Prenuptial Agreement Requires Meaningful Choice in Giving up Rights During the Marriage

Generally, in order for an antenuptial agreement, commonly known as a prenuptial agreement, to be considered valid and enforceable in Massachusetts, the agreement must meet the following elements:

  • in writing and signed by the parties;
  • signed voluntarily and under no signs of duress or fraud;
  • made after full disclosure of the parties’ assets;
  • the prenuptial 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.

One ground for contesting a prenuptial agreement is on the basis of an invalid waiver of marital rights, such as the right to alimony or property. In essence, this means that each party must have the ability to exercise a meaningful choice in giving up his or her rights under the marriage. Each party must understand what rights they are giving up, and each party must exercise his or her choice to do so.

In an important recent case, Eyster v. Pechenik, the court invalidated a one-page prenuptial agreement, drafted by the husband and signed by the parties, in which the parties waived their right to the property of the other spouse. Eyster v. Pechenik, 71 Mass. App. Ct. 773 (2008). The agreement made no mention of alimony or support. The court invalidated the agreement, holding that no meaningful waiver was present. In doing this, the Court also contrasted the facts of the case from the seminal case of  DeMatteo v. DeMatteo, 436 Mass. 18 (2002). The court stated:

“In DeMatteo, the waiver was clear and comprehensive… In the present case, the agreement contained no waiver of the wife’s rights. In DeMatteo, both parties were also represented by independent counsel…Here, neither side consulted a lawyer. The significance of the legal advice in DeMatteo was noted repeatedly by the court.…Also unclear is the parties’ understanding of the terms of the agreement and their effect, and the parties’ understanding of their rights in the absence of the agreement. See DeMatteo, 436 Mass. at 29, 762 N.E.2d 797. This was not “the case of [an] agreement[ ] concluded without the assistance of independent legal counsel for each party, [in which] the agreement states, in language easily understandable by an adult of ordinary intelligence with no legal training, … the nature of any rights or claims otherwise arising at dissolution that are altered by the contract, and the nature of that alteration.” ALI Principles § 7.04(3)(c). Rather, the agreement contains no discussion of marital rights nor how such rights are altered. Furthermore, the provisions of the agreement are sketchy. Assets acquired after marriage other than gifts or inheritances are not clearly addressed or resolved by the one-page agreement, particularly when the document is read from a lay person’s perspective.” Eyster, at 784-785.

One infamous recent case involved the widow of the late John Belushi, who remarried and moved to Martha’s Vineyard. Pisano v. Pisano, 87 Mass. App. Ct. 403 (2015). Prior to her second marriage, she and her husband executed a prenuptial agreement in which they waived their rights to the other spouse’s property in the event of a divorce. Although the agreement referenced alimony, it did not include a specific waiver as to the alimony clause. The husband claimed that the agreement was invalid and that he did not specifically waive his rights to alimony, as “the agreement contains no waiver of the parties’ rights to alimony upon divorce, that the waiver of the parties’ claim to the other’s separate property does not constitute a waiver of the parties’ alimony right on income from the separate property, that the judge failed adequately to distinguish between a waiver of a property interest and a waiver of alimony (which constitute two separate and distinct rights), and that the ruling resulted in effect as an unknowing and involuntary implied waiver of his alimony rights under G.L. c. 208, § 34, contrary to established law and the public policy of the Commonwealth[.]” Pisano, at 411.

The court disagreed with the husband, holding that the overall waiver of rights in this case was sufficient to waive alimony. “While the premarital agreement, as the husband states and as the judge noted, does not contain a waiver of alimony per se, against the backdrop of the parties’ intent to protect their separate property (including income streams), and the above discussed language of paragraph 7 as it pertains to awards of alimony, we think the judge reasonably and properly construed the agreement to limit the husband’s claim for alimony in the manner we have previously described. We also agree with the judge that the modification of rights under G.L. c. 208, § 34, does not, in the circumstances, act as an “unknowing waiver” of the husband’s alimony rights.” Pisano, at 414.

