Peter and Petra are getting married. Peter has considerable assets, including several homes, vacation homes, and checking and savings accounts. He also owns a string of rental properties from which he receives income. He deposits the rental income into an account which is not under his name, but rather the name of a trust he created. Petra, conversely, does not have much by way of assets, save for a modest savings account.
Peter and Petra have agreed to draft and sign a prenuptial agreement. Their respective attorneys have informed them that they would need to fully disclose their assets to the other party—in other words, they would need to inform each other about anything and everything of value they own. Peter has asked his attorney whether he needs to tell Petra about the rental income. After all, it is held in trust; what if Peter chose not to disclose it?
Prenuptial Agreements, Generally
An antenuptial agreement, also called a prenuptial agreement, is a written contract between two people who are about to be married. It serves to set out the terms regarding the division of property in the event of a divorce, along with any provisions for alimony.
Generally, in order for a prenuptial agreement to be considered valid and enforceable in Massachusetts, the agreement must meet the following elements:
- it must be in writing;
- signed by the parties;
- signed voluntarily and under no signs of duress or fraud;
- made after full disclosure of the parties’ assets;
- the agreement must be fair and reasonable, and enforcement must not be against countervailing equities;
- the parties must have adequate opportunity to consult with independent counsel;
- the parties must understand and clearly indicate the rights which they are contracting away; and
- the parties must not relieve themselves of their legal obligations during the marriage through the agreement.
Full Disclosure of Assets
In the above scenario between Peter and Petra, the element of full disclosure is at issue. To ensure that the process of signing the antenuptial agreement is fair and equitable to both parties, the court requires a full financial disclosure of the parties’ assets. In essence, the parties will be viewed to have a confidential relationship which brings with it the duty to disclose, mutually attributed to each party.
Lack of full disclosure may result in the parties’ agreement being invalidated. In some cases, lack of disclosure amounts to a form of fraud, particularly where there is a demonstrable inequity between the parties’ assets. Looking at the above example, this is the case, as Peter clearly possesses more assets than Petra.
In one case, the Massachusetts appeals court invalidated a prenuptial agreement after finding a lack of full disclosure on the husband’s part. Schechter v. Schechter, 88 Mass. App. Ct. 239 (2015). In that case, the husband kept the wife in the dark regarding his financial assets. He also claimed during the divorce proceedings that his primary asset, his real estate company, was a partnership. He claimed that his parents owned a one-half interest in the company. Moreover, the husband then attempted to make a fifty-percent, retroactive distribution of the real estate company’s assets to his parents during the divorce proceedings.
Financial Disclosure Schedules
In order to avoid any potential questions down the line, full disclosure should take place in writing. Each party should, for best practices, draft a financial disclosure schedule, which will be attached to the prenuptial agreement as an addendum. This schedule should clearly delineate and disclose all of the party’s assets to the other party. It should include:
- a listing of the party’s assets, along with the value of each asset;
- any outstanding liabilities of the party;
- the sources and amounts of the party’s income;
- any interests in businesses, partnerships, etc.; and
- any expectations of inheritances or other potential assets.
Moreover, the agreement should include a section which makes it clear that both parties have read each other’s financial disclosure schedules, understand it, have acknowledged reading it, and have had the opportunity to consult with an attorney regarding it.
If you need assistance with a prenuptial agreement or have any questions about divorce or family law issues, call 978-225-9030 during regular business hours or complete our online contact form, and we will respond to your phone call or submission promptly.
In Massachusetts family law in general, the importance of equity and fairness is of utmost concern. The court, when reviewing prenuptial agreements, will seek to ensure that the agreement is fair and reasonable and that its enforcement does not go against countervailing equities.
