An Historical Perspective on Marital Agreements
| Publication year | 1991 |
| Pages | 467 |
1991, March, Pg. 467. An Historical Perspective on Marital Agreements
Lawyers generally encounter marital agreements in three situations. First, they may be approached by a client with a request that an agreement be drafted. Second, a marital agreement may be involved at dissolution of marriage. Third, a marital agreement may affect the spouse's rights at the time of settling an estate.
Agreements effective on and after July 1, 1986, are governed by the Colorado Marital Agreement Act.(fn1) By its terms, written prenuptial and postnuptial agreements are enforceable, as long as there was a "fair and reasonable disclosure of the property or financial obligations" at the time the agreement was made.(fn2) However, the statute expressly reserves jurisdiction to the court not to enforce provisions regarding spousal maintenance, if such provisions are deemed to be "unconscionable" as a matter of law at the time implementation of the provisions is sought.(fn3)
Many of the agreements just now reaching litigation were executed prior to July 1, 1986. Thus, the determination of the enforceability of those agreements requires an analysis of the case law.(fn4) In addition, a determination of what constitutes a "fair and reasonable" disclosure of financial affairs may be assisted by an understanding of the earlier cases. This article reviews the Colorado appellate decisions that have addressed these issues.(fn5) Appendices A and B summarize these decisions. Appendix A shows those cases that involved enforcement of an agreement at death, while Appendix B concerns cases involving the enforcement of an agreement at divorce. Such agreements generally have been upheld in the absence of fraud or overreaching.
Certain factors are repeatedly mentioned in the appellate court's analysis of whether fraud or overreaching was involved in a marital agreement. These factors are as follows:
1) the number of days prior or subsequent to marriage that the agreement was executed;
2) whether the spouse contesting the agreement had an independent attorney;
3) whether the parties had children from prior marriages whose inheritance was being protected;
4) whether the spouse contesting the agreement had sophistication in legal and financial matters;
5) the completeness of the financial disclosures made by each party; and
6) the relative disparity in the net worth of the parties.
The early prenuptial agreements intended to allow each spouse to leave property at death to his or her own children, free from claims by the spouse. These agreements provided waivers of the spouse's rights to an elective share under the Uniform Probate Code ("Code") or waivers of pre-Code spousal rights. Generally, in the absence of such a waiver, a spouse was entitled to a share of the decedent's property in spite of an expressed testamentary desire that the property go to other persons.
The earliest Colorado case to consider such an agreement is Remington v. Remington, decided in 1920.(fn6) The postnuptial agreement provided that each party
waives . . . his rights in any and all property, both real, personal, and mixed,... of which the [other] party ... is ... seized . . ., and hereby expressly waives all right to inherit from said ... [other] party....(fn7)
The Colorado Supreme Court felt the widow's attack on the agreement after the death of her husband was "grossly inequitable, a manifestation of bad faith, and ought not to be tolerated." Therefore, the court had no difficulty upholding the postnuptial agreement. The court determined the widow had no interest in her husband's estate. Six
Only in Linker v. Linker(fn9) did a Colorado appellate court refuse to enforce a waiver of estate rights provision in a marital agreement. In Linker, there was evidence the wife understood little English, had no knowledge of the rights she was waiving, did not understand the legal effect of the agreement, had no knowledge of her husband's assets and thought she was signing a will when she executed the agreement. The Colorado Court of Appeals upheld the trial court's determination that there was constructive fraud and that the wife had been overreached.
From the beginning, the courts had no difficulty---from a public policy standpoint---enforcing a waiver of a spouse's property rights at death. These cases were analyzed on contract principles, where the grounds for voiding the agreement were fraud or overreaching. However, in divorce cases, the public policy concerns became dominant, as is evident in the 1930 case of In re Duncan's Estate.(fn10)
In Duncan's Estate, the Colorado Supreme Court promptly struck down the marital agreement as a "wicked device to evade the laws applicable to marriage relations. . . ."(fn11) In the event the parties no longer lived together after marriage, the prenuptial contract provided the wife would receive a property settlement of $100, which would be multiplied by the number of years they lived together as spouses. The agreement further provided that the money was to be paid within twenty-four hours of the time they ceased to live together and that the wife would vacate the marital residence within twenty-four hours of receiving the money.
The court voided the contract on public policy grounds and allowed the widow to inherit the property of her husband to the extent she otherwise would have been entitled as his surviving spouse. By doing so, the court injected public policy concerns into the analysis of marital agreements for the next thirty-nine years.
During that period, society went through tremendous social changes. Dissolutions of the marital relationship became a fact of life and were no longer considered morally reprehensible. In recognition of those changing social mores, the previous "fault" requirement in a divorce was eliminated with the adoption of the Uniform Dissolution of Marriage Act(fn12) in 1971. Perhaps as a consequence of the changing society and the prevalence of divorce, more people were executing agreements before marriage in an attempt to define their rights should they eventually divorce. A number of these agreements came under scrutiny by the Colorado appellate courts. From 1969 to the mid-1980s, ten decisions were handed down dealing...
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