(Lexology) - Once again, the Appeals Court tells us that a prenuptial agreement that strips a party of all marital interests is unconscionable and will not be enforced. On March 30, 2023, the Appeals Court issued its decision in Rudnick v. Rudnick, finding that a prenuptial agreement was unenforceable after a nearly 27-year marriage.
The prenuptial agreement provided that neither party would pay alimony to the other and allowed the husband to retain his significant premarital assets, plus real estate purchased during the marriage that the husband titled, without his wife’s knowledge, in his name and the name of a trust for the benefit of his children from his prior marriage.
The court found that while the prenuptial agreement was fair and reasonable when it was signed, the prenuptial agreement was unconscionable due to circumstances that occurred during the marriage.
The parties in the Rudnick case were married in November 1992. Both parties had been married previously and had children from those prior marriages. The husband retired the year before the parties’ marriage, and the wife retired a year after their marriage.
The day before their wedding, the husband asked the wife to sign a prenuptial agreement prepared by his counsel. The wife’s attorney advised her not to sign the agreement. The agreement, which the wife ultimately signed over her attorney’s objection, provided, among other things, that neither would pay alimony to the other, that the assets each party brought into the marriage would remain their separate property, and that ownership of any real property obtained by the parties during the marriage was to be held in the parties’ names as tenants in common.
During the marriage, the parties purchased two homes where they lived and shared time– one in Massachusetts and one in Florida. Although the wife was involved in purchasing both properties, including contributing financially to the purchase of the Massachusetts property, neither property was placed in the parties’ names as tenants in common, as required by the prenuptial agreement.
Rather, and unbeknownst to the wife, the husband placed the Florida property in his sole name and the Massachusetts property in trust for the benefit of his children from his prior marriage. The husband alleged his adult children provided the funds to purchase the Massachusetts property.
Throughout the marriage, the husband paid “rent” into the trust for his children. The proceeds were paid to the husband’s adult son when the Massachusetts property was sold a year before the wife filed for divorce.
The wife filed for divorce in July 2019 after nearly 27 years of marriage. At the age of 85 the wife learned that the title to the real estate purchased during the marriage had not been in her name as required by the prenuptial agreement.
Enforcement of the prenuptial agreement would have left the wife with essentially no marital assets and no support from the husband, which the trial court determined was unconscionable. The husband appealed the trial court’s decision.
As I noted in my prior blog post “No Prenupt(ial) Agreement? A 101 Guide to Postnupts,” prenuptial agreements are generally enforceable so long as:
- the agreement is fair and reasonable at the time of execution (the “first look”); and
- the agreement is considered “conscionable” at the time of enforcement (the “second look”).
The Appeals Court in Rudnick focuses on the second look. In deciding whether an agreement is conscionable at the time of enforcement, the case law in Massachusetts is clear that a judge should not relieve the parties of their rights and obligations under the prenuptial agreement unless circumstances occurred during the marriage that would leave one spouse without sufficient property or maintenance to support him or herself if the agreement was enforced.
In Rudnick, the Appeals Court agreed with the Trial Court in finding that the prenuptial agreement stripped the wife of all marital interests and left her without sufficient resources to support herself.
The Court found that the husband breached the prenuptial agreement by failing to put the real property acquired during the marriage into the name of the husband and the wife as tenants in common and that he engineered having the trust (of which his children from his prior marriage were beneficiaries) “purchase” one of the pieces of property to circumvent the prenuptial agreement.
These breaches, coupled with the fact that the wife would receive no alimony and no assets, made enforcement of the prenuptial agreement against public policy.
The moral of the story? Even a prenuptial agreement that is fair and reasonable at the time of execution can fail where the “second look” shows that one spouse is stripped of all marital rights. When negotiating a prenuptial agreement, be mindful of the second look.
By Burns & Levinson LLP
April 7, 2023