In another unpublished case, Roof v. Abelowicz, the parties entered into a prenuptial agreement: the husband wanted to preserve his estate for his minor children from a previous marriage, while the wife wanted to retain her interests in real estate. Roof v. Abelowicz, 91 Mass. App. Ct. 1112 (2017). At the time, the parties’ assets were roughly equal, but by the parties’ divorce, the husband’s assets had significantly appreciated. The wife sought to invalidate the agreement and claimed that she was not fully aware of her rights at the time of signing. The court disagreed and held that the agreement was valid. “In this case, the terms of the agreement provide guidance as to the parties’ understanding. The tenth clause of the agreement contains an explicit waiver provision, providing that each party entered into the agreement with advice of counsel of their own choosing. Additionally, both the wife and the husband had been previously married and divorced, and, therefore, had previous experience with their rights under the law,” the court noted, also bringing up an email by the wife in which the wife clearly stated that she understood what she was contracting to. Roof, at 2.

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Prenuptial Agreements and Fairness

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.

 

 

Putting a Prenuptial Agreement in Place? Be Sure Both Sides Have an Opportunity to Consult with Legal Counsel

Generally, in order for an antenuptial agreement (also known as 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.

One of these important requirements for antenuptial agreement to be valid is the ability of both parties to consult with independent counsel. In particular where one party asks the other to sign the agreement before marriage, the courts will scrutinize the circumstances surrounding the signing to ensure that each party had a meaningful opportunity to consult with his or her own counsel.

In one unpublished appellate case, the court invalidated a prenuptial agreement on this basis, where the wife was from Brazil and spoke limited English. Allen v. Allen, 90 Mass. App. Ct. 1101 (2016). In that case, the husband’s attorney drafted the agreement. The wife visited a Portuguese-speaking attorney who translated the agreement and read it to her out loud; however, that attorney gave the wife no legal advice. The appeals court, agreeing with the trial judge, found that the wife did not have adequate opportunity to consult with counsel:

“As the judge observed, ‘Even if Attorney Kesselman explained the terms of the Agreement to the parties when he met with them, he represented only Husband. Wife’s admission to Attorney Guerreiro that another attorney already had explained the Agreement to her does not change that. Attorney Kesselman could not give legal advice to Wife about the consequences of the Agreement to her. Attorney Guerreiro did not represent Wife and did not give any legal advice to her about the Agreement.’ Contrary to the statement in the premarital agreement that the parties each “had independent legal counsel of his and her own choosing prior to their execution” of the agreement, Maria was unrepresented.” Allen, at 2.

In another case, the judge’s decision to invalidate the prenuptial agreement was also partially based on a lack of meaningful opportunity to consult with counsel. The court in that case noted:

“Although each party was represented by counsel, the evidence supports the judge’s finding that the negotiation was brief and one-sided. The mother first met with her attorney on October 31, 2002. In mid-November, the mother’s attorney sent a series of draft proposals to be included in the agreement to the father’s attorney. The father rejected the proposed terms and on December 16, 2002, the father’s attorney sent the father’s terms by electronic mail to the mother’s attorney with a message that due to the wedding scheduled for the following week the father “would like to sign this tomorrow as relatives are arriving on Wednesday and … schedules will be quite hectic after that.” Although the mother’s lawyer informed the father’s lawyer that the father “ha[d] to put something on the table” in light of the enormous disparity in the assets of the parties, the father did not alter his position. The mother agreed to the terms of the proposed agreement.” Schechter v. Schechter, 88 Mass. App. Ct. 239, at 256-257 (2015).

It is important to note that actual consultation with an attorney is not required in order for an antenuptial agreement to be valid; it is only the opportunity to consult with counsel which is required.

Do both parties need a lawyer for a prenuptial agreement?

Prenuptial or premarital agreements have become more popular in recent years for a variety of reasons. With a shrinking middle class, many people entering their first marriage expect to receive a significant inheritance or gifts from parents at some point during their lives. Additionally, it is not uncommon for people entering second marriages to want an additional sense of protection, particularly for the assets they acquired before getting married. Sometimes the idea of protecting oneself with a premarital or prenuptial agreement is pushed by a party’s parents and sometimes it is the idea of the party him or herself. Either way, the agreements have gained popularity in Massachusetts and before you enter into one, you are well served generally understanding how they work.

