Sarah M. Waelchli, Esq., Hemenway & Barnes, LLP
On July 16, 2010, the Massachusetts Supreme Judicial Court issued the first clear ruling that a postnuptial agreement is valid in Massachusetts. The case, Ansin v. Craven-Ansin (SJC-10548), provided a unanimous opinion that postnuptial agreements or “marital agreements” are permissible and fully enforceable if created properly. The SJC ruled, however, that postnuptial agreements will be subject to a higher level of scrutiny than prenuptial agreements or separation agreements.
Ansin involved a couple who had been married for 19 years prior to signing a postnuptial agreement. They had two adult sons and a combined estate of approximately $19 million. After periods of separation, the couple signed a postnuptial agreement to settle the division of their assets if they were to divorce. The parties were represented by separate counsel and engaged in substantial negotiations over the agreement. The SJC found that the couple was committed to continuing their marriage after signing the agreement, but two years later the husband filed for divorce. The SJC held that the agreement, which gave the wife $5 million and 30% of the appreciation in the marital assets (among other benefits) was enforceable.
The SJC set forth five standards for the enforceability of postnuptial agreements, each subject to the “careful scrutiny” of the court: (1) whether the agreement was free of coercion or fraud; (2) whether each party knowingly, and in writing, waived his or her rights to property and support upon divorce; (3) whether each party had the opportunity to hire counsel; (4) whether each party provided full and fair disclosure of finances, including current and reasonably anticipated assets, income and liabilities; and (5) whether the agreement was substantively fair and reasonable at the time of execution and upon divorce. As an additional hurdle to the enforceability of these agreements, the SJC placed the burden of satisfying these criteria on the spouse seeking to enforce the agreement.
The utility of postnuptial agreements in the estate planning context remains unclear. Estate planners may wish to use postnuptial agreements to ensure that particular family assets (the family business, family vacation home or other inherited assets) stay in the family line at death. While Ansin confirmed the enforceability of postnuptial agreements upon divorce and set forth standards that made sense in that context, it did not address the enforceability of such agreements upon death. Ansin may provide some guidance, but a clear ruling on the enforceability and standards for postnuptial agreements upon death is yet to come.