You and your spouse married years before you decided to settle in Tennessee. Although it sounded terribly unromantic, you agreed to sign a prenuptial agreement. Your wedding was in another state, and you both retained separate legal counsel. Does the fact that the prenup wasn’t executed in TN make it invalid?
More than likely, your rationale in even asking the question speaks for itself. After all, a prenuptial agreement acts as a contract in case your marriage doesn’t work out. Of course, it may also contain provisions in the event one of you dies.
Although some disputes regarding premarital agreements focus on the death of a spouse, your concerns do not. Truth be told, you know divorce looms in your immediate future.
Will Tennessee courts enforce the prenup you signed in another state? The Court of Appeals actually considered this issue in Larsen v. Giannakoulias. The case history and results should help answer your concerns.
Prenuptial Agreement Signed in NM
George Giannakoulias and Angie Renee Larsen met in 2006. Larsen was a general surgeon and practiced medicine in Nashville. During the trial court hearings, Giannakoulias testified that he was “winding down” his real estate career in Florida when he first began dating Larsen.
In February 2007, Giannakoulias moved to Tennessee to live with Larsen. He did not work. When Larsen became pregnant with the couple’s first child, she decided to close down her medical practice. She found it too demanding. Still unmarried, Giannakoulias and Larsen agreed to relocate to Florida. The oldest of the couple’s three children was born in November 2007.
A few months later, in February 2008, Larsen decided to accept a new position in New Mexico. The two relocated there with their new baby. Giannakoulias stayed home with the baby and worked as a day trader.
Fast forward to the summer of 2008. The couple decided to marry. However, Larsen expressed concerns about the need for a prenuptial agreement. In fact, she testified that she would not have married Giannakoulias without one.
Giannakoulias downloaded a prenup from the internet and the two executed the agreement in New Mexico. They subsequently married in Colorado in August of 2008.
The family moved once again in May 2009. Larsen began a fellowship in breast cancer oncology in Pennsylvania. Pregnant with her second child, Larsen started off working part-time. The job evolved into a full-time schedule.
After the birth of their second child in July 2009, Larsen discussed the need for her husband to help out financially. She recalled Giannakoulias telling her he had a $300,000 completely open line of credit on a house he owned with his aunt in Florida.
Larsen suggested that her husband use some of the equity line to support the family during her fellowship. She was surprised to learn that Giannakoulias had already drawn the full amount. Even worse, he lost it all in day trading and used $72,000 in marital funds to pay the line of credit. Giannakoulias still didn’t bother to find a job outside the home.
When Larsen completed her fellowship in July 2010, the family moved again. This time they returned to Tennessee when Larsen accepted a job offer in Chattanooga. She became pregnant with the couple’s third child and was “transitioned out” of her employment.
The Chattanooga medical practice provided Larsen with a monetary settlement. The family used the funds to live on and moved to Florida. The couple’s youngest child was born in August of 2011. Larsen stayed home with the baby. Nonetheless, Giannakoulias still did not work.
In the month following their latest addition, the family moved again. Larsen found a new job in Ohio, where they would live for approximately one year. Giannakoulias remained home with the children. Notably, Larsen’s mother also stayed with the family to help them.
In October of 2012, the family returned to Tennessee. Larsen returned to practice in Nashville, and her earnings increased significantly. Giannakoulias stayed home with the youngest child, while the older ones attended school.
It must have been yet another eyeopener. In 2013, the IRS filed a nearly $4M tax lien against Giannakoulias. The lien only listed the husband’s name. However, Giannakoulias listed one of Larsen’s premarital properties as his address. The IRS, therefore, placed a lien on the property.
Ultimately, the IRS decided to “temporarily close” Giannakoulias’ case, stating that he did not have the ability to pay at that time. However, he still owed the money, and it would accrue interest and penalties.
The saga continued. Larsen purchased a bed and breakfast with the intention of Giannakoulias running the business. Meanwhile, to avoid the IRS problems, the husband used his wife’s name and social security number to run the bed and breakfast. Larsen had no idea and was most likely surprised when Giannakoulias didn’t pay taxes on the business. Ultimately, the state put a tax lien on the house.
Complaint for Divorce
On April 8, 2015, Larsen filed for a divorce. Giannakoulias either refused to answer, or only half responded to requests for information related to the case. Additionally, he hired and fired four attorneys.
The litigation involved several issues. Among them, was alimony. Larsen pointed out that the prenuptial agreement signed between the parties indicated that both parties “waive[d] and relinquishe[d] any claim for alimony, spousal support or maintenance.”
In response, Giannakoulias filed a motion for partial summary judgment. He claimed that since the agreement was signed in New Mexico, it needed to be considered under that state’s laws.
Quick side note. The couple executed the agreement with forms taken from the internet. The problem? Without the benefit of legal counsel, they were unaware that New Mexico law prohibits the waiver of spousal support. Therefore, according to the state’s laws, that portion of the prenup agreement should be declared invalid.
Court on Alimony
In considering the motion, the trial court ruled against Giannakoulias, stating it was clearly the parties’ intention to waive claims to spousal support. Furthermore, the court decided that the parties intended their agreement to follow them. Since they were now in Tennessee, the laws in Tennessee should apply instead of New Mexico.
Giannakoulias appealed the decision now to award him alimony. When the Court of Appeals reviewed the matter, they cited the rule “lex loci contractus.” Under Tennessee law, contracts follow where they are executed. Since New Mexico law did not allow couples to waive spousal support, this section of the premarital agreement was invalid.
The Court of Appeals remanded this case to the trial court for this issue and others.
Premarital agreements serve a purpose and should be written with the advice of legal counsel. That’s among the lessons from this particular case. When it comes to the prospect of high-asset divorces, you need a law firm with experience in negotiating on your behalf. Contact Martin Heller Potempa & Sheppard, PLLC to schedule an appointment to discuss your family law issues.