Prenuptial Agreements

The Basics of a Prenuptial Agreement
A prenuptial agreement is a contract entered into by two prospective spouses prior to marriage.  In Massachusetts, same sex couples may enter into prenuptial agreements pursuant to the Supreme Judicial Court's decision in Goodridge v. Mass. Department of Public Health, 440 Mass. 309 (2003).

The topics parties may include in a prenuptial agreement are numerous; however, certain limitations apply.  Generally, prenuptial agreements focus on financial matters such as spousal support and alimony, financial obligations, and inheritance.  Such agreements may also govern the parties behavior, or consequences for particular behavior during the marriage.

Currently, the law governing prenuptial agreements is codified in the General Laws, chapter 209, section 25 which provides, "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."  There was a time, however, when prenuptial agreements were invalid in Massachusetts.

Historical Background of Prenuptial Agreements in Massachusetts
Like many states, Massachusetts disallowed prenuptial or "antenuptial" agreements with respect to divorce for many years based on public policy.  The general idea was that prenuptial agreements violated public policy because they encouraged or helped facilitate divorce.  In 1981, however, the Supreme Judicial Court held, "an antenuptial contract settling the alimony or property rights of the parties upon divorce is not per se against public policy and may be specifically enforced."  Osborne v. Osborne, 428 N.E.2d 810, 816 384 Mass. 591 (1981).  The Osborne decision also sets forth the notion "fair disclosure," with respect to prenuptial agreements and divorce.  

Fair disclosure means that both parties to an agreement provide the information necessary to make an informed decision before entering the prenuptial agreement.  In Rosenberg v. Lipnick, 377 Mass. 666 (1979) the court held "that the parties [to a marriage] by definition occupy a confidential relationship and that the burden of disclosure rests upon both of them."  Rosenberg, 377 Mass. at 671; Osborne v. Osborne, 428 N.E. 2d at 816.  The court further explained that "In judging the validity of such an antenuptial agreement, other relevant factors which we may consider are whether (1) it contains a fair and reasonable provision as measured at the time of its execution for the party contesting the agreement; (2) the contesting party was fully informed of the other party's worth prior to the agreement's execution, or had, or should have had, independent knowledge of the other party's worth; and (3) a waiver by the contesting party is set forth.  It is clear that the reasonableness of any monetary provision in an antenuptial contract cannot ultimately be judged in isolation. Rather, reference may appropriately be made to such factors as the parties' respective worth, the parties' respective ages, the parties' respective intelligence, literacy, and business acumen, and prior family ties or commitments." Rosenberg, 377 Mass. at 672.  Thus, failure to tell a spouse about assets prior to the signing of a prenuptial agreement could invalidate the agreement upon a divorce.

The Fair and Reasonable Standard for Prenuptial Agreements
Since allowing prenuptial agreements in 1981, Massachusetts court have further refined the analysis of such agreements.  The Supreme Judicial Court returned to the issue of prenuptial agreements in DeMatteo v. DeMatteo.  At the time of their marriage, Susan DeMatteo had been earning approximately $25,000 per year.  DeMatteo v. DeMatteo, 436 Mass. 18, 19-20 (2002).  At the same time, Joseph DeMatteo had a net worth estimated at between $83 million and $108 million.  Both Joseph and Susan employed legal counsel to negotiate a prenuptial agreement.  The negotiations produced a prenuptial agreement which provided "that the wife would receive the marital home free of encumbrance, yearly support of $35,000 until her death or remarriage with an annual cost-of-living increase, an automobile, and medical insurance until her death or remarriage. All property jointly acquired during the marriage would be divided between the parties in equal shares," if the marriage ended by divorce.  DeMatteo, 436 Mass. at 22.

At trial Susan argued that the negotiations had been rushed and that she didn't receive a full disclosure of her husband's assets before entering into the prenuptual agreement.  DeMatteo, 436 Mass. at 27-28.   The court, however, noted that "fair disclosure is not synonymous with detailed disclosure, but contemplates that each spouse should be given information, of a general and approximate nature, concerning the net worth of the other."  DeMatteo, 436 Mass. at 27 (citing Button v. Button, 131 Wis. 2d 84, 95 (1986)).  Further, the court explained that "Where there is no evidence that either party engaged in fraud, failed to disclose assets fully and fairly, or in some other way took unfair advantage of the confidential and emotional relationship of the other when the agreement was executed, an agreement will be valid unless its terms essentially vitiate the very status of marriage. Our test of fair and reasonable is not the same as the test of unconscionability that has been adopted in other jurisdictions."  DeMatteo, 436 Mass. at 31 (internal quotes omitted).  Moreover, the court noted that while there may be some overlap between the "fair and reasonable" and
unconscionability standards, "a standard of unconscionability generally requires a greater showing of inappropriateness."  DeMatteo, 436 Mass. at 32.

Applying the fair and reasonable standard, the court held that Joseph DeMatteo's disclosures allowed Susan DeMatteo, assisted by her legal counsel, to make an informed decision before entering the prenuptial agreement, and thus the agreement was valid.

If you are contemplating creating a prenuptial agreement, or if you are considering entering into a prenuptial agreement, you should talk to a knowledgable lawyer who can help you understand the risks involved.  Call The Law Office of Matthew E. Jones for an initial consultation.  

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