Lloyd v. Niceta (2022): Creating a Solid Postnuptial Agreement

When it comes to marital contracts, postnuptial agreements don’t receive anything like the attention of prenuptial agreements, but this doesn’t reflect the effectiveness or utility of postnuptial agreements. As the term itself denotes, postnuptial agreements have the same power as prenuptial agreements, but they are simply developed and executed after a marriage has already taken place. As a general matter, having a prenuptial agreement is always preferred, because this solves the problem at the outset; but a postnuptial agreement, when properly constructed, will have the same effect, and so there are no real drawbacks or potential mishaps with these contracts.

In this post, we’re going to briefly go over the facts and outcome of Lloyd v. Niceta (2022), and then take a minute to highlight the lessons from this case on the point of creating enforceable postnuptial agreements.

Overview of the Case

The parties of the case developed and executed a postnuptial agreement that included an “infidelity penalty”: essentially, if the husband committed adultery, then the wife would receive $7 million in marital assets as a penalty. This $7 million would be in addition to whatever the wife would ordinarily be entitled to under the standard equitable distribution principle. In other words, in the event of a divorce based on infidelity, the wife would likely receive 50% of the total marital assets, plus the $7 million in addition. When the husband committed adultery, the wife filed for divorce and was ultimately successful in upholding the $7 million penalty stipulated in the postnuptial contract.

The Impact of Fraud or Duress / Coercion

Ensuring the enforceability of postnuptial agreements rests on the same basic things that apply to other types of contracts. This is because postnuptial agreements, like prenuptial agreements, are viewed in much the same way as other contracts, at least when it comes to determining enforceability. As we’ve discussed in the past, the basic principles of contract law govern the formation and enforcement of postnuptial agreements; these agreements aren’t viewed in a special way simply because they involve marital assets. The basic elements of contracts – offer, acceptance, consideration, legality, capacity, and writing – apply to postnups just as they do to other contracts.

In order to maximize the enforceability of a postnuptial contract, there are several things in particular that parties can do. Fraud is one of the means by which a postnuptial contract can collapse: if someone engages in fraudulent behavior, then the other party may be able to undermine the contract altogether. Fraudulent behavior is behavior that attempts to deceive the other party, either via direct misrepresentation or omission (i.e. failing to properly disclose). On the other hand, coercion and duress are also possible avenues to collapse a contract. Using either coercion or duress can transform an otherwise valid postnuptial agreement into something unenforceable. Coercion can take the form of outright pressure or intimidation to give acceptance (or give an offer, for that matter); duress is similar but with key differences. The key point is that, if you want to ensure the enforcement of a postnuptial contract, you need to make sure that your agreement lacks any hint of fraud, coercion, or duress.

Contact the Murphy Law Firm for More Resources

If you want to know more, or if you have a prospective issue, connect with one of the top Maryland family law attorneys at the Murphy Law Firm today by calling 240-219-8825.