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Friday, May 29, 2015

3 Prenup Drafting Tips from the Appeals Court: Pisano v. Pisano

The Appeals Court ruled, in Pisano v. Pisano, on numerous issues involving a bifurcated trial, a prenuptial agreement, temporary alimony and family loans.  The primary issues in the case all could have been prevented by inclusion of clear provisions in the Prenuptial Agreement.  This is not a criticism of the drafters, because in many instances the soon to be married couple don't want to deal with these types of specifics.  However, this case demonstrates the importance of clear and thoughtful decision-making and drafting when creating a Prenuptial Agreement.

1. Trial Judge's determination that the Prenuptial Agreement excludes income derived from separate assets from consideration of alimony - UPHELD.

While the prenup did not explicitly say "income from separate assets is excluded from the calculation of alimony" as clearly as it could have, the appeals court upheld this decision finding that the language of the prenup clearly intended to exclude income from separate assets from being divided.  More clear prenup drafting on the issue of "income from separate assets" could have avoided the need for an appeal on this issue.

Also of note here, the Appeals Court points out that the "modification of rights under G. L. c. 208, § 34, does not, in the circumstances, act as an 'unknowing waiver' of the husband's alimony rights."  In other words, the Alimony Reform Act does not automatically invalidate prenup limitations on alimony just because the law changed.

2. Order for Husband to reimburse temporary alimony paid from separate assets. - OVERTURNED

The Husband had requested as a temporary order of $12,000 per month in alimony to be paid from the Wife to him, and the Wife submitted a more modest proposed order of $1,500 per month.  The Judge's order was $2,000 per month and $32,000 total was paid before the alimony was suspended.  The Appeals Court did not agree that the payment of temporary alimony unjustly enriched the Husband, especially since the Wife had made a similar proposal rather than arguing that alimony was excluded completely due to the prenuptial agreement.

While the Wife, in hindsight, probably wishes she had forced the issue at temporary orders more, I'm not sure that would have really made a difference.  The SJC has already ruled that temporary alimony has a different purpose and nature than a final order of alimony.  This decision is consistent with that earlier ruling, regardless of how the court got there.

Also of note here, the Appeals Court points out that the prenup doesn't mention "temporary alimony."  Since the Court's are treating this as essentially a different category of alimony, prenuptial agreements should address temporary alimony specifically or take the risk that it's considered separately.

3. Order for Wife to be solely responsible for a $100,000 liability created during the marriage. - UPHELD

The Wife borrowed funds during the marriage to pay what she termed "legitimate familial obligations."  The Husband indicated the possibility of her obtaining those funds from other sources, and claimed to not know she was borrowing the funds.  Based partially on how the funds were spent (to support adult children of the wife's previous husband), the lower court agreed with the Husband.  The Appeals court found no abuse of discretion in this determination.

Also of note, here, the Appeals Court points out that the prenup "contains no specific provision concerning the payment of marital liabilities..."  This is another area where a clear prenup provision on the issue of the marital debt could have avoided significant legal fees to fight the issue.

For mediation or representation of Prenuptial Agreements contact Attorney Kelsey for a consultation.


4 comments:

  1. Most engaged couples aren't thinking about divorce, but it does pay in the long run to be clear in your contract. If all goes well, you'll never have to use those clauses. But if divorce does become the only option, you'll be glad you have a clear, binding document to make decisions from. http://www.andraskilaw.net/practice.html

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  2. Some great tips here when it comes to prenup agreements. It can be a difficult process to go through and might seem unnecessary - you don't want to think about potential divorce right before marriage! But it's good to have an agreement set up.

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  3. I can really see how important a prenup is after reading through this article. In the last paragraph in the italicized text, you say having that prenup would have mitigating those legal fees and issues from happening from the start if they just had the proper prenup before their divorce. Sure, people don't think about divorce and never think it's possible when they're getting married at first, but having it just in case as you get married is essential with the potential repercussions if you don't have one. So my question is, how can you bring up a prenup before you're getting married to your future spouse when it's assumed that divorce isn't even possible in the minds of two people getting married?
    http://www.sollandcompany.ca/en/family_law.html

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    1. Felicity,

      Thank you for your comment and question. Many find it difficult to bring up the possibility of a prenup when planning for the happy event of a marriage and feel that it might present a damper on the festivities. However, prenups are simply about thoughtful planning. Many people will plan their wedding for a year (even though it's a one day event), but don't want to spend time planning what their life after the wedding will be like. Just like estate plans or life insurance, prenups help people plan for unexpected events. And just like estate plans many people avoid them because they don't want to think about the possibility of those events.

      When discussing the possibility of a prenup with a client I like to point out that they are not just about divorce. Prenups help plan the financial relationship of two people throughout their marriage and through its end point, whether through death or divorce. Planning can be a helpful tool in having parties understand their financial plan and be on the same page about it when getting married. That type of financial planning might just prevent divorce.

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