Last year, with the case of Ansin v. Craven-Ansin, 457 Mass. 283 (2010) (Ansin), the Massachusetts Supreme Judicial Court (SJC) joined “the majority of States to address the issue” and became the latest to articulate standards by which to recognize the validity and enforceability of “marital” agreements (also known as post-nuptial agreements). Now retired Chief Justice Margaret H. Marshall, the decision’s author, noted that Ansin presented a “long-deferred question of first impression.” Id. at 288, citing Fogg v. Fogg, 409 Mass. 531, 532 n.2 (1991) (where, nineteen years earlier, the SJC left “to another day” the question of whether marital agreements were valid, as the agreement there did not get beyond the “threshold requirement” of being free from fraud).
Justice Marshall included Ansin among her most important decisions when announcing her retirement shortly after its release. The decision and the analysis that forms it are an indication of the respect that courts across the country now have for married peoples’ right and freedom to contractually order and decide their own financial interests in the absence of a present intention to dissolve their marriage. “[A] marital relationship need not vitiate contractual rights between the parties.” Ansin, 457 Mass. at 288. As defined by the American Law Institute, to which the SJC looked for guidance in Ansin, a “marital agreement” is “an agreement between spouses who plan to continue their marriage that alters or confirms the legal rights and obligations that would otherwise arise under [the State’s applicable divorce statutes] or other law governing marital dissolution.” American Law Institute, Principles of Family Law and Dissolution: Analysis & Recommendations § 7.01(1)(b) (2002) ( “ALI Principles”).
While acknowledging that marital agreements are not the product of arms length negotiations, the SJC rejected any assumption that such agreements are “innately coercive” and typically entered into amid threats of divorce or are induced by illusory promises of remaining in a failing marriage. Recognizing, however, that circumstances in which marital agreements are formed may be “pregnant” with opportunity for one party to use the threat of dissolution to bargain into a position of advantage, the Court articulated a duty of “absolute fidelity” between spouses and set forth a two-part analysis that may be the most “rigorous” of any state. The Court expressly distinguished marital agreements from both premarital agreements, where the unmarried parties have a greater freedom to reject, and separation agreements, where the separating spouses deal with more self interest and against the backdrop of a permanent dissolution of their marriage. With the safeguards of its analysis in place, the SJC granted that marital agreements provide useful opportunities to inhibit dissolution of marriages and to protect the interests of children from prior relationships.
As it is the most recent national high court judicial review of the subject matter, and with its detailed articulation of standards calling for careful scrutiny of the procedural and substantive formation of marital agreements, Ansin is recommended reading for family law practitioners and probate lawyers from all reaches. A marital agreement that passes muster under the sort of “heightened scrutiny” set forth in Ansin would seem more than likely to satisfy the applicable standards of any other state. Though not a substitute for reading the case, the first six (6) letters of the alphabet can provide an easy way for remembering the essential components of a valid and enforceable marital agreement:
A) there must be full ASSET disclosure;
B) the BURDEN of satisfying the criteria necessary to have a valid agreement falls on the spouse seeking enforcement, not the challenging spouse;
C) the opportunity for independent COUNSEL must be available;
D) there must be freedom from DURESS, fraud and coercion;
E) there must be EXPLICIT and knowing waivers of the parties’ rights for judicial determination of legal rights; and
F) the agreements must be FAIR and reasonable both at the time of execution and at the time of divorce.
With respect to (A) ASSET disclosure, the obligation is greater in the context of a marital agreement than a premarital agreement due to the SJC’s recognition of the duty of “absolute fidelity” owed between the spouses. They have the highest standard of good faith and fair dealing in the formation and performance of contractual obligations between them. The Court emphasized that enforcement of a marital agreement can only occur when a judge finds that there was a full disclosure of all assets of both spouses. The standard is designedly “rigorous” because marital agreements are made without the safeguards attendant to divorce proceedings which may involve discovery, and where written and sworn financial statements are required of each party. Ansin, 457 Mass. at 293-295.
