Wednesday, August 4, 2010
The Massachusetts Supreme Court ruled last week that postnuptial agreements dividing property on the eve of divorce are permissible, ending years of uncertainty about the enforceablity of such contracts in Massachusetts.
Addressing a matter that has long sown doubt among Massachusetts family law specialists, the Supreme Judicial Court said postnuptial agreements that divide financial assets must be scrutinized to make sure they were not negotiated fraudulently or coerced by a spouse with threats of divorce. But if the agreements meet stringent standards, they should be enforced.
“Marital contracts are not the product of classic arm’s-length bargaining, but that does not make them necessarily coercive,’’ Chief Justice Margaret H. Marshall wrote on behalf of the seven-member court. “Such contracts may inhibit the dissolution of a marriage or may protect the interests of third parties such as children from a prior relationship.’’
Several states, including Alabama, Louisiana, and Wisconsin, have laws authorizing such agreements, the court said. At least one state, Ohio, forbids them. But many states have not addressed the issue.
Such contracts are uncommon in Massachusetts compared with prenuptial agreements, said divorce lawyers, but that may be partly attributable to uncertainty over whether they would be upheld.
Given the confusion, couples marrying in Massachusetts had only two options if they wanted to sign a binding contract dealing with their assets: a prenuptial agreement before their wedding or a separation agreement if their marriage crumbled.
The SJC’s ruling carves out a third option. Thomas J. Barbar, a Boston family law specialist, said postnuptial agreements are a particularly good choice for more affluent couples who want to address financial issues when their marriages are strong, rather than wrestle with them through costly and painful litigation during a divorce.
The high court spelled out a five-step review that judges must conduct before approving such contracts, a process that must include making sure there was no fraud or coercion.
David H. Lee, the Boston lawyer who represented Ansin, said he was pleased that the court upheld the contract and finally addressed such agreements. Lee said he has negotiated fewer than 10 postnuptial agreements in his 37 years practicing family law, compared with more than 100 prenuptial agreements, because of concerns about whether they could be enforced.
Such agreements, he said, can benefit couples with marital woes who want to settle financial matters so they can focus on rebuilding their relationships. Postnuptial agreements are also signed by couples as part of estate planning or to address issues over inheritance that arise in second marriages.