Legal Regime of Separate Property in a Marital Agreement: Is an Agreement by which it is Obvious that the Financial State of One of the Spouses is Superior Enforceable?

Abstract

Under the Lithuanian legislation, current and future spouses are allowed to sign marital agreements by which their property rights and obligations are set. However, it underlines that in some cases the court may declare the whole agreement or some of its terms unenforceable. The legislator does not specify which particular terms may be declared unenforceable. Therefore, the implementation of the spouses’ right to choose the terms they want is put under doubt. As a result, it is very important to find out the circumstances and the criteria that should be evaluated before a marital agreement or some of its terms are declared unenforceable. Under the Lithuanian legislation, the validity of a marital agreement is considered only at the moment it is signed. However, it is not the case in other countries. For instance, many courts of the United States in deciding on the validity of a marital agreement take into account all the circumstances and conditions both at the time a marital agreement is signed and at the time of divorce. Some courts analyse if an agreement was executed voluntarily, without any pressure or fraud, and if both parties provided fair and reasonable disclosure of the property or financial obligations as well as what were their bargaining powers and expectations. Other courts attempt to establish the effect an agreement will have on the parties after the termination of their marriage. Currently, Lithuanian courts have no practice in declaring a marital agreement unenforceable. However, due to the particularities of marital agreements and the state’s aim to defend the public interest, the means to evaluate the validity of a marital agreement become unclear.