Consistent with our firm’s position of being a leader in the field of Family Law, we have just received a decision on one of our appeals, meaning it is now law that will be binding for trial courts. The case is, Steele V Steele, and it was approved for publication today as I write this on, April 30, 2021.
This case analyzed the types of contracts that engaged and married couples can enter into. It makes clear that contrary to unreported decisions that premarital agreements are creatures of statute and that judges are bound by the statutory scheme and can not vary it. In the Steele case, the trial judge erroneously found that an agreement entered into after the marriage was a prenuptial agreement under the act because the husband had expressed an intent to have such an agreement.
The case then goes on to discuss when and if a marital agreement can become enforceable. Recognizing that divorcing adults are susceptible to entering into agreements that are enforceable because they are adverse to each other. It should also be stated that those with marital trouble on the potential path to divorce can contract so long as the agreement is fair at the time it was entered into and at the time enforcement is sought. In Steele, the wife had just conceived a child and was breastfeeding when she entered into the agreement. Unbeknownst to her, the husband had been preparing an agreement even before the parties were married changing the way he valued assets; ignoring some assets and sources of income altogether. The court indicated that for the post-marital agreement to be enforceable the agreement needed to be fair and equitable. Meaning that the dominant partner needed to make a full and complete disclosure of all assets and income without exception. In the Steele matter the husband who admitted to being worth at least 9 million dollars at the time of the agreement, did not decide to play fair and disclose all assets and used inconsistent means to value assets choosing in each instance the valuation technique that yielded the lowest monetary value. In this matter, the husband did not disclose all sources of income and ignored significant income-producing assets held in trusts. Another condition of enforcing such agreements is that they must be fair and equitable when the agreement is reached as well as when enforcement is sought. In this matter, a home selected and purchased after the parties’ marriage was excluded from property to be shared upon divorce and in the event of the husband’s death, his wife and young child would be left destitute as in the document the wife had waived any claim against the husbands’ estate. The overreaching of the husband is well documented in this exquisitely crafted appellant decision.
The decision goes further indicating that for such agreements to be endorsable they must also be fair at the time enforcement is sought. Here the husband had grown a local business into an international one. The parties had moved from a nice home to a mansion. The husbands’ income and assets had grown and the wife of some 24 years was left with very little in proportion to the massive wealth of the marital estate.
The decision is a cautionary tale. If you want a mid-marriage agreement it needs to be crafted fairly and with an eye to an objectively reasonable outcome. If you seek such an agreement to overreach or gain an economic advantage you do so at your peril.
Our office has drafted premarital and mid-marriage agreements successfully for our client. If you have a question related to spousal agreements give us a call. Because as it is with many areas of Family Law, “We Made the Law.”