A prenuptial agreement can eliminate much of the guesswork from the divorce process and save divorcing spouses time and money. Also known as an “antenuptial agreement” or a “prenup,” it is a written contract engaged couples sign prior to marriage that clearly outlines how a couple will divide their assets and liabilities if they later decide to divorce. While a prenuptial agreement can favor one party to a degree—reserving more assets for one spouse should the couple divorce—there are instances in which a Massachusetts court won’t enforce the agreement. For a prenuptial agreement to be enforceable in Massachusetts, the judge must determine both that: 1) it was fair and reasonable when the parties signed it; and, 2) it is conscionable at the time of the divorce proceedings.
A recently decided Massachusetts Appeals Court case, Rudnick v. Rudnick, explores the conscionability standard. In Rudnick, the Appeals Court found that a prenup was unconscionable and thus unenforceable because its enforcement would leave the wife without the resources or means to support herself given events during the marriage.
Case Background
When Doris and Leonard Rudnick began their relationship, Doris was 58 years old. She worked as an administrative assistant at the time. Leonard was a 65-year-old successful, self-employed businessman. Both had been married once before and had children from their prior marriages.
Doris and Leonard married on November 28, 1992. They did not have children together. Leonard retired a year before their marriage and Doris retired the year after.
Doris and Leonard’s Prenuptial Agreement
The day before Leonard and Doris married, they signed a prenuptial agreement. They did so at Leonard’s request; he asserted he would not have married Doris without the prenuptial agreement in place. Both parties attached a statement of their assets to the agreement.
Leonard’s attorney drafted the prenup. Doris hired her own attorney to review it. She only had one contact with her attorney who recommended that Doris not sign the prenup.
The Appeals Court summarizes the relevant portions of the prenup. In the prenuptial agreement, Doris and Leonard agreed that there would be no alimony or support if they were to divorce. They also agreed, in simple terms, that their individual income and possessions would not be split or shared between them in the case of a divorce.
Prenup Provisions Regarding Real Estate
Doris and Leonard further agreed in the prenup that they’d live together in a place and way that suited both of them. They agreed that if they bought any homes or other real property during their marriage, they would own the property together and therefore each have an interest in it. As the Appeals Court states in its opinion, “It is apparent, upon reading the agreement as a whole, that the parties intended to live together in a ‘jointly acquired marital residence’ in which the wife would have a property interest.”
Residences Doris and Leonard Acquired
During the marriage, Doris and Leonard acquired homes in Canton, Massachusetts and Lake Worth, Florida. They lived in each home for about the same amount of time.
The Florida Home
Doris participated in the Florida house purchase. She did not, however, contribute any of her own money toward it. And, unbeknownst to her, the husband bought the house only in his name—not in both their names.
The Massachusetts Home
Meanwhile, the title to the Canton home was held in a trust for the benefit of Leonard’s adult children—again, it was not held in both Leonard and Doris’ names. Leonard said his adult children were the ones who provided the money to purchase the home. During the marriage, Leonard paid “rent” to the trust.
In designing the Canton home, Leonard and Doris met with an architect. They also traveled out of state to select furnishings together, including items like kitchen countertops and cabinets. Doris put about $20,000 of her own premarital money toward these purchases. Further, after a fire destroyed the Canton home in 2007, Doris was involved in the rebuilding process.
Doris believed that she and Leonard owned the Canton home jointly. It was not until 2017, when Doris and Leonard separated, that she learned otherwise. In 2018, the property sold for $1.28 million. The proceeds from the sale went to Leonard’s adult son.
Trial Court Proceedings
In 2019, Doris filed for divorce. In her divorce complaint, Doris sought, in part, an equitable distribution of the marital estate. Leonard subsequently filed a counterclaim. He sought, in part, enforcement of the prenuptial agreement.
At Leonard’s request, the Probate and Family Court judge separated the case into two parts. The judge would first determine whether the prenuptial agreement was valid and enforceable. Then, after addressing that issue, the judge would determine how to divide the marital estate.
At the time of the trial, Doris was 86 years old. She was unwell and unable to earn an income.
Trial Court: Prenuptial Agreement Is Invalid & Unenforceable
The Probate and Family Court judge held a one-day trial to determine the enforceability of the prenuptial agreement. After the trial, the judge found that the prenuptial agreement was invalid and unenforceable.
