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Tennessee Court Invalidates Antenuptial Agreement, Finding It Was Not Entered Into Knowledgeably
Posted by Martin Heller Potempa & Sheppard, PLLC on March 9, 2016
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Antenuptial agreements, also known as prenuptial agreements, can be useful if they are drafted and executed correctly. In a recent opinion, the Court of Appeals of Tennessee examined the validity of an antenuptial agreement during the settlement of the deceased wife’s estate in the case of In re Estate of Hillis (Tenn. Ct. App. Feb. 25, 2016).
In Hillis, the surviving husband challenged the validity of a 1992 antenuptial agreement presented to him by his wife on the day before their wedding. The antenuptial agreement provided that each party waived all claims of inheritance, descent, and distribution with respect to the parties’ private and real property accrued by virtue of the marriage. The antenuptial agreement, however, did not include any financial or asset disclosures from the husband or wife. The husband signed the antenuptial agreement without the advice of an independent lawyer or knowledge of the value of the wife’s bank accounts, investments, or business interests. Following a bench trial, the lower court ruled that the antenuptial agreement was invalid because it did not include the required disclosures about the wife’s assets, and because it contained contradictory provisions. The wife’s son appealed the decision.
In Tennessee, antenuptial agreements are binding if they are entered into freely and in good faith, without the exertion of duress or undue influence upon either spouse. Antenuptial agreements must meet this standard whether they are contested during either marital dissolution or probate. A party seeking to enforce such an agreement can demonstrate that the antenuptial agreement was entered into knowledgeably if each party was provided with a full and fair disclosure of the nature, extent, and value of the other spouse’s holdings.
In the absence of sufficient disclosures, the agreement may be enforceable if the spouse had independent knowledge of the full nature, extent, and value of the other spouse’s holdings. Whether one spouse had sufficient knowledge of the other spouse’s holdings depends upon the particular facts and circumstances of each case. Relevant factors include the parties’ respective sophistication and experience in business affairs, the duration of the relationship prior to the execution of the agreement, the time of the signing of the agreement in relation to the time of the wedding, and the parties’ representation by, or opportunity to consult with, independent counsel.
On appeal, the court affirmed the lower court’s decision. The court noted that it was undisputed that the husband did not receive any financial disclosures with the antenuptial agreement. In addition, the uncontroverted testimony from the husband and other evidence supported the finding that the husband was not sufficiently aware of the extent of his wife’s assets, such as bank accounts and investments. As a result, without any factual foundation to conclude that the husband had knowledge of the full nature, extent, and value of his wife’s holdings, the agreement was not entered into knowledgeably. The court, therefore, held the antenuptial agreement was invalid.
If you are considering protecting your interests before, during, or after a marriage, consulting with an experienced family law attorney can be advantageous in determining your options. At the Nashville firm of Martin Heller Potempa & Sheppard, our family law attorneys provide comprehensive advice to individuals in a variety of legal issues, including divorce, child custody, modification of support orders, and more. To discuss your case with one of our skilled attorneys, call (615) 800-7096 or contact us online.
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