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Prenuptial agreements are tools which have the potential to confer substantial value to nearly every couple prior to marriage. The reason is because these agreements can predetermine certain outcomes in the possible event of a divorce, and going through a divorce without this predetermination can be extremely expensive. But, helpful though these contracts may be, prenuptial agreements are among the most contested contracts because one party often dislikes their impact when it comes time to enforce them. Like other contracts, prenuptial agreements need to have certain technical requirements fulfilled in order to be enforceable. When one party wants to contest enforceability, the contesting party needs to have a case that one or more technical requirements were unfulfilled.
The case of Stewart v. Stewart (2013) is a good example of a case which had a reasonable prenuptial agreement, with reasonable terms and circumstances, which was contested out of sheer frustration with divorce. Cases such as this one provide excellent guidance to future married couples: successfully contesting a prenuptial agreement isn’t easy, under any circumstance, and so parties should walk away altogether if they aren’t fully comfortable with the agreement’s terms.
Let’s review this case in greater detail.
Facts of the Case
The parties in this case married in 1988. They first became involved while the husband was already married, and so they began their relationship as an affair. When the parties met, the husband had a successful construction business and possessed substantial assets, while the wife worked for minimum wage and had few assets. Because of the disparity in their financial conditions, the husband wanted to develop and execute a prenuptial agreement prior to the marriage.
The husband’s attorney drafted the prenuptial agreement, and the husband sent the agreement to the wife approximately 4 days before the wedding. Importantly, the wife never received advice from an attorney during her review of the agreement or at any time prior to her signing. The agreement listed all the husband’s assets, but didn’t provide specific values for each asset or a total combined valuation. Plus, the agreement omitted the husband’s retirement account, which had roughly $60,000 at the time of the drafting. The agreement left open the possibilities of both alimony and a monetary award.
The wife signed the agreement prior to the wedding, and didn’t protest against any possible issues with its enforceability until after divorce proceedings. Significantly, the agreement contained language which stated that the signing parties fully understood all the terms. Apparently, the wife had verbally stated, prior to signing the agreement, that she understood the potential ramifications of the agreement and that the agreement had no impact on her desire to marry.
When the husband ultimately filed for divorce, the wife counter claimed and also argued that the prenuptial agreement was unenforceable. She made two points: one, that the agreement should be rendered unenforceable because of lack of proper disclosure, and two, that the agreement should be rendered unenforceable because of unconscionability.
Ruling & Post-Ruling Discussion
The wife lost on both arguments and ultimately the prenuptial agreement was rendered fully enforceable and valid. The wife had a substantial hurdle to overcome: although the agreement didn’t include specific values for each asset or a total, all the assets were listed except for the retirement benefits, and the wife had every reason to believe that the listed assets held considerable value. Hence, when the wife argued that she didn’t have full knowledge of the agreement’s terms, the court rejected this argument and stated that her knowledge was satisfactory given that she was aware of the fact that substantial value was at sake. Furthermore, the court rejected any notion that her lack of legal representation affected her understanding of the situation.
On the issue of unconscionability, the court stressed that, in Maryland, unconscionability in prenuptial agreements requires a finding of procedural and substantive unconscionability. Generally, procedural unconscionability is revealed through deception or grossly lopsided bargaining power, while substantive unconscionability is revealed through sheer disparity in terms. In this case, the court found that neither of these things were present, as the husband was fair and reasonable in his approach, and that terms were not grossly uneven given the fact that the wife entered the marriage was almost nothing and left with substantial assets (the marital estate granted her well over $1 million because of assets accumulated during the marriage).
Contact the Murphy Law Firm for More Information
Readers who want to learn more about the principle of unconscionability, enforcement of prenuptial agreements, disclosure requirements for enforceable prenuptial agreements, or any other related family law matter, contact one of the family law attorneys at the Murphy Law Firm today by calling 240-219-1187.