Why? The Probate and Family court judge determined that the prenup was fair and reasonable when the parties signed it. However, it was unconscionable at the time of the divorce because of “material and substantial events” that basically stripped Doris of “substantially all her marital interests.” Essentially, because of what transpired during the marriage—Leonard’s actions—Doris would be left with basically nothing from the marriage if the court enforced the agreement. Leonard appealed.
Appeals Court Agrees with Probate and Family Court Judge
Prenuptial Agreement Enforceability: A First & Second Look
When determining the validity of a prenuptial agreement, a judge must consider two points in time in the spouses’ relationship: The time of execution and the time of divorce. An enforceable prenuptial agreement is both “fair and reasonable” at the time of execution and “conscionable” at the time of enforcement.
The prenuptial agreement must be fair and reasonable at the “first look” stage. A prenuptial must first be fair and reasonable at the time the spouses-to-be signed it. Judges will consider things like whether the parties made full financial disclosure prior to signing, whether there was undue pressure on a party to sign the prenup, and whether the agreement stripped a spouse of all or almost all marital interests—although a prenup can, to an extent, be one-sided.
The prenuptial agreement must be conscionable at the “second look” stage. A prenuptial agreement must also be conscionable at the time of divorce. In determining whether a prenup is conscionable, a judge will consider events that occurred during the marriage and whether enforcement of the prenup would leave a spouse with insufficient property, maintenance, or appropriate employment to support her or himself.
The Second Look in Rudnick
In this case, the issue on appeal was whether the prenup was conscionable at the “second look” stage.
Considering the Probate and Family Court judge’s findings on that issue, the Appeals Court agreed with the lower court judge: The prenuptial agreement in Rudnick was unconscionable at the “second look” stage and thus unenforceable. Why? Because, at the time of the divorce, and given Leonard’s conduct during the marriage, the prenup stripped Doris of all her marital interests and left her with insufficient financial resources to support herself after the divorce.
The Appeals Court, therefore, affirmed the Probate and Family Court’s decision.
It’s Okay for a Divorcing Spouse to Get Less Under a Prenup than What a Judge Would Otherwise Award, but…
The Appeals Court explains that whether a prenup is conscionable at the second look stage relates, in large part, to the spouses’ ability to retain at least some marital interests in the divorce. Those interests could be some marital property, a right to ask for alimony, or some combination.
It may very well be that the prenuptial agreement results in one spouse getting less than what a judge would have awarded had it not been for the prenuptial agreement—that is true. But a prenup that strips a divorcing spouse of all marital interests is unenforceable as it goes against our public policy.
A Spouse Cannot Be Stripped of All Marital Assets:
Leonard’s Conduct Left Doris Unable to Support Herself
Because of Leonard’s conduct during the marriage, Doris would be left with nothing from the marriage—no marital property interests and no alimony—if the court were to enforce the prenup. “Here, enforcement of the agreement would leave the wife with no marital assets and no alimony, in direct contravention of [our previous case law],” the Appeals Court said.
What did Leonard do wrong? Regarding the homes Doris and Leonard acquired during the marriage, the Probate and Family Court judge found that Leonard twice breached the prenup when he failed to put the Canton and Florida homes under both their names. Moreover, Leonard either allowed the purchase of, or outright planned to purchase, the Canton property by trust so that he could get around the prenup. The Appeals Court found this to be true even though the parties intended, under the prenup, for Doris to have some property interest in the homes.
Regarding alimony, the Appeals Court noted that Doris waived her right to alimony given her understanding that, under the prenup, she’d be entitled to some property interest if the parties divorced (here, the appreciation in value of the homes they acquired during the marriage). However, Leonard it impossible for Doris to retain any property interest by failing to put the homes in both their names.
Appeals Court Affirms Probate & Family Court Judgments
The Appeals Court stated, “The record amply supports the judge’s findings that, as a result of the husband’s actions to ‘circumvent’ the agreement, the wife (1) would get ‘nothing after 27 years of marriage’ and would be ‘essentially stripped of substantially all her marital interests,’ and (2) was in a worse situation due to her ‘age and health circumstances,’ ‘had to tap her assets to support herself in a modest lifestyle,’ and ‘now does not have sufficient property, maintenance or suitable employment for self-support.'”
The Appeals Court went on to say, “If the agreement were enforced, the wife would be in the same position as if she had never been married at all, in direct contravention to the intent of the parties that the wife retain at least some marital property interests, as set forth in their agreement…Simply put, enforcement of the agreement would deprive the wife of her marital interests.”
For these reasons, the Appeals Court backed up the Probate and Family Court’s decision and affirmed the judgments. The Rudnick prenuptial agreement is unenforceable.
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