Posts
Jeremy
D. Morley
In New York there is a
strong public policy favoring individuals ordering and deciding their own
interests through contractual arrangements, including
by prenuptial agreements. Accordingly, duly
executed prenuptial agreements are accorded the same presumption of
legality as any other contract. Thus, under New York law, a prenuptial agreement is
presumed to be valid unless the party challenging the agreement meets a very
high burden of showing that it was the product of fraud,
duress, overreaching by one spouse resulting in manifest unfairness to the
other spouse, or unconscionability.
An agreement is “unconscionable” if it is
one “which no person in his or her senses and not under delusion would make on
the one hand, and no honest and fair person would accept on the other, the inequality
being so strong and manifest as to shock the conscience and confound the
judgment of any person of common sense.” Sanfilippo
v. Sanfilippo, 137 A.D.3d 773, 774, 31 N.Y.S.3d 78. Although courts
carefully scrutinize marital agreements based on the fiduciary relationship of
the parties, “an agreement is not unconscionable merely because some terms may seem improvident; it
must shock the conscience to be set aside” (Tremont v. Tremont, 35 AD3d
1046, 1048 [3d Dept 2006].
Nonetheless, it
is critical to note that an agreement that
might not have been unconscionable when entered into may become unconscionable at the time
a final judgment would be entered. Maddaloni v. Maddaloni, 142
A.D.3d 646, 649, 36 N.Y.S.3d 695
The burden of proof as
to unconscionability is on the party seeking to set aside the
agreement.
That burden was
satisfied in the recent case of Taha v.
Elzemity, 157 A.D.3d 744, 68 N.Y.S.3d 493 (2d Dept. 2018).
The parties had
married in 2007 and had three children. Shortly before their marriage, they
entered into a prenuptial agreement. It provided, inter alia, that,
in the event of separation or divorce, each party waived the right to the
other's separate property, including property acquired from the proceeds of
separate property acquired during the marriage; that each party would keep
separate bank accounts; and that the husband's maintenance obligation would be
limited to a lump sum payment of $20,000.
The husband had
practiced medicine since 1987 and earned approximately $300,000 annually. The wife
had been employed part-time as a sales person when the parties met, but did not
work outside the home during the marriage and dedicated herself to the care of
the household and the parties' children, one with special needs.
The Court determined,
on appeal that the terms of the agreement were unconscionable since its enforcement
would result in the risk of the wife becoming a public charge, and since she was
unemployed, largely without assets, and was the primary caregiver for the
parties' young children. For these reasons the Court overturned the lower
court’s order that had granted summary judgment in favor of the husband and it granted
the wife’s cross motion for summary judgment ordering that the prenuptial
agreement was unenforceable.
The moral:
Prenuptial agreements must be drafted with great care and must foresee the
possibility that they will be judged in the light of unforeseen future
circumstances.
