When parties sign a prenuptial agreement, they often assume potential changes in the law will automatically apply to their agreement. A recent Appeals Court decision, Liz L. vs. Ursel U., highlights why this is not always the case. In this matter, the parties signed their prenuptial agreement well before Massachusetts enacted new alimony reform laws under the Alimony Reform Act of 2011. When the parties later divorced, the trial judge used certain provisions under the Alimony Reform Act to terminate the husband’s alimony obligation upon his attaining full retirement age. Subsequently, the Appeals Court reversed this, explaining that prenuptial agreements are governed by the laws that existed when the agreements were originally signed. Because the prenuptial agreement at issue did not explicitly state that future, applicable changes in the law would apply, the Alimony Reform Act could not supersede the parties’ specific contractual obligations set forth in their prenuptial agreement. At bottom, if you want future changes in the law to apply to your prenuptial agreement, then document must explicitly state that intention.
The decision also serves as an example on how courts divide property and calculate advances from the marital estate for legal fees during a divorce. Here, the husband sought to exempt certain business holdings acquired during the marriage by claiming they fit the prenuptial agreement’s definition of separate assets. The Appeals Court dismissed the husband’s compartmentalized interpretation, stressing that the agreement must be evaluated in its entirety to prevent the husband from purposefully funneling joint earnings into certain accounts to shortchange wife. Furthermore, the decision outlined the required mathematical steps for dividing the marital estate when there have been advances for legal fees during the pendency of the proceedings. Rather than just subtracting the wife’s legal expenses from her ultimate share of the marital estate, the court determined that all advanced legal fees must first be added back into the marital estate. Only after that combined total is distributed accordingly between the parties can individual legal fees be deducted from that party’s respective share.
prenuptial agreements, alimony reform, property division, divorce, separate property.