Prenuptial and Postnuptial Agreements – Questions and Answers
©Attorney Douglas R. Peterson
1. Why should someone consider getting a prenuptial agreement?
The idea of a prenup is to exercise your freedom to contract with your spouse-to-be about what marital rights will apply upon death or divorce rather than rely upon the default statutory scheme of marital rights. Typically people are concerned about property that they have acquired before the marriage, providing for children from prior marriages, protecting closely held businesses, and questions of alimony and property settlement in the event of divorce. Obviously, the more you have to lose, the stronger the motivation for a prenup. That is why you see it most often in cases of subsequent marriages, later in life marriages, and so-called May-December marriages where one party is significantly older than the other. Usually the young couple just starting out in life with nothing but student loans to worry about will not even give it a thought, although some may wish they had years later.
2. What are some of the requirements for a valid prenuptial agreement?
In Massachusetts there is a law that expressly authorizes prenuptial agreements. It is Gen Laws Chapter 209 section 25. It is very short and reads as follows:
At any time before marriage, the parties may make a written contract providing that, after the marriage is solemnized, the whole or any designated part of the real or personal property or any right of action, of which either party may be seized or possessed at the time of the marriage, shall remain or become the property of the husband or wife, according to the terms of the contract. Such contract may limit to the husband or wife an estate in fee or for life in the whole or any part of the property, and may designate any other lawful limitations. All such limitations shall take effect at the time of the marriage in like manner as if they had been contained in a deed conveying the property limited.
[Law in effect since 1845 last amended in 1902.]
3. How have the Courts interpreted this statute?
The law itself contains no specific conditions or requirements at all, although it speaks of “lawful limitations”. Those two words left the door open to the Courts imposing a layer of requirements to the validity and enforceability of these agreements. In general the agreement must be fair and reasonable when it is signed and fair and reasonable when it is sought to be enforced. As for when it is signed, there must be full and fair disclosure by both parties of all their assets and liabilities. There must be no duress or undue influence and both parties must appreciate and fully understand the terms of the agreement, which means they should both have their own lawyer involved. There must be a clear and unequivocal waiver of rights in the agreement. Beyond that the courts struggle with the notion of what a fair and reasonable provision of rights viewed at the time of entering into the contract is. The bottom line is that an agreement that provides one party with absolutely nothing, or both parties nothing of the other’s property and support where one party has substantial assets and wherewithal to provide support and the other is unable to sustain themselves has probably crossed the line. As stated by the SJC in the Dematteo case in 2002 “ 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.” Marriages where both parties are to get nothing but are each capable of supporting themselves and have their own assets to protect presumably would be different, although no one can be sure.
As far as being fair and reasonable at the time it is sought to be enforced: the good news is that the same standard that would be applied to a divorce settlement under Ch 208 sec 34 does NOT apply to a prenup. For this reason alone (opting into a lesser standard) a prenuptial agreement makes sense for those with something to lose. The bad news is that the courts continue to struggle with the standard saying that it is similar to the standard as for at the time of the signing and then in Dematteo redefining it to one of “conscionabiltiy” while denying at the same time that the test is one of unconscionability applicable in many other states. Apparently one sided agreements are not necessarily out, but lopsided ones may be. In Austin v. Austin in 2005 it was stated by the Supreme Judicial Court of Massachusetts that:
“ The agreement must be enforced unless circumstances such as the mental or physical deterioration of the contesting party, or erosion of promised support by inflation, would lead the court to conclude that the agreement was not conscionable and that its “enforcement . . . would leave the contesting spouse ‘without sufficient property, maintenance, or appropriate employment to support herself.”
4. How about putting your own prenup together with all the online resources available out there? This will save the expense of lawyers’ fees and take all the tension, intimidation and contentiousness out of the equation that could arise if the parties have to start dealing through lawyers.
There is no requirement that lawyers be involved. Each party’s having a lawyer eliminates argument later on that there was some unfairness in that the unrepresented party did not fully understand what they were doing or what the meaning of the language in the agreement was. Even if both parties are unrepresented, one can argue that they were less educated, less knowledgeable, and were taken advantage of. An additional risk is that you will make a mistake in drafting that makes the agreement unenforceable as was the case in the 2008 case of Eyster v. Pachenik 71 MassApp 773. If you are willing to run these risks, then, to paraphrase Yogi Berra, “When you come to a risk, take it”.
5. Does a couple really need to bear the expense of a lawyer for each of them, why can’t one lawyer do it for both?
To begin with, the same lawyer obviously cannot represent BOTH parties as a lawyer in potentially antagonistic negotiations where their interests are at odds. That would pose an irresolvable conflict of interest and alone would be grounds to invalidate the agreement.
It might be possible for a lawyer to assist in the process as a mediator, but that arrangement including the limited role of the attorney would have to be carefully documented. Moreover, all mediators would at least recommend that the parties get their own lawyers and many may be reluctant to take on the role unless both parties were represented by counsel anyway for fear of a malpractice action with so much at stake.
Finally, even with a mediator, each party who did not have their own lawyer can argue that they did not fully understand that they understood the agreement and how it worked the same as they could without a mediator.
