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…the equity in the home did not go up, the wife would receive no assets…the husband chose to encumber the home to the maximum extent possible, the wife would receive no assets.” Schechter, at 259.
DeMatteo v. DeMatteo:
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. 436 Mass. 18 (2002). In that case, the husband (whose net worth was between $108-$133 million) presented the wife with an antenuptial agreement. It provided 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 a few things. First, she would receive the marital home free of encumbrance. Additionally, she would receive the automobile that she was then driving. Finally, she would receive an annual payment from the husband of $25,000 until her death or remarriage. The wife initially rejected the agreement; she asked for the husband to increase the annual payments to the wife to $35,000. She wanted this adjusted annually for increases in the cost of living. Also, she 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; the annual payments were increased to $35,000, however. Medical insurance was also provided for the wife in the final antenuptial agreement.
What does fair and reasonable mean?
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. DeMatteo, at 31.
The court continued:
“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. It held the agreement was both valid at the time of execution and enforceable at the time of the divorce. DeMatteo contains a very important paragraph regarding antenuptial agreements and their enforcement. In it, the high court also clarified the meaning and application of the Second Look Doctrine in Massachusetts as follows.
The Second Look Doctrine:
“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.
Kelcourse v. Kelcourse:
In a subsequent case, however, the appeals court upheld a trial court’s invalidation of the antenuptial agreement; it also was based on the Second Look Doctrine. However, enforcing that 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; this included a commercial marina. The wife had no appreciable assets at the time of signing. The agreement provided for each party to retain his or her assets; it also 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. They inhabited this as their principal residence, and the husband intended to renovate it. 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.
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