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Antenuptial (or Prenuptial) Agreements

DEFINITION

An antenuptial agreement (also known as the Prenuptial Agreement) is a contract executed before marriage in contemplation of the marriage. The contract may deal with:

  • property division in the event of a divorce or dissolution
  • spousal support on divorce or dissolution
  • rights to the respective spouses assets and statutory rights upon death of either spouse

YOU SHOULD SEE AN ATTORNEY AS SOON AS POSSIBLE FOR PREPARATION OF YOUR ANTENUPTIAL OR PRENUPTIAL AGREEMENT OR IF YOU ARE ASKED TO SIGN SUCH AN AGREEMENT

GOVERNING LAW

Generally, interpretation of the terms of an antenuptial /prenuptial agreement  will be governed by the laws of the State where the agreement was entered into. For example, in Braddock v. Braddock (1975), a Nevada divorce court applied Ohio law in determining the validity of an antenuptial / prenuptial agreement, since the agreement had been entered into in Ohio and was intended to be performed in Ohio.

OHIO VIEW

The two leading Ohio cases dealing with the subject of antenuptial / prenuptial agreements are Gross v. Gross and Zimmie v. Zimmie, both decided by the Supreme Court of Ohio in 1984.

In the Zimmie case, the Court held that although antenuptial / prenuptial agreements are not per se invalid, they must meet certain minimum standards of good faith and fair dealing. If the agreement is fair and reasonable under the circumstances, it is enforceable. The prospective spouse must be fully and accurately apprised of the nature, value and extent of the others property, and must enter into it voluntarily.

Facts of Zimmie

In the Zimmie case, the facts were as follows:

  1. The Plaintiff Wife saw the agreement one day before the wedding;
  2. She had not previously discussed its contents with her intended husband;
  3. Shortly after she received it in the mail, she was taken to the office of her intended husband’s attorney;
  4. She signed the agreement without reading the entire contents;
  5. No one explained the value of her intended husband’s assets to her;
  6. No one explained to her that she was giving up martial rights to her intended husband’s property; and
  7. She testified that she thought she had no choice but to sign.

The lower courts found that the Plaintiff did not voluntarily enter into the agreement with full disclosure of the Defendant’s financial worth and the Supreme Court of Ohio agreed.

Judicial Focus

Judicial scrutiny of antenuptial / prenuptial agreements has been concentrated in two areas:

  1. The substantive economic terms of the property division and support, and
  2. The fairness of the circumstances surrounding the execution.

Many Courts have stated that this is not an arms-length transaction since the parties share an intimate relationship which affects caution which would otherwise be exercised. This increases risk and the potential that one party will take advantage of the other. Some Courts have described it as a fiduciary relationship requiring good faith and frankness.

Circumstances Surrounding Execution

Courts look at various factors in determining the validity of the agreement. As I have mentioned, circumstances surrounding the execution of the agreement are critical. In Zimmie, the factors were as follows:

  1. one day before the wedding;
  2. hadn’t discussed it;
  3. didn’t read it all;
  4. signed it in the office of the attorney for her intended spouse;
  5. didn’t have her own counsel;
  6. claims she didn’t understand it;
  7. testified she was pressured into signing.

Courts will look at such things as:

  1. the complexity of the agreement;
  2. the extent and disparity in assets brought into the marriage by each party;
  3. the parties’
    • sophistication
    • education;
    • employment;
    • experience;
    • prior marriages;
    • ability to read and understand;
    • time available to reflect after first seeing; and
    • the most often mentioned and often given greatest weight factor is the complaining parties’ access to independent counsel prior to signing.

Every prenuptial agreement should involve at least two lawyers.

Fairness

One way to look at the fairness issue is fairness of execution. In Gross v. Gross, the Supreme Court of Ohio held that a prenuptial agreement would not be upheld if it was executed with fraud, duress, coercion or overreaching. An example of overreaching is where one party, by “artifice or cunning” or by significant disparity in the ability to understand the transaction, outwits or cheats the other.

Gross v. Gross

First, the Court in Gross considered three issues:

  1. Are antenuptial / prenuptial agreements invalid as a matter of public policy? Its answer was “no.”
  2. May they be enforced at the time of divorce by the party found to be at fault in the marriage? Its answer was “yes.”
  3. May the Court modify the division of property or award of sustenance alimony in a different manner than that set forth in the antenuptial / prenuptial agreement?  Its answer was “yes.”

Facts of Gross

In 1968, Tom Gross was 32 years old. He had been married before and had two sons from his prior marriage. He was part owner of a Pepsi Cola bottling franchise.

Ida was then 27 and had two children from her previous marriage. She worked at Pepsi Cola as a secretary.