The Agreement Must Be Fair and Reasonable at the Time of Signing
In one case, the court chose to invalidate the agreement in part due to its lack of fairness. Schechter v. Schechter, 88 Mass. App. Ct. 239 (2015). The court stated, quoting the trial judge:
“[the father] had over $7.5 [m]illion in equity when the agreement was signed and [the mother] had $2[,]500.00 in equity. The provision for [the mother] to receive, upon a divorce, a lump s[um] payment of alimony at the rate [of] $5,000.00 for each full year of marriage is well below fair. When her lawyer tried to negotiate it up a little, [the father] said no. He negotiated himself out of a fair agreement. The property division agreement is also unfair when viewed from the date of signing. The agreement gives the wife one-half of the increase in the equity, if any, in the marital home from the date of the agreement less mortgages and encumbrances. If the parties lived in a rental home or an apartment the wife would receive no assets. If the equity in the home did not go up, the wife would receive no assets. If the husband chose to encumber the home to the maximum extent possible, the wife would receive no assets.” Schechter, at 259.
Of particular importance to this issue is the 2009 case of DeMatteo v. DeMatteo, in which the Supreme Judicial Court enforced an antenuptial agreement which had been contested by the wife during the divorce. DeMatteo v. DeMatteo, 436 Mass. 18 (2002). In that case, the husband (whose net worth was between $108-$133 million) presented the wife with an antenuptial agreement, providing full written disclosure of his assets, including tax returns. Both parties retained counsel, and negotiations followed.
The agreement, drafted by the husband’s attorney, provided that in the event of a divorce, the wife would receive the marital home free of encumbrance, the automobile that she was then driving, and an annual payment from the husband of $25,000 until her death or remarriage. The wife initially rejected the agreement and asked for the husband to increase the annual payments to the wife to $35,000, adjusted annually for increases in the cost of living. She also asked for medical insurance, life insurance, and the lesser of twenty per cent of the husband’s estate or $5 million. Upon further negotiations, the wife dropped that last demand, but the annual payments were increased to $35,000 and medical insurance was also provided for the wife in the final antenuptial agreement.
The high court in DeMatteo spent particular effort on discussing the requirement of “fair and reasonable” in antenuptial agreements. The court explained this requirement as follows:
To meet the requirement of “fair and reasonable,” at the time of execution an antenuptial agreement need not approximate an alimony award and property division ruling a judge would be required to make under G.L. c. 208, § 34. Judged by those statutory requirements, the parties’ right to settle their assets as they wish would be meaningless. The relinquishment of claims to the existing assets of a future spouse, even if those assets are substantial, also does not necessarily render an antenuptial agreement invalid. An antenuptial agreement may be most desired when a wealthy individual contemplating marriage seeks to ensure that, if the marriage is not successful, his or her own assets will not accrue to the spouse. Many valid agreements may be one sided, and a contesting party may have considerably fewer assets and enjoy a far different lifestyle after divorce than he or she may enjoy during the marriage. It is only where the contesting party is essentially stripped of substantially all marital interests that a judge may determine that an antenuptial agreement is not “fair and reasonable” and therefore not valid. DeMatteo, at 31.
The Agreement Must Also Be Fair and Reasonable at the Time of Divorce
In addition to the validity of the agreement, the court will also consider whether the agreement is enforceable at the time of divorce.
The seminal recent case on this doctrine is DeMatteo v. DeMatteo, in which the trial court invalidated an antenuptial agreement signed by the parties. The Supreme Judicial Court ultimately reversed, holding that the agreement was both valid at the time of execution and enforceable at the time of the divorce. In a very important paragraph regarding antenuptial agreements and their enforcement, the high court also clarified the meaning and application of the Second Look Doctrine in Massachusetts as follows:
“In Massachusetts, a valid antenuptial agreement is not unenforceable at the time of divorce merely because its enforcement results in property division or an award of support that a judge might not order under G.L. c. 208, § 34, or because it is one sided. Moreover, it is not appropriate for a judge to use the same test of enforceability of an antenuptial agreement as she would for the enforceability of a separation agreement, for the reasons explained earlier. Rather, we follow the majority of courts and require that a judge may not relieve the parties from the provisions of a valid agreement unless, due to circumstances occurring during the course of the marriage, enforcement of the agreement would leave the contesting spouse “without sufficient property, maintenance, or appropriate employment to support” herself. ..Such circumstances might include, for example, the unanticipated mental or physical deterioration of the contesting party (here the antenuptial agreement provided for full health insurance for the wife), or the erosion by inflation of agreed-on support payments to such a degree as to nullify the obvious intention of the parties at the time of the agreement’s execution (here the support payments agreed to by the parties contained an adjustment for cost of living, which the wife does not claim is inadequate). The “second look” at an agreement is to ensure that the agreement has the same vitality at the time of the divorce that the parties intended at the time of its execution.” DeMatteo, at 36-37.