Essentially, the idea of a prenuptial agreement is that the parties choose how a divorce would work in the event it ever happens.  The agreements can cover different issues and they are generally tailored to the individual facts and circumstances of the situation.  The focus, however, is always financial, dealing almost exclusively with alimony and/or property division.  The terms of a premarital agreement attempting to establish a custody arrangement or child support figure are unenforceable. Any such terms would be stricken from an agreement and not enforced, if the entire agreement was not set aside as a result. Issues regarding the children will always be determined at the time of divorce because child-support is always based on income at the time it’s determined and custody arrangements are always based on the best interests of the children, which cannot be determined in advance.

The parties are generally free to enter into agreements regarding alimony and property division, called equitable distribution in Massachusetts, as they see fit. However, unless some basic guidelines are followed, the parties risk the agreement being set aside and not enforced at the time of divorce. When that occurs, it is ordinarily a big disappointment to the party in a superior financial position and generally undermines the purpose of the entire process.

Parties entering into a premarital agreement must generally understand the terms of the agreement and must have adequate time to contemplate the terms before getting married. Failing to have these elements present will raise the issue of whether the parties truly understood the agreement into which they entered and also whether they entered the agreement under duress.  While it may be attempting for a party in the better financial position to push strongly to get the prenuptial agreement completed and signed, being too aggressive may result in the agreement not being enforceable.  One important element in ensuring the absence of duress is for each party to have a competent family law lawyer represent them through the process.

These issues were recently discussed in a rule 1:28 opinion in the case of Allen v. Allen. In this case the premarital agreement and a 17 year marriage was set aside by the probate and family judge overseeing the divorce.  The facts upon which the judge relied are as follows. The wife was from Brazil and her primary language is Portuguese. The husband exclusively spoke English and when they started their relationship they needed an interpreter just to communicate. Leading up to their marriage, the husband told the wife that he would not marry her unless she signed a prenuptial agreement. He had an agreement drafted by a lawyer who did not speak Portuguese.  The husband signed the agreement five days before the wedding. The wife then brought the agreement to the Portuguese speaking lawyer who, although he did not represent her in the matter, translated the document for her. Notably, that lawyer did not practice divorce or family law, something the appellate court took note of in affirming the trial judge’s decision.

The Portuguese speaking lawyer’s only function was translating the prenuptial agreement verbally into Portuguese for the wife. The agreements, were generally protective of the husband’s interests, waving alimony and property division between the parties.

When the parties filed for divorce, the husband sought to enforce the agreement and the wife sought to have it set aside. The wife prevailed and the judge ultimately ordered the husband to pay alimony for a period of 702 weeks.  The judge also distributed the marital estate, distributing most of it to the husband but a sizable portion to the wife.

The husband appealed, clearly dissatisfied with the trial judge’s ruling.  How could this have been avoided?  Confident and experienced divorce and family law attorneys know the basic requirements of a prenuptial agreement. Even if they aren’t in the practice of drafting or negotiating these agreements, they see them come up in divorce cases.  Step one in ensuring a prenuptial agreement is enforceable is having competent, experienced divorce lawyers representing each party. The reason that is necessary is that the parties are not able to enter into an agreement knowingly if they don’t understand how a divorce would work in the absence of an agreement. In order to be counseled effectively on what would happen in the absence of an agreement, you need to speak with a lawyer who actually understands divorce and family law.

Beyond having competent counsel, the concepts of basic contract law would apply. For the agreement to be enforceable you need to have a full disclosure of finances from both parties. Each party needs to understand the basic financial world of the other. That includes the other party’s income, assets, and debts. There also must be adequate time between signing the agreement and when the wedding actually occurs. Failing to have that creates an argument of directs. Consider for example, The wedding being scheduled, 150 family members booking flights and hotel rooms, tens of thousands of dollars spent on the wedding itself, and then one spouse saying he or she will not marry the other without the other signing a prenuptial agreement waving important rights.  That fact pattern would put the individual in such a difficult position here she may sign just to avoid problems for his or her family and friends.  Signing the agreement far enough out will avoid these issues.  The agreement also cannot be completely one sided. In Massachusetts, the judge will review the agreement at the time it is enforced to make sure it is not unconscionable, putting one spouse into an extreme financial hardship.  Accordingly, the parties are well advised to draft the agreement in a way that neither party will end up destitute.

The first step in getting a premarital agreement established is a consultation with a competent divorce lawyer or family law lawyer To schedule a free consultation with our office call 978-225-9030 or complete the contact form on this website.