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Pre-Nups – A Contract is a Contract According to Florida Supreme Court
After years of ambiguity regarding the enforceability of prenuptial agreements in Florida, the Supreme Court ruled this month that a voluntarily-executed prenuptial agreement is valid despite the fact that the terms would otherwise violate Florida family law and significantly benefit one spouse over the other.
Florida Supreme Court Makes Landmark Ruling on Prenuptial Agreements
In Hahamovitch v. Hahamovitch (No. SC14-277), the Supreme Court upheld the Fourth District Court of Appeal decision, holding that when a contract is clear and unambiguous, it must be enforced according to its plain language. Two other Florida Courts of Appeal have previously ruled that prenuptial agreements could not trump a spouse’s claim to the other spouse’s “earnings, assets acquired with those earnings and the enhanced value of the other spouse’s non-marital property resulting from marital labor or funds.” These prior rulings are in line with Florida Family Law provisions, which beg the question: why should couples bother contracting on their own terms if courts will disregard them?
Wife Gives Up Rights to Husband’s Property
The Florida Uniform Premarital Agreement Act provides that couples may contract generally with respect to property, spousal support and estate planning issues. The prenuptial agreement at issue in Hahamovitch provided that the wife would have no right or claim to her husband’s property and any increase in value that may have occurred during the marriage. Under Florida law, property that is purchased during marriage or any increase in property value is considered marital property, subject to equal distribution upon divorce.
The wife in Hahamovitch did obtain $1.9 million payable over a term of seven years from her husband as consideration for her waiver of claims to his property. However, according to the husband’s attorney, she would have gotten far more had that Supreme Court upheld the other appellate court decisions.
Prenuptial Agreement Facts
The Florida Supreme Court’s ruling does not mean that spouses have the ability to contract away their rights carte blanche. Certain factors must be in place for a prenuptial agreement to be enforceable. Under the Florida Uniform Premarital Agreement Act, a premarital agreement is not enforceable if the spouse against whom enforcement is sought can prove that:
The agreement was not entered into voluntarily;
The agreement was made as a result of fraud, duress, coercion or overreaching; or
The agreement was unconscionable when it was executed.
In addition to being unconscionable, the spouse against whom enforcement is sought:
Did not obtain a fair and reasonable disclosure of property or financial obligations of the other spouse;
Did not voluntarily agree in writing to waive his or her right to disclosure of the financial obligations of the other spouse; and
Did not have or reasonably could not have had an adequate knowledge of the property or financial obligations of the other spouse.
The prenuptial agreement in Hahamovitch reportedly was drafted by attorneys for both spouses and the wife had ample opportunity to object to the terms.
If you are considering entering into a prenuptial agreement, it’s important to seek the advice of experienced counsel. Contact McMichen, Cinami & Demps today at (407) 898-2161 or complete our online form.