Financial disclosure required of a marital agreement may be satisfied through written statements which accurately list the significant assets in total approximate value, indicate approximate annual income and reveal significant future acquisitions or changes of income to which a party has a current legal entitlement or which a party reasonably expects to realize in the near future. Ansin did not mandate the time period with respect to satisfying this obligation relating to future acquisitions and changes in expectations (the ALI Principles, Sec. 7.04 (5), recommends disclosure for three preceding years of income and future acquisitions anticipated within three years of execution). There was ample evidence in the case (including a one-page, joint summary of financial condition appended to the agreement, and years of jointly filed income tax returns) that the conditions were satisfied by the contesting wife’s knowledge and awareness of the parties’ assets and income. Ansin, 457 Mass. at 294, n.15.
Shifting the (B) BURDEN to the party seeking to enforce the marital agreement emphasizes the heightened standard for scrutiny of the marital agreement bargaining process. The standard, however, need not be met by clear and convincing evidence, but may be met by a fair preponderance of the evidence. Ansin, 457 Mass. at 292, n.11. It should be noted that because of the clear existence of consideration for the marital agreement in Ansin (including the provision of immediate estate plan security for the wife and a life insurance obligation for her benefit) the SJC did not address whether, as a matter of law, marital agreements are required to be supported by consideration. Ansin, 457 Mass. at 291, n.10. While the ALI suggests no such requirement, ALI Principles, Section 7.01(4), lack of consideration has been the basis in other states for invalidating marital agreements. E.g. Bratton v. Bratton, 136 S.W.3d 595 (Tenn. 2004); Simmons v. Simmons, 249 S.W.3d 843 (2007).
Although independent (C) COUNSEL for each party is not an absolute requirement to the validity and enforceability of a marital agreement, the SJC indicated that reliance on advice of experienced independent legal counsel will go a long way toward ensuring enforceability of a marital agreement. Ansin, 457 Mass. at 291, n.9. A theme of independent counsel permeates the Ansin decision. The involvement of such counsel not only increases the likelihood of enforceability, it seemingly takes an edge off of the degree to which scrutiny must be applied at the trial court level. Id. (discussed below). The Court noted that with respect to marital agreements the ALI Principles, Sec. 7.04, recommends that the fact the fact that the contesting party’s consent was informed and not obtained under duress is satisfied and essentially presumed when both parties were advised to obtain independent counsel and had reasonable opportunity to do so before the execution of the agreement. Id.
In addressing the issue of (D) DURESS, fraud and coercion, it was cautioned that trial judges should be careful to insure that the contesting spouse was not misled in any way by a spouse who at the time seems committed. The SJC intimated that sufficient evidence confirming a party’s acquiescence to a marital agreement out of concern related to illness of a child, or a child being harmed by divorce, may establish coercion or duress. Ansin, 457 Mass. at 291-292, n.13. The standard of duress historically has been an extreme standard of proof essentially showing that someone has been stripped of the ability to exercise free will. Assumedly, in order for these events alluded to by the SJC to constitute duress or coercion the degree of impact on the party to the agreement of such circumstances would have to be of a compelling magnitude.
In determining whether or not there was (E) EXPLICIT and meaningful waivers, a trial judge is to consider (i) whether the person was represented by independent counsel, (ii) the adequacy of the time to review the agreement prior to execution; (iii) the parties having an understanding of the terms and effect of the agreement; and (iv) the parties having an understanding of their rights in the absence of an agreement. Ansin, 457 Mass. at 295-296 (with evidence of independent counsel, several weeks of negotiation, and the wife’s acknowledgment that she understood her rights, “the wife’s waiver was meaningful”).
