3 General Validity and Criteria for an Enforceable Postmarital (or Marital) Agreement

• Library: Premarital Agreements: Drafting and Negotiation (ABA) (2017 Ed.)

3 General Validity and Criteria for an Enforceable Postmarital (or Marital) Agreement

§3.01 Scope of This Chapter; Terminology

A postmarital agreement has been defined as "an agreement entered into during marriage to define each spouse's property rights in the event of death or divorce."¹ In some states, such an agreement may fix or waive spousal support. As used here, the term refers to an agreement that is not incident to an existing or imminent separation.

Agreements of this type are sometimes called marital agreements, postnuptial agreements, or mid-marriage agreements. When the primary purpose of the agreement is to predetermine spousal rights when a couple is estranged, but is willing to make an attempt at reconciliation, the agreement may be called a reconciliation agreement. In the Uniform Premarital and Marital Agreements Act, the Uniform Law Commission opted to use the term marital agreement. However, as the case law and statutes in the majority of states generally use the term postmarital agreement or postnuptial agreement, these agreements will be referred to herein as postmarital agreements.

§3.02 Uses of postmarital agreements

A postmarital agreement can be useful under a variety of circumstances:

• Parties intended to enter into a premarital agreement but were not able to complete negotiations and drafting before the wedding.
• Parties have separated or filed for divorce, or a party has engaged in marital misconduct, and they wish to predetermine disposition of property and, to the extent permitted under state law, support, as a condition of reconciliation.²
• A party who operates a business or engages in a professional practice with significant financial exposure, or potential for a personal liability claim, may wish to document a division or transfer of property to protect the other spouse before any creditor claims are made.³ A spouse who may be exposed to a personal injury claim,⁴ or a claim for medical care not covered by insurance,⁵ may seek an agreement to segregate assets to protect the nondebtor spouse before a claim is made, or a nondebtor spouse may seek an agreement to avoid the liabilities of an impecunious debtor-spouse, particularly in a community property state.⁶
• An agreement may be a necessary component in an estate plan.
• Parties with a premarital agreement may wish to make significant revisions to the terms with a superseding instrument.

§3.03 General validity of postmarital agreements

(a) Overview

Two legal developments have promoted court and legislative acceptance of postmarital agreements. At common law, spouses generally could not contract with each other.⁷ As courts and legislatures abrogated the common law disabilities of married women, they acquired the right to contract with their husbands for many purposes, including comprehensive postmarital agreements in contemplation of death and dissolution.⁸ In Estate of Harber,⁹ a case of first impression, the Supreme Court of Arizona held a postmarital agreement executed in 1938 by a couple who had no plans to divorce was enforceable when the husband died 24 years later. The court made clear that its holding permitted such an agreement to govern disposition of property at divorce as well as death. The Court of Appeals of Utah came to a similar conclusion in a 1990 case, D'Aston v. D'Aston,¹⁰ citing Harber and a number of cases from other jurisdictions.

Further, premarital agreements have gained universal acceptance; public policy favors such agreements if fairly made.¹¹ As postmarital agreements serve similar purposes, public policy supports a consistent approach.¹² As one court observed: "Postnuptial agreements are consistent with public policy; they realistically acknowledge the high incidence of divorce."¹³ Put another way: "The modern view is that spouses may freely enter contractual relationships, and courts will uphold them if they satisfy the criteria of contract formation and are otherwise fair."¹⁴ Currently, every state permits spouses to contract with each other for some purposes, although in a small minority, the permissible scope of such an agreement is quite restrictive.¹⁵

(b) Authority for Comprehensive Postmarital Agreements

New York, Wisconsin, Texas, and Virginia have statutes governing premarital and postmarital agreements that provide the same criteria for validity of both types of agreement, permitting parties to contract about the same subjects, and addressing property rights at both death and divorce as well as spousal support.¹⁶ Virginia's version of the Uniform Premarital Agreement Act (UPAA) includes a provision that applies the Act to all spousal agreements, expressly permitting postmarital agreements that cover the same subjects and have the same prerequisites for validity as premarital agreements.¹⁷ Minnesota, by statute, permits a married couple to contract about anything after marriage that they could contract about before.¹⁸

Acting without express statutory authority, courts in Alabama, Connecticut, Florida, Georgia, Massachusetts, Tennessee, and Pennsylvania have held postmarital agreements generally enforceable at divorce to the same extent as premarital agreements.¹⁹ Case law in these states supports enforceability of provisions fixing or waiving spousal support under the same circumstances as applied to a premarital agreement.

