Prenuptial Agreements Should Address All Terminating Events For A Marriage

 Every marriage will come to an end.   Some terminate by divorce and others terminate by death.   Eventually every marriage will end.  

Most people who want Prenuptial Agreements  (also called premarital agreements or prenups) want the agreement for protection in the event of a divorce.   However, a recent case in Massachusetts explained that a well drafted agreement should also address termination by death.  

In the case of Stacy v Stacy the husband and wife had a Prenuptial agreement that had the following language:  "a final and complete settlement of all matters relating to the interest and obligations of each [party] with respect to all future property matters, including but not limited to alimony, support, maintenance, property assignment, and the rights of the parties under G. L. c. 208, § 34, as amended, in the event of a divorce."  Apparently the agreement was silent on what was to happen if a spouse died.   

The husband died and the personal representative of his estate sued his widow over ownership of personal property.  The Appeals Court held that the language of the agreement did not exclude applicability to other events such as death.  This meant that the personal representative and the widow had to try a case to figure out how to interpret the agreement.  Most people who draft prenuptial agreements do so to avoid litigation.  This agreement failed to do so.

A properly drafted prenuptial agreement should specifically address termination of the marriage by both marriage and death.  If the parties don't want to include events other than divorce then the agreement should state so in clear language.   In the Stacy case they could have included a sentence to the effect of "in the event this marriage terminates by death this agreement shall have no effect and shall not decrease the rights of the surviving spouse."

If you are considering a prenuptial agreement you should consult an experienced family law attorney to draft an agreement that includes provisions for termination by death and by divorce.

Pre-Nuptial Agreements are not automatically enforced.

Pre-Nuptial Agreements are not automatically enforced.

Pre-nuptial agreements in Massachusetts are enforced if they are fair at the time of the execution of the agreement and fair at the time of the enforcement of the agreement. Fairness at the time of the execution means that there was complete financial disclosure, had the ability to obtain advice of counsel, the agreement was free of duress, misrepresentation, and fraud and the terms are fair. Since the agreement must also be fair at the time of enforcement, the Courts take a “second look” at the agreement and view it in the context of the financial circumstances at that time. The agreement will be enforced unless the court finds that it is unconscionable. This means that the agreement will be enforced unless the agreement would leave the contesting spouse without sufficient property, maintenance, or appropriate employment to support herself.

In a recent case, Kelcourse v.Kelcourse, Mass.App.Ct. (Jan. 21, 2015), the court refused to enforce a pre-nuptial agreement. The agreement on its face appeared fair. The agreement gave the
Wife a house and alimony as part of the settlement. The problem was that the house needed over $300,000.00 in repairs and had negative equity. The Wife lacked funds to repair the house and, due to the negative equity, was unable to sell the house. The Court found that the condition and finances of the house rendered the agreement unconscionable and unenforceable.

The Kelcourse case means that in Massachusetts the second look is a real and substantial examination. The Court won't enforce the agreement if the spouse won't be able to support herself. In other words, disclosure and lack of duress is not enough to make an agreement enforceable. The second look must examine the circumstances to see if the facts and enforcement would shock the conscience.

If parties want a pre-nuptial agreement they should consult family law attorneys to advise them. This is not an area where parties should do-it-yourself. When the parties seek to enforce the agreement it may be too late to fix any problems.

The Massachusetts Alimony Law – A Deal is a Deal

In 2011 Massachusetts enacted an alimony reform law. This law changed many aspects of alimony including imposing termination of alimony when the payor reaches the maximum retirement age and when the payee cohabits. Since enactment of this law, lawyers and Judges have been struggling with the question of how do these changes affect prior alimony agreements and judgments. On January 30, 2015 the Supreme Judicial Court answered this question by stating in essence that a deal is a deal. The Court held that the limits for cohabitation and retirement do not apply retroactively to alimony agreements and judgments that pre-date the enactment of the new law.

This interpretation of the new law does not apply to all alimony judgments. When parties enter into a separation agreement, they have the ability to specify that the agreement merges into the divorce judgment or survives as an independent agreement. If the agreement merges with the divorce then the agreement may be modified in the future if certain conditions are met. If the agreement survives as an independent contract, then the agreement can't be modified by a judge. It may be modified by agreement of the parties. The new alimony law does not give the courts the power to change any prior separation agreements that survive. This new interpretation only applies to separation agreements that merged into the decree of divorce.

