Throughout the country, states are grappling with the question of whether postnuptial agreements are valid and enforceable contracts. Until recently, state courts were not willing to uphold postnuptial agreements, believing they offended public policy. The agreements were originally thought to be contrary to the states’ interest in promoting and protecting marriage. That rationale has proven to be outdated by the unfortunate fact that today’s marriages are just as likely to fall apart as they are to succeed, and postnuptial agreements can help married couples stay married.
Connecticut is the most recent state to declare postnuptial agreements do not violate public policy. In the case Bedrick v. Bedrick, the state’s highest court referred to the increased rate of divorce, serial marriage, and the fear many people have of financial instability that stems from divorce. When postnuptial agreements alleviate financial worries or eliminate an area of contention, spouses are able to focus on continuing their marriage. For these reasons, the Connecticut court found “no logical or compelling reason why public policy should not allow two mature adults to handle their own financial affairs.”
Connecticut, like other states, is reluctant to judge postnuptial agreements by the same standards as other contracts. Inherent in postnuptial agreements is the risk that one spouse will take advantage of the other spouse. Generally, people are less cautious when they enter a contract with their spouse than when entering a contract with a stranger. A lower level of caution may create a greater level of risk. As a result, postnuptial agreements in Connecticut are subject to a special standard of scrutiny. The postnuptial agreement must be fair and reasonable when it is created and not unconscionable at the time of divorce.
The fair and reasonable standard requires that postnuptial agreements are entered voluntarily and that neither spouse is coerced into signing the agreement. Both spouses must provide a full and fair financial disclosure of all assets and debts. Additionally, both spouses must have access to independent counsel and ample time to review the agreement before signing.
“Unconscionability” is a legal term that basically means extremely unfair. The unconscionability standard is satisfied if no injustice occurs by upholding the postnuptial agreement. On a case-by-case basis, the court considers the circumstances that took place since the postnuptial agreement was created. It evaluates the impact of unforeseen changes in marital relations, such as unemployment, the birth of a child, or moving to another state.
The postnuptial agreement at issue in Bedrick was found to be unconscionable at the time of divorce because of a major financial change. Approximately twenty years passed between the time the postnuptial agreement was last modified and when the parties filed for divorce. The most recent modification was entered before the birth of their child and before the husband’s car wash business became lucrative. The postnuptial agreement entitled the wife to only a $75,000 cash settlement and no alimony payments. However, when the parties filed for divorce, their combined assets totaled almost $1 million.
In Bedrick, the change in financial circumstances was highlighted by the parties combined efforts in increasing their net worth. During the twenty years, both spouses worked at the husband’s car wash business, and for a period of several years the wife managed almost all business operations. When the business experienced financial trouble, the wife took additional outside employment to provide stable income for the family. As a result, the Court found that an injustice would occur if the postnuptial agreement was upheld and the wife received only $75,000.
Absent a finding of unfairness or unconscionability, public policy supports enforcing postnuptial agreements in Connecticut. There is a great benefit in allowing spouses to privately resolve family financial issues. When possible, the courts will uphold postnuptial agreements to minimize the emotional turmoil of a long and costly divorce case.
Read more about postnuptial agreements.