Tom wanted his sons to follow in control of the family business. He had his attorney draw up the antenuptial prenuptial agreement and a draft was sent to Ida and her attorney. Some changes were made by Ida’s attorney, who advised her not to sign, but she signed anyway.

The agreement provided that in the event of separation or divorce, Ida was to receive a maximum of $200.00 per month for a maximum of 10 years. Further, it provided that she was entitled to no property division, expense money or counsel fees in case of divorce. She also waived her dower rights in his real estate.

The agreement did give her one-half of the net equity of the marital residence, personal property in the house and one car. It provided that in the event of Tom’s death while the parties’ were still married, Ida was to receive a trust with a principal sum of $200,000.00 or 20% of his net estate, whichever was less.

Attached to the agreement was a statement of assets of each. Tom’s assets were listed at $500,000.00. Ida’s totaled $5,000.00. The parties were married in 1968 and had a son in 1970. The marriage lasted approximately 14 years. At the time of the trial, Tom had net assets of approximately $6 million and his gross income for 1980 was $250,000.00.

In examining the antenuptial / prenuptial agreement, the Supreme Court of Ohio held that it would be upheld if three tests were met:

  1. it was entered into freely, without fraud, duress, coercion or overreachings;
  2. if there was full disclosure, or full knowledge and understanding of the nature, value and extent of the prospective spouses property; and
  3. if the terms of the agreement do not promote or encourage divorce.

The Court noted that the second condition would be satisfied to attaching a listing of assets or by showing that full disclosure had been made by other means.

Marital Misconduct as a Defense to an Agreement

The Court noted that providing for what will happen in the event of divorce, “some misconduct” was contemplated. It stated:

“If the parties had intended that subsequent marital misconduct would extinguish the mutual promises in the agreement. . . the parties could very well have made this clear . . . [in] the agreement.”

Practice Tip

If you want to be able to change the terms in the event of marital misconduct, you must specifically state this in the agreement. Absent such a provision, antenuptial / prenuptial agreements which are otherwise valid are not abrogated due to fault.

The Court stated that there must be a standard of good faith with a high degree of fairness and disclosure of all material circumstances.

The Court treated the provisions relating to property and alimony separately. As to property, the standards are to be applied looking at the time of the execution of the agreement, not the time of divorce.

As to maintenance or sustenance alimony (now called spousal support in Ohio), it must be “conscionable” at the time of the divorce or separation. The Court stated that provisions relating to maintenance or sustenance may lose their validity by reason of changed circumstances which render the provisions unconscionable at the time of the divorce. These provisions may become voidable.

Examples of Unconscionability.

Examples of unconscionability may include:

  • Extreme health problem requiring care and expense
  • Change of employability
  • Additional burdens such as care of children
  • Changes in cost of living
  • Changed standard of living

In the Gross case, the Court found that the agreement was executed in good faith, there was no overreaching, there was full disclosure and the agreement did not promote or encourage divorce; accordingly, the Court found that the basic agreement was valid. Unfortunately for Tom, this was not the end of the story. The Court continued that:

“To require Wife to return from this opulent standard of living to that which would be required . . . [by the agreement] could well occasion a hardship or be significantly difficult for the former wife.”

Accordingly, the Court found the agreement unconscionable as a matter of law and voidable by Ida and remanded the case to the trial court to review its maintenance provisions consistent with Section 3105.18 of the Ohio Revised Code. That statute requires the Court to consider all of the following factors in determining whether spousal support is appropriate and reasonable and in determining the nature, amount, terms of payment and duration of spousal support:

  1. income of the parties from all sources;
  2. relative earning abilities of the parties;
  3. ages and physical, mental and emotional conditions of the parties;
  4. retirement benefits of the parties;
  5. duration of the marriage;
  6. extent to which it would be inappropriate for a party, because he or she will be custodian of a minor child to seek employment outside the home;
  7. standard of living;
  8. relative extent of education;
  9. relative assets and liabilities of the parties;
  10. contribution of each party to the education, training or earning ability of the other party including, but not limited to, either party’s contribution to the acquisition of a professional degree of the other party;
  11. time and expense necessary for a spouse who is seeking spousal support to acquire education, training or job experience;
  12. tax consequences for each party of an award of spousal support;
  13. lost income capacity resulting from a party’s marital responsibilities;
  14. any other factor which the Court expressly finds to be relevant and equitable

An important fact to be considered in determining whether an antenuptial / prenuptial agreement will be held valid relates to its timing. Cases from various jurisdictions have considered from wedding day agreements to agreements executed substantially before the wedding. There is no general rule, although obviously the closer to the wedding, the better the argument that tests relating to fairness, good faith and disclosure has not been met.

In summary, Ohio Courts have held that prenuptial agreements are valid if certain safeguards are met

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