Prenup Struck Down by “Second Look” Test

Prenuptial Agreements are a very special type of contract between two people.  Unlike other contracts which are valid if there is a “meeting of the minds” at the time of the execution of the contract, prenups afford the parties a “second look” or a second bite at the apple to determine validity.  What does that mean in practice?  It means that a prenup has to be fair and reasonable at the time that the parties enter into it AND it also has to be somewhat fair and reasonable at the time that the parties need to use it (when they divorce).  If at the time of divorce, enforcement of the prenup would be so unfair and unconscionable, then the court can invalidate the agreement even if the parties had entered into it with full knowledge and with lawyers on both sides.

A recent case from the Appeals Court illustrates this principle.  In Kelcourse v. Kelcourse, the Appeals Court invalidated a prenup when it found that the prenup to be unconscionable if applied.  The husband and wife entered into this prenup with a full financial disclosure and with the assistance of 2 separate attorneys.  The prenup stated that all property before marriage is considered “separate property” and the marital home of the parties would belong to the wife as her “separate property.”  The parties were married for approximately 5 years and wife filed for divorce.  The marital home they were living in was at the time very dilapidated and the cost to repair the home far outweighed the mortgage amount.  The house was worthless, in other words.  At the time of divorce, husband’s assets was about $1.7 Million while the wife only made $300/week.  The Probate and Family Court trial judge determined that the prenup was valid at the time of execution but due to the “second look” test, she finds it invalid at the time of divorce.  The trial judge awarded the wife $400,000 as replacement value for the dilapidated home.

Even though this case was appealed to the Appeals Court, it is not new law.  This principle of the “second look” test is well established law in Massachusetts.  However, it is a useful reminder to attorneys who draft prenuptial agreements and also to parties to remember that no Agreement is bulletproof.  There is always a possibility that even the best drafted prenuptial agreement might be held invalid when applied at the time of divorce.

 

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