If you are getting married, you may want to seriously consider a Prenuptial Agreement. These days more and more couples are creating prenuptial agreements before their marriages, which can provide many benefits to those with significant assets and even for individuals of modest means.
What does a Massachusetts Prenuptial Agreement protect?
A Prenuptial Agreement is an agreement that identifies each spouse’s financial obligations and property rights with respect to property held prior to the marriage. Additionally, a Prenuptial Agreement may address income and property accumulated during the marriage and spousal support, if any, that may be paid in the event of divorce. It is important to keep in mind that child support and child custody cannot be integrated into a prenuptial agreement.
Related read: Interested in learning about what a MA Prenuptial Agreement can protect?
Why get a Prenuptial Agreement?
People enter into a Prenuptial Agreement prior to a marriage for two main reasons: (a) doing so may help clarify financial expectations and obligations for the couple and; (b) a Prenuptial Agreement will likely save the parties the considerable time and expense associated with a divorce by establishing the division of assets and alimony obligation that will be put in place in the event of a divorce. Additionally, a Prenuptial Agreement can preserve the inheritance for the children of a previous relationship; rather than having those assets considered marital assets subject to division upon divorce. Read more about why getting a Prenuptial Agreement in Massachusetts may be important, here.
Are Prenuptial Agreements enforceable in Massachusetts?
The Massachusetts Supreme Judicial Court has outlined what is required for a Massachusetts Prenuptial Agreement to be enforceable. First, the Prenuptial Agreement must be fair and reasonable at the time of execution. Second, the Prenuptial Agreement must be fair and reasonable at the time of entry of the Judgment of Divorce Nisi. Also, Massachusetts law requires that the parties to a Prenuptial Agreement make a full and truthful disclosure of their respective assets and liabilities and it is very important that both parties be represented by an attorney at the time the prenuptial agreement is signed.
"Second Look" Requirement
In January 2015, the Massachusetts Appeals Court reaffirmed the 'second look' requirement for enforcement of Prenuptial Agreements. In the Kelcourse case, the appeals court reaffirmed the requirements for a prenuptial agreement to be enforceable in Massachusetts:
(a) The Prenuptial Agreement must have been valid when executed; and
(b) The Prenuptial Agreement must be conscionable at the time of divorce.
In the case of Kelcourse, although the Prenuptial Agreement was deemed valid at the time it was executed, circumstances had changed by the time of the divorce, and the court determined that enforcing the agreement would be unconscionable.
The 'second look' analysis of a Prenuptial Agreement at the time of divorce ensures that the Agreement has the same consequence at the time of divorce as the parties intended when they signed it (at the time of execution). In Kelcourse, The Court reiterated that a Prenuptial Agreement will not be enforced if, due to circumstances that occurred during the course of the marriage, enforcement of the prenuptial agreement would leave one spouse without sufficient property, maintenance, or appropriate employment to support herself or himself.
In summary, even if the prenuptial agreement was valid when it was executed, the Court could determine that it is no longer enforceable at the time of divorce because circumstances that occurred during the marriage render the enforcement of the Prenuptial Agreement unconscionable.
A Massachusetts Prenup Case You Should Know: Dematteo v. Dematteo
In the case of Dematteo vs. Dematteo, the SJC reversed the Probate and Family Court’s decision on the issue of enforceability and Prenuptial Agreement was upheld.
The Facts of Dematteo v Dematteo
Husband and Wife married in 1990 at the ages of 47 and 41. Because the couple had dated years prior, Wife was aware of Husband’s wealth. Similarly, Husband was aware of Wife’s lack of wealth. At the time of their marriage, their financial situations looked like this:
- Husband owned a large stake in his family’s business, along with significant assets, bringing his net worth to over $80 million.
- Wife owned no real property, and made $25,000 per year as a secretary.
Prior to marriage, Husband discussed with Wife the need for a prenuptial agreement. Both Husband and Wife then retained their own attorneys for representation, who began negotiating and drafting the prenuptial agreement. The Probate Court later did not find Husband to be “overbearing” in his request for the prenuptial agreement, but did make note that Husband was “very clear that such an agreement was necessary,” prior to marriage, and that Wife felt rushed.
