Until recently, there were two types of enforceable contracts used to define property rights upon divorce: prenuptial agreements and settlement agreements. Prenuptial agreements are executed before the parties marry, while settlement agreements are created when the parties have decided to divorce.
In 2010, the Massachusetts Supreme Judicial Court (SJC) authorized a third option, postnuptial agreements. Postnuptial agreements are created after the marriage and before the spouses have expressed intent to divorce. Postnuptial agreements more closely resemble separation agreements than prenuptial agreements. If a person does not like the terms of a prenuptial agreement, that person can walk away and avoid the rights and obligations of marriage. Once married, rights and obligations are solidified.
In Ansin v. Craven-Ansin, the SJC held that postnuptial agreements are not automatically unenforceable as a matter of public policy. However, not all postnuptial agreements will be enforced by the court. The agreement must pass a five part test. The ultimate question appears to be whether the agreement is fair and reasonable, and the other four factors help provide the evidence.
1. Did the parties have the opportunity to hire separate legal counsel?
If one of the spouses did not have the opportunity to hire an independent lawyer to review and explain the agreement, it is less likely that the agreement is fair and reasonable.
2. Is there any evidence of fraud or coercion?
It is difficult to find that an agreement is fair and reasonable when there is evidence that the agreement was made or signed because of fraud or coercion.
3. Was there a full financial disclosure?
Full financial disclosure allows the parties to make an informed decision about entering the agreement. It is less likely the agreement is fair and reasonable without it.
4. Did the parties knowingly and explicitly waive judicial division of marital property?
If a spouse did not understand what was being signed or the effect of the agreement, it is less likely that the agreement will be considered fair and reasonable.
5. Can the agreement be considered fair and reasonable at the time it was entered and at the time of divorce?
What is fair and reasonable is not easily defined. It is not a requirement that both spouses end up with an equal amount of marital property or money. It is an assessment of all the circumstances surrounding the agreement. The judge weighs various factors against one another and assesses which way the scale tips: towards a fair and reasonable agreement that is enforceable, or towards an unfair and unreasonable agreement that is unenforceable.
To analyze whether the agreement was fair and reasonable at the time it was created, the judge looks at the big picture. For example, consider the motives of the spouses. Did they enter into the agreement to financially protect children from a prior marriage? Was a spouse trying to put him/herself into a better position before filing for divorce? Also, consider the impact of the agreement. Is there a great disparity between property division under the agreement and what would happen under judicial property division without an agreement? What potential impact does the agreement have on any children? The entire context of the agreement will be highly scrutinized by the judge.
The judge then takes a second look and analyzes whether the postnuptial agreement is still fair and reasonable at the time of divorce. It is an assessment of what circumstances changed since the postnuptial agreement was written. For example, when considering the current age, health, occupation, and employability of the spouses, is it possible that one would be unable to properly support him/herself if the postnuptial agreement is enforced? If yes, it could mean that the agreement is not fair and reasonable at the time of divorce.
Postnuptial agreements can be an effective tool for spouses who want to determine for themselves what will happen to their property if they divorce. An agreement outside the excitement of an upcoming marriage or the turmoil of impending divorce could create the best result. Just remember, if circumstances change between when the agreement was written and when the divorce occurs, it could mean the agreement is no longer fair and reasonable.