Understanding Prenuptial Agreements

Prenuptial agreements are drafted in consideration of marriage and they outline each spouse’s rights and obligations to one another in the event of a separation, divorce, annulment, and/or death. Prenuptial agreements create a predictable structure for a successful marriage or a starting point for negotiations in the case of divorce. In a typical prenup, parties outline terms like the division of assets, spousal support, debt protection, inheritance, and business interests. It is against public policy to include provisions relative to child custody and other related child provisions, i.e. child support.

The parties’ rights to enter into a prenuptial agreement settling property rights prior to their marital union is a valuable right that both parties may exercise without fear that the court may unreasonably or destructively regulate it in the future. However, it is a common misconception that prenuptial agreements are automatically valid upon execution. This is not always the case and there are a fair number of instances that can impact an agreement’s enforceability.

At Ryder & Phelps, P.C., our attorneys have experience successfully supporting as well as arguing against the recognition of prenuptial agreements. The intricacies of these agreements highlight the importance of working closely with an attorney you trust to ensure that your agreement is still equitable to both parties at the time of execution.

When can a prenuptial agreement be upheld?

Fair and Reasonable Test

For a premarital agreement to be valid under Massachusetts law, it must be both fair and reasonable at the time of execution as well as at the time of enforcement, as a matter of public policy, so that it has the same vitality when executed upon divorce. This is often explicitly stated in the agreement with a provision signed by each party, stating that they are entering into the agreement freely and voluntarily. The ‘fair disclosure rule’ is another means of ensuring the agreement’s fairness. Under the ‘fair disclosure rule’, prior to enforcing a prenuptial agreement, both parties must fully and accurately disclose their financial situation to their former spouse.

Second Marriages as Support for Enforcement

Interestingly, when one of the parties is enduring a second marriage that ends in divorce, the Court poses a higher burden onto that party. The court considers the fact that individuals who have already experienced divorce have a better grasp of their legal rights in the divorce process. In Roof v. Abelowitz, 91 Mass. App. Ct. 1112 (2017), the court used this reasoning to lessen the wife’s ability to claim that she did not fully understand an explicit waiver provision within the prenuptial agreement. Similarly, in the Austin v. Austin, 445 Mass. 601 (2005) case, the court found the parties’ prenuptial agreement enforceable because the wife was fully aware of her rights and knowledgeable about alimony, property division, and child support from her past divorce.

When might the agreement be unenforceable?

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 unconscionable and that enforcing such an agreement would leave the spouse with insufficient property, maintenance, employment, or without reasonable means of supporting themselves.

Fair and Reasonable Test

In Upham v. Upham 36 Mass.App.Ct. 295 (1994), the court explicitly relied on the “fair and reasonable” test, which considers the mandatory and discretionary factors set forth in G.L. c. 208 § 34, and thus points to the length of the marriage, station, amount and source of income, employability, estate, and the needs of each party and the opportunity of each for future acquisition of assets and income. The Upham court found that the parties’ agreement was unenforceable because despite its fairness at inception, it was not fair and reasonable at the time of enforcement. In the case of Upham, the parties ceased having a joint household several years prior to their divorce and that when the husband moved out of the residence with his belongings, he informed the wife that he did not “want anything more after that.” Therefore, the agreement entitling him to half the contents in the home at the time of enforcement could not be upheld in good faith. In addition to this, there was other evidence that throughout the marriage the parties had kept their prenuptial agreement in mind when making financial decisions, like in negotiation of property title.

The disclosures both parties make to one another in negotiating the original agreement is another relevant consideration taken into account to interpret whether it is fair and reasonable. In DeMatteo, the judge determined the agreement was neither fair nor reasonable at any point in time. The court made its determinations based on factors including the lack of significant negotiations prior to the agreement’s execution, the husband’s financial holdings, the sophistication of the issues, the lifestyle both parties enjoyed during the marriage, and the husband’s ability to acquire assets in comparison to the wife’s inferior asset-acquisition ability. See DeMatteo v. DeMatteo, 463 Mass. 18 (2002).

Second Look Doctrine

Under the ‘second look doctrine,’ the court has the right to take a ‘second look’ at the agreement to ensure it accurately reflects the intentions of both parties at the inception of the agreement as well as the time of enforcement with the judgment of divorce nisi. The court may consider circumstances that occurred during the marriage as well as the ultimate division of assets pursuant to G.L. c. 208 §34 when making a determination on the enforceability of a prenuptial agreement. For example, in the case Kelcourse v. Kelcourse, the court found the parties’ prenuptial agreement to be unenforceable under the second look doctrine in that the purchase of the parties’ marital home and its subsequent neglect constituted a change in circumstances beyond what the parties anticipated when they executed said agreement. If the court had upheld the agreement, it would have left the wife with a house with negative equity and she would not have appropriate finances to support herself. Kelcourse v. Kelcourse 87 Mass.App.Ct. 33 (2015).

At Ryder & Phelps, we recently worked on a case where one party was a successful business owner and President of his own company who was looking to have his prenuptial agreement upheld. The wife in this case was on her second marriage and divorce and thus was more in-tune with the consequences of such a premarital agreement. Additionally, at the time of signing, both parties were independently represented by legal counsel and neither experienced any sign of deterioration that would have made the agreement unfair at the time of signing nor at the time of enforcement because both parties were left with sufficient property in maintenance and were each financially independent prior to their marital union.