If you would like to read more about this case in detail, including the terms the parties agreed to in their Massachusetts prenuptial agreement, click here to read our blog: A Case You Should Know: DeMatteo v. DeMatteo
Fast forward eight years later, when Husband filed for divorce. Not surprisingly, he sought enforcement of the prenuptial agreement. After three days of a divorce trial, the Court held that the prenuptial agreement was unenforceable, reasoning that it was “not fair and reasonable at the time of its execution and is not fair and reasonable at the present time, and therefore may not be enforced.”
The Supreme Judicial Court’s Analysis
In reversing the lower Court’s decision, the Supreme Judicial Court implemented the two-step guideline set forth in Osborne v. Osborne, 384 Mass. 591, 598 (1981), elaborating further with a detailed analysis:
Step #1: Was the Agreement Valid?
To answer this question, the Supreme Judicial Court lists three “fair disclosure” rules set forth in the Massachusetts case of Rosenberg v. Lipnick, 377 Mass. 666 (1979).
- Rule No. 1: Were the terms of the prenuptial agreement fair and reasonable to the contesting party at the time of its execution?
- Rule No. 2: Did the contesting party have independent knowledge, or were they fully informed of the other party’s financial status before the agreement was executed (signed)?
- Rule No. 3: Was there a waiver by the party contesting the agreement?
Again, to read the Court’s reasoning on the above, please see our detailed blog on this case.
Step #2: The “Second Look” Analysis: Was the Agreement Fair and Reasonable at the Time of Enforcement?
The analysis of whether or not it is fair and reasonable at the time of the enforcement only exists if the prenuptial agreement is considered to have been fair and reasonable at the time it was executed. The Court cannot conduct the second look analysis without the agreement having passed the first “fair and reasonable” test, first. The lower Court ruled the prenup agreement was invalid at the time it was signed / executed, so it should not have been evaluated at the time of trial.
The SJC took a “second look” at the agreement because it found the agreement to have been fair and reasonable at the time of execution, and therefore enforceable when the parties entered into it. In providing their rationale, the Court stated “[i]n 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…”
While Wife did abandon substantial rights under the Massachusetts divorce law statute by entering into this prenuptial agreement, the fact that the agreement appears to significantly favor the Husband does not equate to Wife being stripped of all marital assets to the degree that the agreement should be considered deemed unenforceable.
This point is important, because it makes clear that even though a prenuptial agreement is “one-sided” is not enough to invalidate it. The Court’s decision noted that unlike other states that have adopted the standard of unconscionability set by the Uniform Premarital Agreement Act (UPAA), the Court “see[s] no reason to replace our standard of ‘fair and reasonableness.’” Massachusetts does not utilize the UPAA for guidance on standard of enforceability of prenuptial agreements.
Ultimately, the Massachusetts Supreme Judicial Court ruled that, even though the prenuptial agreement in this case heavily favored the Husband, it was enforceable when it was entered into and at the time of enforcement, because the prenuptial agreement comported with the standards administered under Massachusetts law.
Mavrides Law: Experience you can trust.
Mavrides Law has extensive experience in drafting, reviewing, and providing second opinions on Prenuptial Agreements. We understand how uncomfortable it may feel to get a prenuptial agreement while also planning a wedding, and we are here to and assist our clients by explaining the process, the law, and creating a prenuptial agreement they feel comfortable with. Due to our deep understanding and over 30 years of experience in family law, we have assisted our clients in avoiding potential property disputes through the use of prenuptial agreements, as well as disputes regarding the validity of existing agreements.
Mavrides Law can help you protect your assets by creating prenuptial agreements custom-tailored to meet your needs. The firm can draft an agreement for you, review a proposed agreement or provide an opinion regarding the validity of an existing agreement. Mavrides Law can help you develop an agreement that addresses your specific needs and protects your rights and assets.
This information is intended only to be a brief introductory guideline, because each case is different, and presents different issues and areas of concern. Contact Mavrides Law for an initial consultation, at email@example.com, or (617) 723-9900.