Basics of Prenuptial Agreements

One of the basic agreements in divorce and family law is the prenuptial agreement, which is signed prior to the parties’ marriage. It is typically used to protect one or both parties’ separate property from becoming marital property or to address any other issues between the parties in the event of dissolution of the marriage. Prenuptial agreements are encouraged as consistent with the public policy of New York. Such agreements, however, must be fair and reasonable and not invalidated by fraud, misrepresentation, coercion of one of the parties. In the absence of fraud, misrepresentation, coercion, these agreements are presumed to be valid, and the party seeking to set aside the agreement has the burden of proof.

Domestic Relations Law (DRL) §236(B)(3) governs prenuptial agreements and addresses their subject matter. Such agreements typically address the following:

1) The right to make a testamentary provision of any kind, or a waiver of any right to elect against the provisions of a will;
(2) Ownership, division or distribution of separate and marital property;
(3) The amount and duration of maintenance or other terms and conditions of the marriage relationship; and
(4) Custody, care, education and maintenance of any child of the parties.

The courts carefully scrutinize such agreements if one of the parties is seeking to enforce it. For example, an agreement concerning the amount and duration of spousal maintenance must be fair and reasonable at the time it is made, and not unconscionable at the time of entry of final judgment in the divorce action. See Domestic Relations Law §236(B)(3); Deckoff v. Deckoff, 284 A.D.2d 426 (2d Dept. 2001). Further, no spouse may relieve the other of the requirement of support to the extent that the spouse may become a public charge. Bloomfield v. Bloomfield, 97 N.Y.2d 188 (2001). An agreement as to child support must set forth the amount of child support that would be owed under the relevant guidelines and, if the amount agreed to deviates from the same, an explanation why. Domestic Relations Law §240(1-b)(h). Moreover, even if the agreement complies with the statutory requirements, the courts “retain discretion with respect to child support”. Domestic Relations Law § 240(1-b)(h); Gravlin v. Ruppert, 98 N.Y.2d 1, 5 (2002). Similarly, a prenuptial agreement as to child custody is not binding on the court. Friederwitzer v. Friederwitzer, 55 N.Y.2d 89 (1982); Fanelli v. Fanelli, 215 A.D.2d 718 (2d Dept. 1995). Nor is an agreement concerning the physical location of a child subject to a joint or shared custody arrangement. Tropea v. Tropea, 87 N.Y.2d 727 (1996). In short, the statutory scheme may trump an agreement if there is an inconsistency.

Even with the courts’ ability to review and vacate prenuptial agreements, they are the single best tool family law lawyers have to plan ahead and to allow their clients to prearrange for orderly dissolution of the marriage. A prenuptial agreement may be required if one spouse is involved in a business, and his or her partners may want to protect the business from any effects of equitable distribution. If one of the parties is entering the marriage with valuable property, including real estate, a business or a license or a degree, that property, and any appreciation in its value can be protected. If one of the prospective spouses is attending law school or medical school, a prenuptial agreement will protect against such degree becoming marital property. A prenuptial agreement will allow both sides in the marriage to address issues that may arise if the marriage is dissolved. . It sets forth each party’s rights in the event of a divorce or separation.

Usually, the significant issue related to the validity of prenuptial agreements is nondisclosure. During marriage spouses are subject to the special duties imposed by their confidential relationship. As noted in Christian v. Christian, 42 N.Y.2d 63 (1977) those fiduciary duties are imposed independently of any statute. In addition, the Domestic Relations Law requires full disclosure between spouses, and to “opt out” of the statutory system there must be a full and complete disclosure of all financial data, unless there is an intelligent waiver. Courts ordinarily are wary of waivers of full disclosure.

Family law attorneys often insert clauses in settlement agreements that contain declarations that each party has made full financial disclosure to the other; that their respective counsel has fully explained to each of them the legal and practical effect of the terms of the agreement, and that the circumstances surrounding the preparation and execution of the agreement were fair, and not the result of fraud, duress or undue influence. However, unless such disclosure was actually made, there is a significant risk that the agreement would be vacated by the court.

If “unconscionability” is established, such clauses certainly have limited, if any, effect. But if the settlement agreement is fair on its face, and especially if the complaining party was represented by independent counsel, such clauses are effective and, at a minimum, place a heavy burden on the party who asserts invalidity. It should be noted that courts have sustained the validity of a prenuptial agreement where there was an intelligent waiver and full disclosure was not made. In Hoffman v. Hoffman, 100 A.D.2d 704 (3rd Dept. 1984), the court held that a failure to disclose the full extent of a party’s assets does not in itself constitute such fraud or overreaching that would invalidate a prenuptial agreement, where no representations were made and thus none were relied upon.

There are also important procedural requirements applicable to such agreements. A prenuptial agreement is valid only if it is “in writing, subscribed by the parties, and acknowledged or proven in the manner required to entitle a deed to be recorded”. Domestic Relations Law §236(B)(3); Matisoff v. Dobi, 90 N.Y.2d 127, 132 (1997). If the acknowledgment is does not comply with the statute, specifically Real Property Law §309-a, the agreement will be invalidated by the court.

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