The recorded decisions have never said flat out that a lawyer for each party is absolutely necessary, but, lack of a lawyer for one party appears to be a huge red flag to the courts when it comes to looking at fairness and enforcing the agreement, and lack of any attorney at all in this complex area of contract and family law almost guarantees a fatal mistake in the drafting of the agreement.
6. When should the issue of a prenuptial agreement be raised?
Obviously the issue must be raised in sufficient time to give everyone time for reflection, time to get a lawyer or at least look into it, time to get all the information together for disclosure, and time for negotiation, drafting, redrafting and so forth. Clearly, presenting someone with a document to sign on the eve of the wedding is not going to fly. Time pressure as well as ultimatums it can be argued create an atmosphere of duress that could easily render any resulting agreement unenforceable. The more complicated the parties’ situation is with properties, former marriages, children and obligations to fulfill, the more time is going to be needed. Again, this is not a hard and fast rule that can be ignored if someone wants to take the risk of doing so.
7. How does someone guarantee that the prenup will be enforceable?
Hopefully by now the light should be coming on in the head illuminating the sign which says “NO GUARANTEES” because there can be none. Follow all the rules: Get an attorney skilled in the area of prenups, have your spouse to be get his or her own attorney. Leave yourselves plenty of time. Be completely honest in the disclosure of assets. Finally, don’t be too greedy. As the courts show in their decisions over and over, it is easier to validate an agreement that would be merely insufficient at the time of divorce than one that flat out leaves a spouse likely to become a burden to society.
8. An elderly lady is planning to marry for the second time. He is of a like age and does appear to have health issues that could be serious in a few years. Will a prenup insulate her from all responsibility for the cost of his nursing home care if that becomes necessary?
From the standpoint of being concerned about the husband’s creditors, yes provided that the agreement is recorded as provided in section Chapter 209 section 26 . But that is not the end of it. For purposes of determining eligibility for Medicaid LTC benefits, the assets of both spouses are COMBINED. The staying at home spouse can only keep the marital home and approximately $119,000 of these assets before the husband can qualify for Medicaid. Thus in some cases, the healthy spouse will either be forced to spend down his or her own assets or divorce so that the benefits can be obtained DESPITE what the prenup says.
9. What kinds of things can go into a prenuptial agreement?
This list is not exhaustive:
What happens to assets of the spouses which you bring into the marriage.
How will future inheritances be treated
How will other assets acquired after marriage be treated
What about creating joint assets such as a marital home and bank accounts for sharing expenses
How will expenses be shared
What about responsibilities for each other’s indebtedness, preexisting and arising after the marriage, use of credit cards
Consequences of supporting a spouse while they obtain education, training etc for a successful career or business.
What property will each spouse be entitled to in the event of death or in the event of divorce
What alimony obligations will exist in the event of divorce
Penalties for opposing a divorce or for infidelity or other conduct
Responsibility for caring for children of the marriage during the marriage and after divorce
Child support responsibilities
Agreements to provide for the children of the other spouse during lifetime and after death (such as by will or trust)
10. What issues are the most likely to be problematic when an agreement is sought to be enforced?
Regardless of how careful everyone was in bringing the prenup to signing these provisions will be problematic:
1. Provisions for alimony or lack thererof, (because of the second look at fairness)
2. child custody and support (court is never bound to accept parent’s agreements on children)
11. Can a prenup be modified after marriage? For that matter, if a couple missed the boat on a prenup, can they agree on things after the wedding is behind them? In other words, what about postnuptial agreements?
The provisions of Gen Laws Ch 209 section 2 state that a married woman may contract as if sole and may make such contracts with her husband.. [Orig date 1855 Amended 1963 to permit contracts with her husband]. So the answer would be yes BUT how would such a contract be interpreted by our Courts? Until 2010 there were no reported cases on it.
In July of 2010 in the case of Ansin v. Craven-Ansin the Massachusetts Supreme Judicial Court issued an historic ruling on the validity of agreements entered into between spouses subsequent to the marriage and prior to a divorce. The Court for the first time ruled that such agreements are not void as against public policy and will be enforced subject to considerations set forth in the opinion. In doing so the Court settled this important issue and compares and distinguishes such agreements from prenuptial agreements and separation agreements negotiated in contemplation of a divorce. Not surprisingly the rulings states that in order to be enforced: both parties must have a real opportunity to be represented by independent counsel of their choosing, there must be full and fair disclosure of all assets, proper language effective to waive specific marital rights, and the agreement must be fair and reasonable at the time it is entered into as well as at the time it is sought to be enforced. These considerations are almost identical to those that have been applied by the Court to prenuptial agreements. However, the Court holds that there is one additional consideration which is that there must have been no fraud or coercion involved and a further requirement that when such agreements come before a judge for enforcement, they must be carefully scrutinized as to all these factors and the proponent of the agreement has the burden of proof in establishing that there was no fraud or coercion involved. The court goes on to rule that on the issue of fairness and reasonableness, such agreements are closer to separation agreements in that analysis involves the factors set forth in GL CH 208 sec. 24. The ruling also puts a lot of stress on whether or not each party actually was represented by their own attorney as a significant part of the analysis of whether it was fair and reasonable, even though the ruling earlier discusses only the “opportunity” to have an attorney of one’s choosing.