Prenuptial Agreement Cases

Rosenberg v. Lipnick, 377 Mass. 666 (1979)
Parties to a prenuptial agreement have a confidential relationship of mutual trust and confidence, which requires exercising the highest degree of good faith and candor. There also needs to be lack of fraud, misrepresentation and duress. A prenuptial agreement must be "fair and reasonable" as measured at the time of execution; the contesting party must be fully informed of the other party"s worth (or had or should have had independent knowledge thereof); and there must be a waiver by the contesting party. "Fair and reasonable" is judged by the parties" respective worth, age, intelligence, literacy, business acumen, and prior family ties or commitments.

Osborne v. Osborne, 384 Mass. 591 (1981)
The SJC held that the settlement of alimony rights and property rights by a prenuptial agreement is not per se invalid, but did not express an opinion as to whether parties could waive the legal obligation of support during the marriage. The Court applied certain aspects of Divorce Agreements to prenuptial agreements, i.e., that a prenuptial agreement must be "fair and reasonable at the time of entry of divorce", and must be modifiable by the Court in certain situations, as when it determined that one spouse will become a public charge. This latter prong is now referred to as the "second look" requirement and has been interpreted in later cases. Also, the Osborne Court held certain prenuptial agreements may be so unreasonably encourage divorce as to be unenforceable on grounds of public policy.

DeMatteo v. DeMatteo, 436 Mass. 18 (2002)
The Trial Court had applied the "fair and reasonable" standard of Dominick v. Dominick, 18 Mass. App. Ct. 85 (1984), a case involving the enforceability of a separation agreement at the "first look" analysis. The SJC reversed and upheld the Prenuptial Agreement, saying that even though the provisions were "less than modest" than application of chapter 208, section 34 factors would have required, the section 34 analysis is not relevant, otherwise, the rights of parties to settle their assets as they wish in a prenuptial agreement would be "meaningless". The SJC clarified the "fair and reasonable" standard at the time of the "first look" at execution by holding that a prenuptial agreement would be invalid if it essentially stripped the contesting party of "substantially all marital interests" so that its terms essentially vitiated the "very status of marriage".

The SJC then discussed under what circumstances the spousal waiver required under Rosenberg v. Lipnick would be meaningful. The important factors cited by the SJC are representation by independent counsel, adequacy of time to review the agreement, the parties" understanding of the terms of the agreement and their effect, and a party"s understanding of his or her rights in absence of an agreement.

The SJC found the Prenuptial Agreement valid at the time of execution. But then the Court then went on to interpret and expand upon the Osborne requirement that the agreement be "fair and reasonable" at the "second look" at the time of divorce. The Court defined the "fair and reasonable" standard of prenuptial agreements to one of "conscionability" at the time of divorce. (Query whether a conscionable prenuptial agreement is the same as one that is not unconscionable.) To clarify and define the new standard at the "second look", the SJC held that at that time, the agreement would be enforced unless "due to circumstances occurring during the course of the marriage, enforcement . . . would leave the contesting spouse without sufficient property, maintenance or appropriate employment to support herself." The SJC said the importance of the "second look" 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."

With respect to "maintenance" and "support", the SJC in DeMatteo specifically stated that it would not enforce a Prenuptial Agreement that prevents a spouse from retaining her marital rights of maintenance and support "however disproportionately small". (But see the SJC holding in Austin v. Austin below.)

Austin v. Austin, 445 Mass. 601 (2005)
In this case, the wife waived alimony in the Prenuptial Agreement. The Trial Court judge invalidated the Agreement as it related to alimony, finding that the waiver of alimony was "unfair and reasonable at the time of execution", and enforced the Agreement as it related to property division. The Appeals Court (Austin v. Austin, 62 Mass. App. Ct. 719 (2004) affirmed the Trial Court, saying that the waiver of alimony was not fair and reasonable in light of the known circumstances of the parties and those "reasonably foreseeable" at the time of the marriage, but said that in certain cases an alimony waiver is not per se unenforceable. (But see the SJC holding in DeMatteo above that seems to require that a spouse must retain her marital rights of maintenance and support.)

The Prenuptial Agreement at issue in Austin provided that if the marital residence was owned solely by the husband at the time of separation (as it was at the time of marriage), the wife would have to vacate the home, but the husband was required to assist the wife in relocating and to give the wife "support based upon such considerations as the length of the marriage, their present employment, whether any children were born to the marriage" and other factors. If there was a jointly-owned house (as there was at the time of separation) the agreement provided that the appreciation on the last marital home would be deemed a marital asset and subject to property division. Therefore, under the facts of the case and the agreement, there would be no alimony paid to the wife. (The wife was a full-time mother and there was a child born to the marriage.)

Most practitioners, including me, found the Appeals Court opinion and reasoning quite persuasive and were greatly surprised when the SJC overruled and upheld the alimony waiver in Austin. The SJC decided that if there had been no jointly-owned house at the time of the divorce, under the terms of the Prenuptial Agreement provided, the husband would have given the wife support. So even though there was a jointly-owned home at the time of the divorce (and therefore no alimony required under the Prenuptial Agreement), the SJC held that the Agreement did not strip the wife of substantially all her marital interests at the time of the "first look".

Then the SJC made a "second look" analysis and found the terms of the Agreement to be "conscionable" in light of the amount of property given to the wife upon divorce, even without the alimony payments, even though they were "disproportionately small" when compared with the husband"s assets.

SJC Justice Greaney (joined by Judge Spina), dissented in Austin, asserting that the Prenuptial Agreement failed to be valid at the time of the "first look". The dissenters believed the majority analysis was flawed, because the wife had essentially given up substantially all of her marital interests at the time of the signing of the agreement, because there were no marital assets at the time of the marriage and there might not have been at the time of divorce. If there were no jointly-owned marital residence, the agreement stated that the husband would "assist her" in relocating, not that he would purchase a home for her. Since the agreement failed at the "first look" according to the dissenters, there was no need to analyze the effect of the agreement at the "second look" at the time of the divorce.

Eyster v. Pechnik, 71 Mass. App. Ct. 773 (2008).
In this case, a one-page prenuptial agreement was drafted by the husband and signed by the parties five days before the marriage. It was a first marriage for both the husband and wife. Neither had significant assets at the time of the marriage. Neither party consulted an attorney at the time of signing. At the time of divorce 22 years later, there were significant assets, and following the terms of the prenuptial agreement, the husband would have received well over half the accumulated assets. The lower court upheld the agreement holding that the prenuptial agreement did not strip the wife of "substantially all marital interests". The Appeals Court reversed on the basis that the agreement did not contain a meaningful informed waiver of marital rights. There was no evidence to suggest that the wife had been advised to obtain her own legal counsel, and no evidence that the parties had substantial understanding of the terms of the agreement, the effect of the terms, or what they were waiving. The prenuptial agreement itself did not contain a discussion or marital rights or how the rights were altered under the agreement.
Rev. 8/19/08

Wilcox v. Trautz, 427 Mass. 326 (1998).
Cohabitation agreements of unmarried partners are generally enforceable, without looking into them under the "fair and reasonable" standard of prenuptial agreements. The agreement must merely conform to the ordinary rules of contract law, and not the higher standard involved with prenuptial agreements. In dicta, the Court said that if parties to a cohabitation agreement married, the agreement would no longer be valid, and that "the rules concerning prenuptial agreements would govern any agreement thereafter entered into by them. " Wilcox v. Trautz, 427 Mass. 326, 332, footnote 4.

Laurie Israel
April 1, 2008