Antenuptial/Postnuptial Agreements

Katz, Manka, Teplinsky, Graves & Sobol, Ltd.

Divorce with Dignity ◦ Defending Rights for Family Law Clients for 40 Years

An antenuptial agreement (also known as a prenuptial agreement or a “pre-nup”), if properly drafted, is a legally enforceable contract governing rights you will have, once married, upon a future divorce or the death of your spouse. Many times, these agreements are challenged upon the commencement of a marriage dissolution action, and many times the spouse seeking enforcement of the agreement seeks a fast determination by the court that the agreement is enforceable. The statutory law governing antenuptial agreements and postnuptial agreements (contracts governing rights of spouses upon divorce or death drafted after the marriage) is found in the Minnesota Statutes at Section 519.11.

The law firm of Katz, Manka, Teplinsky, Graves & Sobol, Ltd. is extremely experienced in drafting antenuptial agreements and has both successfully challenged agreements drafted by others as well as argued in support of the enforcement of properly drafted agreements. We were involved in the leading Minnesota Supreme Court case defining what is necessary to make an antenuptial agreement an enforceable contract: In re the marriage of: McKee-Johnson v. Johnson. In the McKee-Johnson case, the Minnesota Supreme Court determined that, to be enforceable, an antenuptial agreement must generally pass three tests:

1. whether is was procedurally fair when drafted,
2. whether it was substantively fair when drafted, and
3. whether it remains substantively fair at the time of enforcement.

If all three prongs are met, the agreement will be enforced. If there is a deficiency in the first prong of the test (the agreement was not procedurally fair) the agreement will be invalidated. If there are defects in the second or third prong of the McKee-Johnson test, part or all of the agreement may be subject to invalidation.

Procedural fairness

To be deemed procedurally fair there must be:

1. a full and fair disclosure of the earnings and property of each party, and
2. each party must have had the opportunity to consult with legal counsel of his or her own choice.

In considering procedural fairness, the court will look at the circumstances under which the agreement was executed. Did the party requesting the execution of an antenuptial agreement discuss the need or desire for an agreement months before the marriage, or did he/she hand his/her fiancé a cocktail napkin waiving rights to property just shortly before the marriage? Was the other party afforded the opportunity to consult with an attorney? There is no requirement that the other party actually consult with an attorney and in fact, in the McKee-Johnson case which upheld the agreement on procedural fairness grounds, Ms. McKee knew she had the right to consult with an attorney, but waived her right and did not speak with her own attorney.

At Katz, Manka, Teplinsky, Graves & Sobol, Ltd., we attempt to avoid issues of procedural fairness when participating in the drafting of antenuptial agreements, by attempting, when possible, to complete all negotiations and to have the document executed, when possible, several weeks (and preferably at least a month) before the marriage. This may mean, for some clients coming to see us, being open minded about pushing back a wedding date to make sure enough time is allowed so that all negotiations and disclosures are fair and open, and free from any specter of duress, which may later be raised as a defense to the agreement. While you may enter into negotiations for an antenuptial agreement believing you will never be divorced, unfortunately, the very fact that there are negotiations taking place means that at least one party is contemplating the possibility that the marriage may end someday in divorce.

Substantive fairness at the time of execution

The second factor the court will evaluate in determining whether an antenuptial agreement is enforceable upon divorce is whether the agreement was substantively fair (not unconscionable) when executed. For example, an agreement under which a spouse with little or no income or assets agrees to waive a claim to any marital property or maintenance upon divorce, and in exchange for this waiver is not granted any alternative rights to support or property, may later be found to have been substantively unfair when executed, providing a basis to invalidate the agreement.

In representing a party seeking an enforceable agreement, it is important to evaluate the income and property of both parties and to look into the future to try to determine where each party might be financially at the time of a divorce, and where they might have been but for the marriage. This requires detailed information about each party’s assets, and especially in the case of a business owner, an understanding of the business and its future prospects, with a goal of crafting an agreement that in the future will not be seen as overreaching. At Katz, Manka, Teplinsky, Graves & Sobol, Ltd., we excel at this type of analysis.

Substantive fairness at the time of enforcement

Although most properly drafted antenuptial agreements are upheld by the courts, in all or part, at the time of divorce, pursuant to McKee-Johnson if an antenuptial agreement is vulnerable, it is typically vulnerable on the grounds that it is substantively unfair (unconscionable) upon enforcement. This means that the more time and thought put into thinking about the future at the time the agreement was originally drafted, and the more effort placed into tying to assure that the agreement will be found to be substantively fair upon divorce, the more likely the agreement will be found to be valid.

Although the Supreme Court in McKee-Johnson did not set forth any specific rules or guidelines for the trial courts in undertaking this analysis, the Court did state that, in analyzing the issue of substantive fairness, the trial courts need to look at the reasonable expectations of each party as to the scope and ultimate effect of the contract in the event the marriage should terminate by dissolution and whether intervening events, such as the birth of a child, have defeated those expectations to the point where enforcement of the agreement would be oppressive or unconscionable.

Burden of proof

The party challenging the agreement is the party bearing the burden of showing that the agreement was procedurally unfair at the time of execution or is substantively unfair relative to any limitations on the division of non-marital property upon divorce (property owned by one party before the marriage, or received by gift or inheritance from a third party during the marriage, or the increase in the value of that property during the marriage not resulting from marital efforts).

Importantly, however, to the extent the antenuptial agreement limits the award of what otherwise would be deemed to be marital property, the proponent of the agreement in that case bears the burden of proving that the limitation on the award of marital property is substantively fair.

In considering burdens of proof and the factors set forth in McKee-Johnson, the Supreme Court has noted that while the public policy of this state, as reflected by the common law, favors antenuptial agreements – in other words recognizes the rights of knowledgeable and consenting spouses to enter into such contracts – Minnesota courts have always scrutinized such agreements for fairness, based upon the possibility for overreaching by one party over the other due to the relationship existing at the time of execution. In other words, the court will carefully examine whether one party took advantage of the other at the time the agreement was prepared.

The law firm of Katz, Manka, Teplinsky, Graves & Sobol, Ltd. has zealously protected the rights of its clients when it comes to antenuptial agreements. We have successfully invalidated parts or all of such agreements when improperly drafted or when enforcement was substantively unfair. We similarly strive to draft agreements with the goal of assuring fairness to our clients and their future spouses, with the goal of withstanding future challenges to the agreements we help negotiate.