In a subsequent case, however, the appeals court upheld a trial court’s invalidation of the antenuptial agreement based on the Second Look Doctrine, as enforcing the agreement would have left the wife with negative equity in the marital home. Kelcourse v. Kelcourse, 87 Mass.App.Ct. 33 (2015). In that case, the husband had considerable assets, including a commercial marina, while the wife had no appreciable assets at the time of signing. The agreement provided for each party to retain his or her assets, and it provided for the wife to take the marital home in the case of a divorce. During the marriage, the parties bought a fixer-upper home together, which they inhabited as their principal residence, and which the husband intended to renovate. By the time of the divorce, the property had further deteriorated, and the husband had moved out.
The court noted, quoting DeMatteo:
“A “second look” at the agreement during divorce proceedings ensures that it “has the same vitality at the time of the divorce that the parties intended at the time of [the agreement’s] execution.” … A prenuptial agreement will not be enforced if enforcement, “due to circumstances occurring during the course of the marriage, … would leave the contesting spouse ‘without sufficient property, maintenance, or appropriate employment to support’ herself.” Ibid., quoting from 1 H.H. Clark, Jr., Domestic Relations in the United States § 1.9 (2d ed. 1987). The Probate and Family Court judge found that the prenuptial agreement was valid when entered into by the parties, but upon taking a second look, the judge found that it could not be enforced. She determined that the purchase of the principal residence and its subsequent neglect constituted a change in circumstance beyond what the parties contemplated when they executed the agreement, and that enforcement of the agreement would be unconscionable.” Kelcourse, at 35.
Heidy and Hugh, who are both Massachusetts residents, are getting married in Boston trying to determine who may solemnize Massachusetts marriage as they plan their big day. Heidy’s brother, who is an ordained minister in New York, would like to perform the ceremony. Heidy and Hugh wonder if this will be sufficient to make their marriage valid. They have heard that the solemnization of their marriage is a requirement. Will Heidy’s brother qualify as a person who may solemnize their marriage, despite being from out of state?
According to Massachusetts General Laws, chapter 207, section 38, which sets out the meaning of solemnization of a marriage in Massachusetts, Heidy’s brother should be able to perform the ceremony for a valid marriage to exist. A marriage may be solemnized in any place in the Commonwealth through three types of persons:
- A duly ordained minister or religious clergyman (such as a rabbi or imam) in the Commonwealth of Massachusetts, who is in good standing within his or her church or denomination;
- A justice of the peace who is appropriately registered to perform solemnization within the Commonwealth; or
- A duly ordained non-resident minister or clergyman, so long as he or she is a part of a church or denomination which is fully established in the Commonwealth.
Heidy’s brother falls under the third category. As long as he practices in a denomination which is fully established in Massachusetts, he may perform the ceremony and solemnize Heidy and Hugh’s marriage. (Note here that churches and other religious organizations are required by law to “file in the office of the state secretary information relating to persons recognized or licensed” to solemnize marriages.)
The person solemnizing the marriage must keep a record of the marriage, must fill out the Certificate of Intention of Marriage by stating the place and date of the marriage, and must return the Certificate to the Massachusetts clerk or registrar who issued it.
One thing to point out here: if a marriage were not sufficiently solemnized, because the person performing it were not authorized under the statute to do so, the marriage isn’t necessarily void. So long as the marriage is in all other respects lawful and the parties consummate it in the belief that the marriage is lawful, the Secretary of the Commonwealth’s office may validate the marriage by issuing a certificate.
If you have any questions about marriage or divorce, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form here, and we will get back to you at our earliest opportunity.
 Mass. Gen Laws, ch. 207 s. 38