In three cases, Chin v. Merriot, Doktorv. Doktor, and Rodman v. Rodman, the court held that with one exception, all alimony judgments that pre-date the new law are subject to modification as if the new law never went into effect. This means that alimony can change if the terms of the separation agreement or divorce judgment state conditions that will change or terminate the alimony or if there is a material change of circumstances. Reaching retirement age or the recipient of alimony cohabitating only constitutes a material change of circumstances if the agreement specifically states so. Otherwise, there can not be a modification for these reasons.

These decisions indicated that the new law does allow termination of alimony for what is known as “durational limits.” For marriages less than twenty years, alimony is limited to a percentage of the length of the marriage. The longer the marriage, the higher the percentage. Prior alimony awards that had no termination date that are merged into the decree of divorce and the length of the marriage is less than twenty years are subject to these durational limits. As a result, a modification may be filed to terminate alimony under these circumstances.

The new alimony law is very complicated. If you have questions about the application of this law you should consult an experienced family law attorney for advice about your particular situation.

Child support agreements need court approval

Previously, I wrote about the dangers of parents making an agreement for child support and not

seeking approval from a court. A recent case, Zizza v. Zizza, from the Massachusetts Appellate Division (Oct. 27, 2014) is an example of the problems created when parents make an agreement without judicial approval.

In the Zizza case, the parties, after a foreign divorce, entered into a private agreement regarding property division, child custody, visitation, and child support. The agreement also had a clause that stated that the agreement could not be be modified by any court. This agreement eventually resulted in litigation in Massachusetts District Court with the court ordering a modification of the child support obligation. On appeal, the Appellate Division upheld the modification of child support. The court added a comment which explained that the Massachusetts Legislature has declared that it is against public policy to make an agreement that prevents the courts from changing child support obligations.

If you are about to make an agreement for child support you should consult a lawyer who is experienced in family law to make sure you don't fall into a child support trap.

If you live together you need a cohabitation agreement

Every relationship ends at some time. When a couple lives together, sooner or later, they will stop living together. Sometimes they separate because one person moves out. Sometimes, the relationship ends because one person dies. No matter what reason causes the end of the relationship, Massachusetts does not recognize any rights for a couple who cohabit without marriage. This means that no property division of separately owned property. No palimony (or alimony). No rights if your partner is hospitalized. If one person in the relationship sacrifices employment to maintain the home or to care for children, there is no compensation for the lost earning capacity. If one partner dies, there is no right to inherit from the estate. Massachusetts does not allow common law marriage so no matter how long a couple live together, cohabitation won't ever change into a marriage without performing a wedding ceremony.

Historically, some people who separate after long periods of cohabitation have tried to obtain property rights or support by litigation. While palimony is not recognized in Massachusetts, there are some legal theories that may give some limited benefits in this situation. These theories can result in some property rights but only in very limited factual circumstances and only after expensive litigation. A well drafted cohabitation agreement should prevent such litigation.

While the Commonwealth of Massachusetts won't create protections for cohabitants, the parties can create their own protections by executing legal documents such as a cohabitation agreement and an estate plan. Just as a couple who are going to get married can create a pre-nuptial agreement, a couple who live together can create a cohabitation agreement. A well drafted cohabitation agreement will explain rights and responsibilities for termination of the relationship including termination by death. It should explain how finances will be managed if the couple remains healthy and employed and if one party becomes incapacitated or unemployed. The agreement should address usage of real property and rights in the property if one party dies. This is particularly important if the couple purchase real estate together. The agreement can address personal property and debt division. The agreement can address protections for children of other relationships or children of the cohabitating couple. It can provide inheritance rights.

A cohabitation agreement should be drafted in conjunction with a will, a health care proxy, and a power of attorney. Drafting of these agreements should be done by an experienced family law attorney working with an experienced estate planning attorney. These attorneys should be able to discuss the financial differences between marriage and cohabitation and the limits on protections that a cohabitation agreement and estate plan can provide. Even with a well drafted agreement and estate plan, there will always be differences between marriage and cohabitation. While a couple should not get married because of the lack of protection afforded cohabitants, it is important that they understand the differences.