First District Upholds Integrity of Contracts in Recent Opinion
A prenuptial agreement is a contract entered between partners before marriage or civil unions in those jurisdictions recognizing those. The contract’s contents typically include provisions for the division of marital assets and spousal support in the event the relationship terminates.
Prenuptial agreements usually arise in two very different legal contexts: (1) divorce and (2) probate. In Florida, the rules applying to these two vastly-different courtrooms are exclusive of one another. My experience has been dealing with prenuptial agreements in the probate arena, where the marital relationship has been severed not by divorce, but by the death of one of the spouses. Usually, the surviving spouse faces the issue of whether a prenuptial agreement he or she signed before marriage is enforceable so as to strip him or her of what would otherwise be their rightful inheritance. The surviving spouse usually claims that there is something that should invalidate the agreement, and the family of the deceased spouse typically seeks to enforce the agreement so as to exclude the surviving spouse from any inheritance. I have represented both sides of this commonly-litigated issue.
Prenuptial agreements are governed by the Florida Probate Code (the prenuptial agreements arising in the divorce context are governed by the rules and statutes connected with domestic relations courts and actions). Section 732.702 of the Probate Code provides that the rights of a surviving spouse to homestead, exempt property, and family allowance, or any of those rights may be waived before marriage by written contract, agreement, or waiver, signed by the waiving party in the presence of two subscribing witnesses. The Code also provides that no consideration other than the execution of the agreement itself is necessary for it to be valid and enforceable. See Fla.Stat. §732.702(3).
The Florida Probate Code, while allowing for a spouse to waive his or her inheritance rights, also requires that each spouse must make a fair disclosure to the other of that spouse’s estate if the agreement, contract, or waiver is executed after the marriage, but no disclosure is required for an agreement, contract, or waiver executed before the marriage. Fla. Stat. §732.702(2).
The integrity of the waiver of rights contained in a valid prenuptial agreement was recently examined by the Florida 1st District Court of Appeals in its opinion released on January 28, 2009, in Taylor v. Taylor, 34 Fla.L.Weekly D229a, 2009 WL 186155. At issue in Taylor was the validity of a prenuptial agreement entered into between Louis and Mary Ann Taylor (“Mrs. Taylor”).
The day before their marriage in 1996, Mr. and Mrs. Taylor signed a prenuptial agreement that read as follows:
“BE IT KNOWN, this agreement is entered into on this 21 day of June 1996.
WHEREAS, the parties contemplate legal marriage under the laws of the State of Florida, and it is their mutual desire to enter into this agreement so that they will continue to own and control their own property, and are getting married because of their love for each other but do not desire that their present financial interest be changed by their marriage.
NOW, THEREFORE, it is agreed as follows:
1. All property which belongs to each of the above parties shall be, and shall forever remain, their personal estate, including all interest, rents, and profits which may accrue from said property, and said property shall remain forever free of the claim by the other.
2. The parties shall have at all times the full right and authority, in all respects the same as each would if not married, to use, sell, enjoy, manage, gift, and convey all property as may presently belong to him or her.
3. In the event of a separation or divorce, the parties shall have no right against each other by way of claims for support, alimony, maintenance, compensation, or division of property existing of this date.
4. In the event of separation or divorce, marital property acquired after marriage shall nevertheless remain subject to division, either by agreement or judicial determination.
5. This agreement shall be binding upon and inure to the benefit of the parties, their successors, assigns, and personal representatives.
This agreement shall be enforced with the laws of the State of Florida. Under this language, the agreement bears the signatures of the decedent, Appellee, two witnesses, and a notary.”
After Louis died, his estate proceeded through the probate court system, where his personal representative, Joshua Taylor, filed a petition to determine beneficiaries based on the existence of what Joshua believed to be a valid prenuptial agreement which would be effective as a waiver of any inheritance rights by Mary Ann.
The Duval County probate court held a hearing and determined that the prenuptial agreement had no effect on Mrs. Taylor’s right to partake in the decedent’s intestate estate as his surviving spouse. Particularly, the probate court felt that the agreement was silent, ambiguous as to whether it affected the rights of one spouse in the event of the other spouse’s death.
Joshua Taylor appealed the decision of the probate court and the case worked its way to the 1st District Court of Appeals which first examined the Florida Probate Code §732.702(1), which provides as follows:
“The right of election of a surviving spouse, the rights of the surviving spouse as an intestate successor or as a pretermitted spouse, and the rights of the surviving spouse to homestead, exempt property, and family allowance, or any of them, maybe waived, wholly or partly, before or after marriage, by a written contract, agreement, or waiver, signed by the waiving party. Unless it provides to the contrary, a waiver of “all rights,” or equivalent language, in the property or estate of a present or prospective spouse, or a complete property settlement entered into after, or in anticipation of separation, dissolution of marriage, or divorce, is a waiver of all rights to an elective share, intestate share, pretermitted share, homestead property, exempt property, and family allowance by each spouse in the property of the other and a renunciation by each of all benefits that would otherwise pass to either from the other by intestate succession . . . .”
The Court then applied the Code to the Agreement detailed above and found that “the trial court erred in determining that the prenuptial agreement was ambiguous as to Appellee’s rights in the decedent’s estate. Section 732.702(1) does not require that the parties specify an intent to relinquish rights given to surviving spouses in order to effectively relinquish those rights. Instead, the statute provides that a general relinquishment of “all rights” or equivalent language is sufficient to accomplish this purpose. Here, Appellee agreed, under paragraph one, that after marriage, the decedent’s property would “forever remain [his] personal estate” and that such property would be “forever free of any claim by [Appellee].” Because this language is equivalent to a statement that Appellee waived “all rights” in the decedent’s property or estate, section 732.702(1) compels a conclusion that the prenuptial agreement was a valid waiver of those rights.”
“Our review of the remainder of the agreement supports this conclusion. When read as a whole, the agreement makes clear the parties’ intention that their marriage would not affect their financial interests. Paragraph two particularly supports this conclusion, even though it would not have been sufficient, standing alone, to constitute a waiver of the rights enumerated in section 732.702(1). Paragraph two, which provides that the parties were to retain “the full right[s] and authority” over their property as they would have “if not married” shows that the parties intended for their property to be treated as property belonging to an unmarried person. Additionally, while paragraphs three and four pertain specifically to “the event of separation or divorce,” the remainder of the agreement contains no such limiting language. Thus, the prenuptial agreement, by its own terms, defined the parties’ property interests for general purposes, and not simply for the purpose of aiding a court in dividing the assets in the event of a divorce or separation.”
The Taylor decision is a good reminder that Courts will generally uphold the integrity of contracts in the probate context. Does this policy extend to judicial enforcement of contracts to make a will?