prenuptial agreement. The law also allows married individuals to enter into an agreement on how their property and finances shall be divided after a divorce is filed, most commonly referred to as a Marital Settlement Agreement. The law is well-established in these areas and both pre-nuptial agreements and Marital Settlement Agreements pursuant to divorce are recognized by the Court as enforceable contracts in most instances.
Like a prenuptial agreement, a reconciliation agreement determines how the couple’s assets and debts will be divided in the event the couple divorces. Reconciliation agreements, however, are not entered into as part of a divorce. Instead, reconciliation agreements are executed typically after the separation as a condition for maintaining the marital relationship. A reconciliation agreement allows the spouse that is considering ending the marriage to attempt to repair the relationship without concern of what would happen in the event a divorce occurs in the future.
Enforcing reconciliation agreements can sometimes be difficult because the Court must analyze the reconciliation agreement to ensure there is sufficient “consideration” to be enforced. Consideration is the concept that value must be exchanged between the parties for the contract to be upheld. Reconciliation agreements are scrutinized for sufficient consideration more intensely than pre-nuptial agreements because it is well-established that pre-nuptial agreements have sufficient consideration if the parties get married after the pre-nuptial agreement is executed. Since the parties are already married when they enter into a reconciliation agreement, the Court must determine whether sufficient consideration exists for the reconciliation agreement.
Indiana Courts have held that there is sufficient consideration to enforce a reconciliation agreement when the parties would have gotten a divorce absent the execution of the reconciliation agreement. Whether there is sufficient consideration is a factual determination the Court will have to make on a case-by-case basis. A couple should consult with an attorney prior to entering a reconciliation agreement to ensure the contract is valid and enforceable.
If you are considering executing a reconciliation agreement, speak to the experienced attorneys at Slotegraaf Niehoff, P.C.