Enforceability of Prenuptial Agreements in Florida
By Kluger Kaplan October 19, 2016
When couples decide to get a divorce – particularly those with significant assets – the first question that usually comes to mind is whether or not the parties have a prenuptial agreement. A prenuptial agreement is a contract entered into by prospective spouses that lays out certain financial obligations and terms the parties will abide by during the marriage and in the event of divorce. Florida courts generally will enforce a prenuptial agreement provided it complies with Fla. Stat. § 61.079. Pursuant to subsection 61.079(7)(a), a prenuptial agreement is not enforceable when it was not entered into “voluntarily”, it “was the product of fraud, duress, coercion or overreaching”, or it was “unconscionable” at the time it was entered due to deficient financial disclosures.
Florida courts are reluctant to set aside prenuptial agreements. Public policy favors individuals ordering and deciding their own interests through contractual arrangements; however, this right is not entirely unrestricted. While there is a strong presumption that a carefully prepared and executed written instrument expresses the true intention of the parties, in Casto v. Casto, 508 So. 2d 330 (Fla. 1987), the Florida Supreme Court set out a test for when a marital agreement may be invalidated:
First, a spouse may set aside or modify an agreement by establishing that it was reached under fraud, deceit, duress, coercion, misrepresentation, or overreaching.
The second ground … contains multiple elements. Initially, the challenging spouse must establish that the agreement makes an unfair or unreasonable provision for that spouse, given the circumstances of the parties…
Once the claiming spouse establishes that the agreement is unreasonable, a presumption arises that there was either concealment by the defending spouse or a presumed lack of knowledge by the challenging spouse of the defending spouse’s finances at the time the agreement was reached. The burden then shifts to the defending spouse, who may rebut these presumptions by showing that there was either (a) a full, frank disclosure to the challenging spouse by the defending spouse before the signing of the agreement relative to the value of all the marital property and the income of the parties, or (b) a general and approximate knowledge by the challenging spouse of the character and extent of the marital property sufficient to obtain a value by reasonable means, as well as a general knowledge of the income of the parties (citations omitted).
Id. at 333.
Florida courts apply the Casto standard in deciding whether to enforce a prenuptial agreement. For example, in Flaherty v. Flaherty, 128 So. 3d 920, 923 (Fla. 2d DCA 2013), the Second District found that there was competent evidence to set aside the parties’ prenuptial agreement based upon duress and coercion where the husband handed the wife a copy at 11:30 p.m. the night before their wedding in Las Vegas, telling her to sign and have it notarized before the ceremony. Further, the wife had previously met with an attorney eleven days before the wedding, who advised her not to sign the agreement because it waived all of her rights to an elective share, required a release of any interest in assets acquired during the marriage, and waived her rights to any form of alimony or award of attorney’s fees. Additionally, the wife’s attorney said she would speak to the husband’s attorney about her concerns, but did not follow up with the wife until after the wedding.
Importantly, if an unreasonable prenuptial agreement is freely entered into, it will be enforced. In Waton v. Waton, 887 So. 2d 419 (Fla. 4th DCA 2004), the wife challenged the parties’ prenuptial agreement, claiming that the husband failed to make a full and fair disclosure of his net worth and income to the wife at the time the parties signed the agreement when she agreed to waive alimony and equitable distribution. The husband’s alleged deficient disclosures related to not assigning values to his ownership interests in a private company and other assets. The wife argued that she did not know that the assets had substantial value at the time she entered into the agreement. The court ruled that although enforcing the agreement produced an inequitable result, “if an unreasonable agreement is freely entered into, it is enforceable.” Waton v. Waton, 887 So.2d at 421 (citing Casto v. Casto, 508 So. 2d at 334.)
On the other hand, a husband’s financial disclosure has been held insufficient as a matter of law and a prenuptial agreement deemed unenforceable where the husband failed to provide any information regarding his assets at the time the prenuptial agreement was executed. In Hjortaas v. McCabe, 656 So. 2d 168 (Fla. 2d DCA 1995), the parties’ prenuptial agreement provided that in the event of divorce, the wife was to leave the marriage with a lump sum payment of only $48,000, even though the husband’s net worth was approximately $2 million at the time the agreement was executed, and the wife’s net worth was zero. The Second District held that while the wife’s observations of the husband’s properties could have possibly led her to a peripheral understanding of the extent of the husband’s wealth prior to marriage, the wife did not have adequate knowledge of the character and extent of marital property so as to excuse the husband’s nondisclosure of financial assets.
While in some states such as New York, the burden on the party seeking to challenge a prenuptial agreement appears to be softening, in Florida it is still very difficult to set aside an agreement absent sufficient proof of one of the grounds set forth in Casto.