(c) The Uniform Premarital and Marital Agreements Act and (Post) Marital Agreements

The Uniform Premarital and Marital Agreements Act (UPMAA), for the first time, creates proposed uniform standards for recognition, validity, and scope of marital agreements, more often referred to in case law and statutes as postmarital or postnuptial agreements. The UPMAA defines a marital agreement as an agreement executed by spouses who intend to stay married and which "affirms, modifies, or waives a marital right or obligation during the marriage or at separation, marital dissolution, [or] death of one of the spouses. . . ."²⁰ A marital agreement includes an amendment to a premarital agreement as well as an agreement revoking a premarital agreement or a marital agreement.²¹ To date, Colorado and North Dakota have enacted the UPMAA.²²

(d) Statutory Authority for Postmarital Agreements Regarding Property Rights at Death or Divorce

The majority of states do not have a single statute or case expressly authorizing comprehensive postmarital agreements governing property rights at death or divorce as well as waiver of spousal support. However, in many states there is a patchwork of statutes enacted at different times and for a variety of purposes, supported by appellate decisions, which, taken together, permit spouses to enter into a postmarital agreement conclusively defining their rights to property at death or divorce. These statutes generally do not address the right to fix or waive spousal support.

Married Women's Property Acts

Married Women's Property Acts, ending the historic disabilities of married women, permit married women to contract with their husbands, in some states subject to the rules governing persons standing in a confidential relationship.²³ Statutes permitting spouses to contract with each other without specifying or limiting the subjects of such a contract appear to permit spouses to enter into a postmarital agreement determining their rights at death or excluding property from the marital estate at divorce.²⁴

Statutes Expressly Permitting Postmarital Agreements Excluding Property from the Marital Estate at Divorce

Many states' equitable distribution statutes permit spouses to enter into a valid contract to exclude property from the marital estate at divorce.²⁵ Unless such statutes limit their application to an agreement made incident to a separation or divorce, they appear to permit parties not contemplating an immediate separation to execute an agreement regarding disposition of property in the event of a future separation.

Community Property Agreements

Spouses in community property states may execute an agreement to alter the status of property.²⁶ In Washington, Texas, Idaho, and Louisiana, spouses may by agreement reclassify existing community property as separate property or may opt out of the community property regime as to property to be acquired in the future.²⁷ Texas and Washington statutes permit spouses to convert what would otherwise be separate property into community property by postmarital agreement.²⁸

Statutes Permitting Spouses to Contract Regarding Wills or Rights at Death

Some states have a statute similar to or based on §2-213 of the Uniform Probate Code that permits parties to contract before or after marriage to waive or limit their rights to property at death and with the same validity criteria as the UPAA.²⁹ These statutes do not by their terms authorize enforcement of a postmarital agreement at divorce. Another group of states have a statute permitting a postmarital waiver of rights upon death that requires observance of rules regarding confidential relations or that there be full disclosure of assets and fair consideration.³⁰

Statutes that Permit Postmarital Agreements Not Incident to Separation, but Prohibit Waiver of Support

Several states have a statute similar or identical to the following:

A husband and wife cannot by any contract with each other alter their legal relation, except as to property and except that they may agree, in writing, to an immediate separation and may make provision for the support of either of them and of their children during such separation.³¹

These statutes appear to permit a spousal contract during marriage that determines property rights at death or divorce, but preclude determination of spousal support unless the agreement is incident to marital separation.

(e) Minority Position: Ohio

Ohio appears to be a minority of one in prohibiting spouses from entering into a postmarital agreement not incident to an immediate separation except to cancel a premarital agreement or confirm an oral premarital...