Don’t Forget to Define Separate Property in Your Prenup
Many prenuptial agreements contemplate that one spouse will receive alimony, and it is difficult to imagine a prenup that does not establish an intention to delineate between separate and marital property. However, a failure to define terms can result in confusion. The recent Tennessee Court of Appeals case Seifert v. Seifert presented just such a situation.
In Seifert, the parties’ prenup established that all property received by either spouse during the marriage would be separate unless it was otherwise titled. However, since property was an undefined term, the parties disagreed as to whether this included income and retirement accounts. The Court, looking to the plain meaning, determined that it did.
Seifert is also noteworthy because the Court also disregarded a portion of the parties’ written agreement with respect to the determination of alimony. The prenup provided that “separate property […] shall be eliminated from consideration by the courts of this or any other state or jurisdiction in the event of any divorce or other matrimonial action between the parties in the future.” The Court of Appeals noted that the prenup specifically contemplated that a party might be awarded alimony by a court and the law of the state requires that an alimony award be made by giving consideration to factors like the amount of separate property. Accordingly, the provision purporting to restrict the court’s ability to apply Tennessee law was disregarded.
Timing, Sophistication of Parties Key Factors in Prenup Enforceability
The Tennessee Court of Appeals recently reinforced longstanding principles in determining the enforceability of prenuptial agreements. Among the factors a court examines carefully in determining whether a prenup will be upheld are the timing of the presentation of the document and the relative experiences of the parties in terms of age and educational background. Failure to account for these differences can be fatal to enforceability, since the party seeking to have a prenup enforced bears the burden of proof.
In Grubb v. Grubb, the wife, then aged 20, was presented with the prenuptial agreement at the office of the attorney representing her soon-to-be husband, who was 42 years old. The meeting took place two days before the parties left for their destination wedding. The trial court noted that Mrs. Grubb possessed her G.E.D. and worked at a dry cleaners when the couple met. Mr. Grubb, on the other hand, had a college degree and had assets in the amount of $5,000,000 and an annual income of approximately $500,000.
While the trial court upheld the agreement with the exception of purported caps on alimony, the Tennessee Court of Appeals determined that Mrs. Grubb’s opportunity to consult independent counsel was illusory. Accordingly, the prenup was unenforceable.
Post by: Jillian Mastroianni