Did you pahk yah cah in Havahd yahd? You love yah dunks, clam chowdah, and Cape Cod. Did you know that HelloPrenup was born in Boston, too? Wicked cool, right? If you and your fiancé are considering a prenuptial agreement in Massachusetts, it is important that you first understand what a MA prenup should include, cannot include, and how prenups are enforced in this great Commonwealth. A prenuptial agreement can be a great way to establish clear expectations around finances, current and future for your marriage, as well as expectations for your fiancé’s behavior (and yours!) during your marriage.
Clauses in MA Prenups
Engaged couples usually enter into a prenuptial agreement to protect their assets in case of a divorce in Massachusetts. The most common clauses include:
- What is “Separate Property” and what should be considered “Marital Property?” Your prenup should include very specific details about which property (ie assets) will be considered your own, and which property will be considered part of the marital estate.
- How property will be divided in the event of a divorce. This can answer what happens to martial property, but also what happens to appreciation on separate property? Is that to remain separate or does that appreciation become marital? Details, details!
- Are we waiving alimony? Your prenup may specify whether alimony (“alimony” is the official term used in Massachusetts, but this is also widely known as spousal support) will be paid in the event of divorce.
Why enter into a Massachusetts Prenup?
There are many reasons that engaged couples choose to enter into a prenuptial agreement in Massachusetts. Here are a few of them:
- To protect inheritance
- To protect assets they owned prior to marriage (including a house, condo, stocks, etc)
- If this is a second marriage, they may want to protect assets for children from a prior relationship
- Protecting interest in a family owned business or interest in a business
- Specify how premarital debt should be distributed
- A prenuptial agreement is also widely viewed as an emotional document. Wait what? Yep, we said it. A prenup is often just as emotional as it is legal, because it allows couples to discuss financial implications of their marriage before getting married. We call this pre-marital planning, and we like it!
What are the requirements for a valid prenup in the great state of MA?
To create a valid prenup in Massachusetts, the following must be met:
- Prenuptial agreement must be signed by both parties
- Agreement must be reasonable and fair
- There must be full and fair financial disclosure of all assets, property and liabilities from both parties
- Make sure your prenup in notarized! This is not an explicit requirement, but… don’t skip this step.
Lifestyle Clauses in Massachusetts prenups
Lifestyle clauses in a MA prenup are different than the typical prenup clauses because they are often not focused on the financial aspect of the relationship. Lifestyle clauses can instead focus on the behavior of the spouses, with financial penalties for violating certain clauses. Here are some of the most popular lifestyle clauses in Massachusetts:
- Infidelity Clause: An infidelity clause usually states that if one of the parties cheats on the other that the cheater will be penalized, often financially- like, a certain sum of money will be owed or a denial of spousal support in the event of divorce.
- Confidentiality Clause: A confidentiality clause is often used when one fiancé is a business owner, partner in a business, or in some position within a business that is highly visible. Or, ya know, a movie star. This clause states that the parties may not disclosure certain information about the other, their business dealings, etc.
- Social Media Clause: A social media clause is a lifestyle clause that establishes a general guideline for what types of social media engagement or activity the spouses can (or cannot) participate in during the marriage. This may include not writing or engaging with others negatively on social media about their spouse, or not posting certain photos, etc. There may be financial penalties in place if one of the spouses breaks these rules!
Are lifestyle clauses valid in a Massachusetts prenup?
Lifestyle clauses are not prohibited in Massachusetts. In Massachusetts, the only clause that is specifically prohibited are clauses that would contract away the rights of a child- like, child support or child custody.
How are Massachusetts Prenups Enforced?
First, the basics of contract law must be followed- like, the contract must be in writing, should be notarized, and you cannot contract away the rights of children. Upon enforcement, a Massachusetts court will do a two part analysis to determine whether the agreement was “fair and reasonable” at the following points:
Was the Prenuptial Agreement “Fair and Reasonable” at the time it was signed?
A Massachusetts divorce court will determine whether the prenup agreement was “fair and reasonable” when the agreement was signed. The purpose of a prenuptial agreement is to contract around the default state divorce law, so for a prenup to be valid, there is no requirement that the agreement owes spouses the same percentage or distribution of assets as they would have otherwise be entitled to under Massachusetts divorce law. Prenuptial agreements can largely favor one side over the other, and still be enforceable if the agreement passes the Massachusetts “fair and reasonable” at the time of signing and “fair and reasonable” at the time of divorce standards. This means that depending on the terms of the agreement, the less wealthy spouse may be living a very different lifestyle after a divorce than during the marriage, and this is not a problem in the eye of the courts. Where the problem comes in however, is when the spouse contesting the prenuptial agreement during a divorce case has been stripped of nearly all of their marital assets, leaving them with nothing, a court may find that the second prong is met, and the agreement is not “fair and reasonable” at the time of the divorce (more on that, below).
Was the Prenuptial Agreement “Fair and Reasonable” at the time of divorce?
As you now know, if a prenuptial agreement is being contested during a divorce trial (read: one party is saying that prenup should be invalidated and not considered in the divorce) a Massachusetts court will determine whether a prenuptial agreement is “fair and reasonable” at the time of divorce under what is called the “Second Look Doctrine.” A Massachusetts judge can choose not to enforce the prenuptial agreement if it would leave the contesting spouse without property, financial support, or employment to support themselves. Want a few examples?
- The spouse contesting the agreement experiences unanticipated mental or physical deterioration
- The spouse contesting the agreement has no appreciable assets
- A “change in circumstances” occurred, that was not part of what the parties considered when they signed the agreement
A Case to Know: Dematteo v Dematteo
Here’s how the story goes: Joseph Dematteo, age 47 and Susan, age 41 at the time, married in 1990. Although they had only been dating for a few years, Joseph and Susan had known each other during childhood and had briefly dated about twenty years prior. Susan was aware of her future husband’s wealth and Joseph was aware of his future wife’s lack of wealth. At the time of their marriage, their financial situations were as follows:
- Joseph owned a large stake in his family business, along with other assets. His estimated net worth was between approx $80 million and $100 million.
- Susan, on the other hand, did not own a home, shared a two-bedroom apartment with her daughter from her first marriage, had very few assets, and earned an income of $25,000 per year in her position as a secretary.
- As you can see, their financial situations were *very* different.
Before their marriage, Joseph discussed the need for a prenuptial agreement with Susan, and Joseph and Susan each obtained their own attorneys who began with negotiating the agreement. 8 years later, Joseph filed for divorce in Massachusetts, stating that the marriage had irretrievably broken (a term for a no-fault divorce in MA). Joseph sought to enforce the prenup agreement, and after the divorce trial, the trial court ruled that the agreement was unenforceable. The Court stated that the agreement was not “fair and reasonable at the time of its execution” and “is not fair and reasonable at the present time, and therefore may not be enforced.” (see above for more details on the “fair and reasonable” standard).
The trial court determined that the Dematteo prenuptial agreement was not fair and reasonable because of the financial settlement, the sophistication of the financial issues and the marital lifestyle and the vast disparity between Susan and Joseph’s ability to acquire future income and assets. But, that ruling was overturned by the Supreme Judicial Court (see below).
Spoiler Alert, for all of you falling asleep right now
Ultimately, the Supreme Judicial Court overruled the lower court, stating that even though the prenuptial agreement heavily favored Joseph, it was not unenforceable when it was entered into or when the parties divorced because the agreement comported with the standards of fairness and reasonableness as administered in Massachusetts. Want to read all of the juicy details? Check out the Dematteo full case text here.