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Yesterday, I noted that there seemed to be a rash of cases challenging the validity of prenuptial agreements. Today, I continue my review with a case the sends the message that you had better read and fully understand the agreement before you sign it, particularly if you are “well educated.” Blindly entering into an agreement will not invalidate it.

In Stawski v Stawski, the Appellate Division upheld the validity of a prenuptial agreement, written in German and signed by an American citizen, in Germany. At the time of its execution, the wife-to-be did not speak German and was not represented by an attorney. Instead, the “notar,” before whom the agreement was signed, simply read and explained the agreement to the parties.

The Court found it significant that the well educated wife voluntarily signed the agreement and did not ask any questions about it prior to its execution.

The agreement provided that each party would retain ownership of their separate property held at the time of the marriage or acquired thereafter. During the length of the marriage, the Court found that:

[D]espite her asserted lack of understanding, she acted in accordance with the terms of the agreement throughout the marriage, maintaining separate bank accounts in her own name in which she deposited income from properties she inherited from her family, which properties were themselves also retained by plaintiff solely in her name.

The Appellate Division restated the public policy that:

[T]his State favors " individuals ordering and deciding their own interests through contractual arrangements'" (Van Kipnis v Van Kipnis, __ AD3d __, 2007 NY Slip Op 06074, *5 [July 12, 2007], quoting Bloomfield v Bloomfield, 97 NY2d 188, 193 [2001]), and thus, duly executed prenuptial agreements, including agreements executed in a foreign country, are accorded the same presumption of legality as any other contract.

Notwithstanding the fact that wife did not read the agreement written in German and had no legal representation at the time it was signed, the Court declined to set aside the prenuptial agreement, stating

”I]f defendant "did not read or understand the agreement, or have any explanation of the same, his conduct evidenced a degree of carelessness or negligence not to be expected of a sophisticated and mentally brilliant person" (id.). One need not be an attorney or a Fulbright scholar to know the folly of signing a legal document without an understanding of its import.

In short, a Court is not going to excuse you from an agreement you voluntarily sign if you fail to read it. The fact that agreement is written in a language you do not understand is of no import. I wonder if the result have been different if the wife was not well educated?

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Thank you to the Prenuptial Agreement Blog for including me in the list of Top Family Law Blogs.

Speaking of prenuptial agreements, a couple of cases addressing prenuptial agreements have been decided by the Appellate Division in recent weeks. Thus, I begin a series of postings addressing these cases.

In the recent case of Selinger v. Selinger, the parties entered into a prenuptial agreement, in which they agreed “to waive any rights in and to the other's separate property, including gifts of land to the other as long as the gift was either evidenced in writing or "such records or the title of the donated property must have been changed into the name of the donee party."

During the course of the marriage, the parties sold a home that husband solely owned prior to the marriage, and purchased a house in Long Island with legal title to that house being placed solely in wife's name. When the home was sold, the sale proceeds, $3.4 million dollars were deposited in the wife’s separate bank account.

The Court ruled that the proceeds were the wife’s separate property.  “By deeding the house to defendant, plaintiff memorialized in writing a gift to his wife pursuant to the clear terms of the prenuptial agreement. . .”

The opinion hints that there was another, but unenforceable agreement executed between the parties, which I bet, obligated the wife to transfer the property or its proceeds back to the husband in the event of divorce.

There certainly was something improper going on that was not directly addressed in the opinion. I am guessing that the transfer to the wife was an attempt to protect the property from the creditors of the husband.

In any event, this case serves as a lesson that a prenuptial agreement will be upheld, even if it results in a wind-fall for one of the parties.

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The New York Probate Litigation Blog highlights the recently decided case of Estate of Joseph Menaham, in which a widow’s attempt to nullify a pre-nuptial agreement was rejected by the Surrogates’ Court.

Prior to marriage, the wife, now a widow, was diagnosed, hospitalized and treated for a bipolar disorder. Following her release, she entered into a pre-nuptial agreement in which the parties each agreed waived their rights to election against the other’s estate. The right of election is a statutory protection which prevents one spouse from dis-inheriting the other.

Following her husband’s death, the widow sought to set aside the pre-nuptial agreement claiming that the bipolar disorder left her unable to knowingly execute the prenuptial agreement.

Surrogate Lopez-Torres noted that a "duly executed prenuptial agreement is given the same presumption of legality as any other contract, commercial or otherwise. It is presumed to be valid in the absence of fraud." The court further referred to section 5-1.1-A(e)(2) of the Estates Powers and Trusts Law which sets forth the requirements for an effective waiver of a spouse's right of election against the estate of a deceased spouse. Such a waiver or release must be in writing, signed, acknowledged and in "recordable" form which means that such a waiver must follow the same form as would be used to provide for the recording of a deed to real property.

The Court viewed this claim with the proper amount of cynicism and found that the widow failed to prove that she lacked the competence to enter into the agreement. As noted in the New York Probate Litigation Blog, the widow earned a professional degree during the marriage and never challenged the validity of the agreement until her husband’s death.

The real focus of the inquiry must be was the wife competent at the time she entered into the agreement. While her mental capacity before and after she signed the agreement may be of some probative value, it should not be dispositive of the issue. If a person could avoid the intended, but harsh consequence of an agreement merely by alleging that at some prior time, he suffered from metal illness, every agreement would be at risk to a subsequent challenge.

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The Appellate Division in Van Kipnis v. Van Kipnis enforced a pre-nuptial agreement which the parties entered into in France in 1965.  The agreement provided that “Each spouse shall retain ownership and possession of the chattels and real property that he/she may own at this time or may come to own subsequently by any means whatsoever.”

Although there is a presumption under New York law that property acquired during the marriage is marital, the Court found that the presumption was overcome by the unambiguous terms of the parties’ agreement and their conduct in keeping their assets separate. As a consequence, the parties’ separate assets were not subject to equitable distribution.

In rendering this decision, the Court offered a primer on the relevant law  of matrimonial agreements. Among the basic concepts elaborated upon are:

• There is a "strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements" (Bloomfield v Bloomfield, 97 NY2d 188, 193 [2001] Thus, "[d]uly executed prenuptial agreements are accorded the same presumption of legality as any other contract.”
• "Agreements are to be construed in accord with the parties' intent."
  
• The best evidence of what parties to a written agreement intend is what they say in their writing."
• A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms.
• Extrinsic evidence of what the parties really intended is generally inadmissible, and will be considered only if the agreement is found to be ambiguous, W.W.W. Assoc., v Giancontieri 77 NY2d 162 [1990]).
• Extrinsic evidence may not be utilized to create an ambiguity that would otherwise not exist

The decision can be read here.

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