From the Family Law Letter November - December 2003

Premarital Agreements

Agreements between parties contemplating marriage are subject to special court scrutiny.

New Hampshire is an equitable distribution state. This means that in a divorce a court may award assets to one spouse that might seem to “belong” to the other if equity (fairness) requires such distribution. This can even apply to inheritances and to money earned before the marriage. When contemplating marriage, a person who has substantial assets or who has children from a previous marriage and wants to preserve assets for them may wish to consider a premarital agreement.

What is a premarital agreement. A premarital agreement (sometimes called a prenuptial or antenuptial agreement) is a written contract between two parties who plan to marry. Under New Hampshire law, a man and a woman may enter into a written contract “in contemplation of marriage” RSA 460:2-a (1997). By signing such an agreement, one or both parties may waive certain rights they might otherwise have had under the law in the event of divorce or death. In some cases, other persons can also be parties to premarital agreements. A parent, for instance, who gives a gift to a child but does not want that gift to go to the child’s spouse in case of divorce might become a party to a premarital agreement.

Limitations on Premarital Agreements. The New Hampshire Supreme Court has held that “the State has a special interest in the subject matter” of prenuptial agreements and “courts tend to scrutinize [them] more closely than ordinary commercial contracts.” MacFarlane v. Rich (MacFarlane), 132 N.H. 608, 613 (1989). Moreover, certain provisions cannot be included in a premarital agreement because they would be contrary to public policy. For example, the parties cannot agree to waive child support because the right to receive support belongs to the child, not the parents.

For a premarital agreement to be valid in New Hampshire it must meet four basic requirements. First, it must be in writing and signed by each of the future spouses.

Second, there must have been full and complete financial disclosure before the agreement is signed. To meet this requirements, signed and notarized statements of each party’s assets and liabilities should be attached to the agreement and made part of it.

Third, each party must have his or her own attorney review the proposed agreement before signing. The parties must not use the same attorney.

Finally, a proposed form of agreement must have been be presented by one party to the other with sufficient time remaining before the wedding for independent legal review. In case of a dispute, the validity of an agreement could turn on timing. If a court ever had to determine whether an agreement was signed voluntarily, it would likely focus on such factual questions as when the subject of a premarital agreement first arose and when its terms were discussed and negotiated, given the pressure to sign when a wedding date is near at hand.

A new guideline in New Hampshire. The New Hampshire Supreme Court ruled in a very recent case that signing an agreement even on the wedding day does not necessarily make it invalid without looking at the circumstances at the time of the signing. In Re John Albert Hollett, 2002-346, 2003 N.H. LEXIS 131, __NH __ (2003).

A prenuptial agreement is presumed valid unless the party seeking to invalidate it proves that: (1) the agreement was obtained through fraud, duress or mistake, or through misrepresentation or nondisclosure of a material fact, or (2) the agreement is unconscionable, or (3) the facts and circumstances have so changed since the agreement was executed as to make the agreement unenforceable.

In Hollett the Court found duress since the agreement was not signed voluntarily given the circumstances. Where “such agreements often involve persons in a confidential relationship,” the Court wrote, “the parties must exercise the highest degree of good faith, candor, and sincerity in all matters bearing on the terms and execution of the proposed agreement, with fairness being the ultimate measure.” Id.

To establish duress, a party must ordinarily show that it involuntarily accepted the other party’s terms, that the coercive circumstances were the result of the other party’s acts, that the other party exerted pressure wrongfully, and that under the circumstances the party had no alternative but to accept the terms set out by the other party. Id. The Court provided a practical guideline in Hollett by advising that any premarital agreement be presented well in advance of the ceremony, usually 30 days, to avoid invalidation on grounds of duress.

Any person wishing to arrange for a premarital agreement to be drafted or reviewed should consult an attorney experienced in family law.