Finally, the agreement must be (F) FAIR and reasonable at the time of execution and at the time of enforcement. Here the SJC established a “second look” prong to the analysis, as in Osborne v. Osborne, 384 Mass. 591 (1981), and DeMatteo v. DeMatteo, 436 Mass. 18 (2002), which dealt with premarital agreements. The Court indicated that, unlike parties just contemplating marriage, spouses entering into a marital agreement already possess the statutory rights and obligations conferred by reason of their marriage, and that these rights and obligations are an integral part of the marriage. Ansin, 457 Mass. at 296-297. The Court’s perception is that parties to a marital agreement do not bargain as freely as separating spouses and, therefore, higher scrutiny must be applied to determine the fairness and reasonableness of an agreement formed while the parties owe absolute fidelity to each other and intend to remain in their marriage.
The entire context in which the agreement is reached should be considered in determining the fairness and reasonableness at the time of the marital agreement’s execution, though, as noted above, “greater latitude” is allowed in cases where each party was represented in the negotiation by separate counsel of their own choosing. Ansin, 457 Mass. at 297. Factors which may (the Court did not use the word “shall”) be considered include: (i) the magnitude of the disparity between the outcome under the agreement and the outcome under otherwise prevailing legal principles; (ii) the purpose of the agreement (i.e., was it to benefit or protect interests of third parties such as children of a prior marriage?); (iii) the impact of enforcement on children of the parties; (iv) the length of the marriage, the motives of the spouses, their respective bargaining positions, the circumstances giving rise to the agreement, the degree of “pressure” (distinct from considerations of fraud, duress and coercion) experienced by the contesting spouse; and (v) other circumstances the judge may find relevant to the particular case. Id.
In the context of the “second look” that applies to a marital agreement when enforcement is sought in a divorce action, the SJC indicates that the requisite “searching inquiry” can be satisfied by reference to factors employed to evaluate contested separation agreements. Ansin, 457 Mass. at 298-299, citing Dominick v. Dominick, 18 Mass. App. Ct. 85 (1984). Without excluding other considerations relevant to a particular case, the Court referenced the following factors: (1) the nature and substance of the objecting party’s complaint; (2) the financial and property division provisions as a whole; (3) the context in which the negotiation took place; (4) the complexities of the issues involved; (5) the background and knowledge of the parties; (6) the experience and ability of counsel; (7) the need for and availability of experts to assist parties and counsel; and (8) the mandatory and, if appropriate, discretionary factors under G.L. c. 208, § 34 (the Massachusetts alimony and equitable distribution statute). No evidentiary hearing is required as to those statutory factors under consideration, and the judge has no obligation to divine what judgment she or he might have entered had the case been litigated in the absence of the martial agreement. Id. at 299-300. Where Ansin was a divorce case, it remains to be seen whether similar levels of heightened scrutiny will apply in the context of a marital agreement sought to be enforced following the death of a spouse.
In sum, the message of Ansin seems to be that, to be enforced, a marital agreement needs to “feel” right under all the circumstances both in its process of creation and the impact of its implementation on the parties. No one case, of course, can give a precise road map for creating a marital agreement which will be beyond challenge, and a look at how other states analyze the issue is always wise. Despite areas of uncertainty which arise from the wording of the decision, Ansin delineates those matters that are subject to scrutiny when a marital agreement is sought to be upheld and enforced and the factors to be assessed. It also adds Massachusetts to the growing number of states to recognize the utility of this class of agreement to married parties wishing to avoid divorce or separation and to the family law practitioners, financial planners and trust and estate lawyers who provide them with professional counsel.
David H. Lee graduated Tufts University (cum laude) and Boston University Law School and is a partner in Lee & Levine LLP, Boston, MA. The focus of Mr. Lee’s practice over his entire career has been in the field of Family Law. Whether as a courtroom advocate, negotiator, or counselor, Mr. Lee is committed to using his knowledge and experience to guide and assist his clients through the legal process, in an effort to minimize the potential adverse impact upon the parties and their children.
Kevin M. Corr is a cum laude graduate of Suffolk University Law School and Syracuse University. A member of the Massachussetts, New York and Connecticut State bars, he has been engaged in the practice of Family Law for more than nineteen years. Mr. Corr’s practice covers all areas of Family Law with a focus on divorce, property division and support issues