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Sunday, June 22, 2014

Owen v. Owen - Ensure Your NYC Prenuptial Agreement is Enforceable

A recent divorce case reviewed by the West Virginia Supreme Court calls into question the validity of prenuptial agreements, and whether there are some circumstances in which they can't be enforced.

New York City prenuptial agreement attorneys would point out that established case law in West Virginia varies somewhat from what the courts have found in New York.

But before we explore the latter, let's look at the case of Owen v. Owen, and how this can serve as a lesson to those contemplating a prenuptial agreement in New York.

In this case, the husband and wife were married in 1981. Each had been married previously, and had custody or partial custody of children from these earlier marriages. Husband was 38, while wife was 23. Four days before the wedding, a prenuptial agreement was drafted by an attorney who had represented the husband in prior matters.

The wife was not given a copy of the proposed agreement before agreeing to sign it. However, the husband did have access to it, and did make some edits. The attorney who drafted the agreement reviewed the general terms with the wife, but did not discuss specifics with either the husband or wife.

The wife would later testify she did not receive a copy of this document until she filed a petition for divorce in 2005. The agreement stated neither party would seek spousal support, that if children were born of the marriage, they would be supported equally, each parent demanding no more than half from the other, and that all personal property holdings would be free and clear of claims from the other in the event of a divorce. At the time, the husband's net worth was noted to be nearly 14 times that of the wife.

The couple were married more than two decades and had two children together. The wife filed for divorce in 2005, but the pair reconciled. However, she filed for divorce again in 2011. The husband sought enforcement of the prenuptial agreement.

However, the wife insisted the prenuptial agreement was unenforceable because she was not privy to the extent of her husband's asset at the time the agreement was signed.

A family court order invalidated the prenuptial agreement on the grounds the wife did not at the time of signature have full knowledge of the contents of the agreement. Additionally, despite express language in the agreement stating otherwise, the wife did not have independent counsel advising her with regard to the agreement. It was contested whether the attorney who drafted the document ever indicated he could represent her interests, though the husband had told the wife the lawyer represented them both.

Additionally, the court noted the provisions regarding child support ran contrary to state law, as such payments are based on parental income in consideration of the best interests of the child - not what parents agreed to before the children were born.

This invalidation of the prenuptial agreement was later upheld by both the appellate and the state supreme court.

New York courts, however, have in some recent cases displayed a willingness to enforce prenuptial agreements, even in cases where they seem inherently one-sided.

A good example is Barocas v. Barocas in 2012. In this case, the wife, a native of Guyana, married her husband when she was 20-years-old, without a high school diploma. She had $2,500 in assets at the time, while the husband had nearly $600,000. The prenuptial agreement indicated the wife waived all rights to all husband's property in the event of a divorce, and also that she would forfeit any jewelry or other gifts given to her by the husband.

Clearly, the agreement was incredibly one-sided.

At the time of the divorce, the wife had an IRA valued at $30,000, while the husband had a net worth of $4.6 million.

Still, the courts chose to affirm the enforcement of the prenuptial agreement, finding the wife entered into it voluntarily. A key point in the case was that an attorney, hired by the husband to represent the wife on the issue prior the marriage, advised her not to sign the document. She did so anyway.

The court did find there were some factual issues regarding the wife's waiver of spousal support in the agreement, and that issue was remanded for further proceedings.

The question in these cases is not so much whether the agreement is fair, but whether both parties entered into the agreement voluntarily. Expect too that any issues pertaining to the care and support of the children will be subject to heightened scrutiny by the court.

If you are interested in information about New York City prenuptial agreements, call our offices at (718) 864-2011.

Additional Resources:

Owen v. Owen, June 4, 2014, West Virginia Supreme Court

More Blog Entries:

U.S. v. Fuller - Failure to Pay Child Support Results in Severe Consequences, May 28, 2014, New York City Prenuptial Agreement Lawyer Blog


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