Thinking divorce? Is Your Prenup Enforceable?

Thinking divorce? Is Your Prenup Enforceable?

A pre or post-nuptial agreement is a contract, enforceable like any other.  However, Florida courts recognize that parties to a marriage are not necessarily dealing at arm’s length.  Indeed, in certain divorce proceedings, a court will find that a fiduciary relationship exists between the two parties — the spouses or soon-to-be spouses.  As such, as a general matter, a court may vacate a pre or post-nuptial agreement on one of the following grounds:

        1. The agreement was reached as the result of fraud, deceit, duress, coercion, misrepresentation, or overreaching; or
        2. The agreement is unfair or unreasonable given the circumstances of the parties.

 

Kearney v. Kearney, 129 So. 3d 381, 386 (Fla. 1st DCA 2013) quoting Casto v. Casto, 508 So. 2d 330, 333 (Fla. 1987). This general rule is codified in Florida statute and extensively flushed out in case law.

The Statute

Florida Statute § 61.079(7) governs the enforceability of premarital agreements.  Essentially, there are three avenues to invalidation.  A premarital agreement will not be enforceable if:

1. The party seeking to invalidate the agreement did not execute the agreement voluntarily;
2. The agreement was the product of fraud, duress, coercion, or overreaching; or
3. The agreement was unconscionable when it was executed and, before execution of the agreement, the party seeking to invalidate:

a. Was not provided a fair and reasonable disclosure of the property or financial obligations of the other party;
b. Did not voluntarily and expressly waive, in writing, any right to disclosure of the property or financial obligations of the other party beyond the disclosure provided; and
c. Did not have, or reasonably could not have had, an adequate knowledge of the property or financial obligations of the other party.

Fla. Stat. § 61.079(7)(a). The issue of “unconscionability” is decided by the court as a matter of law. Fla. Stat. § 61.079(7)(c).

Separately, if the premarital agreement modifies or eliminates spousal support such that it causes one party to the agreement to be eligible for support under a program of public assistance, a court, notwithstanding the terms of the agreement, may require the other party to provide support to the extent necessary to avoid that eligibility. Fla. Stat. § 61.079(7)(b).

The Case Law

The statute notwithstanding, Florida courts generally recognize §61.079(7) as a codification of the common law jurisprudence of prenuptial agreement enforcement. The seminal case is Casto v.Casto, 508 So. 2d 330 (Fla. 1987), which recognizes two separate grounds upon which to have a pre or post-nuptial agreement vacated or modified:

First, a spouse may set aside or modify an agreement by establishing that it was reached under fraud, deceit, duress, coercion, misrepresentation, or overreaching.

The second ground to vacate . . . contains multiple elements. Initially, the challenging spouse must establish that the agreement makes an unfair or unreasonable provision for that spouse, given the circumstances of the parties.

Casto at 333.

Once it is established that a postnuptial agreement is unreasonable, “a presumption arises that there was either concealment by the defending spouse or a presumed lack of knowledge by the challenging spouse of the defending spouse’s finances at the time the agreement was reached.” De Rey v. Rey, 114 So.3d 371 (Fla 3rd DCA 2013).

The burden to the defending spouse, who may rebut these presumptions by showing that there was either

1. a full, frank disclosure to the challenging spouse by the defending spouse before the signing of the agreement relative to the value of all the marital property and the income of the parties; or
2. a general and approximate knowledge by the challenging spouse of the character and extent of the marital property sufficient to obtain a value by reasonable means, as well as a general knowledge of the income of the parties.
“The test in this regard is the adequacy of the challenging spouse’s knowledge at the time of the agreement and whether the challenging spouse is prejudiced by the lack of information.” Id. Courts, “recognize that parties to a marriage are not dealing at arm’s length, and, consequently, trial judges must carefully examine the circumstances to determine the validity of these agreements.” Casto at 333.

Thus, the “critical” test is whether there was: 1) fraud or overreaching on one side, or 2) assuming unreasonableness, whether the challenging spouse did not have adequate knowledge of the marital property and income of the parties at the time the agreement was reached. Id.

Remember, if an agreement that is unreasonable is freely entered into, it is still enforceable. Thus, an individual seeking to void a pre or post-nuptial agreement will still have to show fraud, misrepresentation, duress, coercion or overreach. In identifying the existence of such circumstances, the court will take the following factors, among others, into consideration: whether the challenging spouse receives nothing, the age differential between spouses, language barriers, and whether the parties shared a lawyer.

Seeking to enforce or void a prenup? Contact Kevin Ross-Andino for more information.