The Effect of Choice of Law Provisions in Prenuptial Agreements

When wedding bells are ringing, the last thing most couples want to think about is the possibility of death or divorce. However, for those entering long-term relationships or preparing for marriage, prenuptial agreements can be crucial for preserving control over assets. These agreements provide a framework for individuals to protect their assets and guard against state laws, which would otherwise dictate how their property would be distributed in the event of death or divorce.

While prenuptial agreements can be perceived as controversial, they don’t need to be. They are particularly beneficial for couples if each person is financially secure prior to marriage, has business interests, possesses significant wealth or family assets, or is remarrying with children from prior relationships. Each of these circumstances presents unique issues that can be effectively addressed by legal counsel during the drafting process. Choice of law provisions dictate which state’s law will govern its enforcement, and the implications of that choice on the value of a prenuptial agreement are tremendous.

Choice of Law Provisions

A choice of law provision specifies which jurisdiction’s laws the court will apply when one party seeks to enforce a prenuptial agreement. Typically, courts will apply the laws of the state in which a divorce is filed and a prenuptial agreement enforced, if that state has a substantial connection to the prenuptial agreement or the marriage. However, certain states apply the laws of a different state if an enforceable choice of law clause is included in the prenuptial agreement. Depending on the state, this may or may not be conditioned upon the application of that state’s law being fair and not contrary to public policy. For instance, the Massachusetts courts applied Pennsylvanian law in Marshall v. Marshall, where the prenuptial agreement included such a choice of law provision without considering the application of public policy.[1] However, in McNamara v. McNamara, the Fifth District Court of Appeals in Florida allowed a prenuptial agreement’s choice of law provision applying Georgia law specifically because it did not violate public policy.[2] According to McNamara, public policy is not violated merely where the agreement inadequately provides for one party, nor where one party made a bad bargain. Rather, the court looked to whether the contract was freely and voluntarily executed by both parties with the benefit of full and fair disclosure of the parties’ assets, and whether it was valid and enforceable under Florida law.

In situations where the parties may be uncertain about which state they will live in within the coming months or years, it is advisable to select a state to which the marriage has genuine ties, rather than choosing your current state or another state at random. This is because courts often consider the couple’s actual residence and ties to the state when determining violation of public policy and determining applicable law.[3]

Given the flexibility of courts to adhere to choice of law provisions, an understanding of each state’s enforcement requirements for prenuptial agreements is critical when drafting prenuptial agreements. These provisions could possibly determine the outcome of a future lawsuit.

Introduction to the UPAA

In response to the increasing number of couples entering marriages while pursuing careers outside the home, the Uniform Premarital Agreement Act (UPAA) was enacted in 1983.[4] The UPAA aims to promote uniformity and predictability in state laws, ensuring that prenuptial agreements validly executed in one state are recognized in another if the couple seeks a divorce. Forty years later, after half of the states had applied the UPAA with substantial updates, and a wealth of commentators presented criticisms of the original Act, the UPAA was updated and renamed the Uniform Premarital and Marital Agreement Act (UPMAA).[5] This revised version pulled from the consistencies that were seen across state borders in legislative updates to the original UPAA provisions when made into state law. These updates also presented several additional benefits to its users, such as: the requirement that all premarital and marital agreements be in writing and be enforceable without consideration, a flexible framework for evaluating the validity of agreements, the non-enforcement of unconscionable agreements, prohibitions against enforcement of agreements executed involuntarily or under duress, and affirmations of traditional choice of law principles.[6] These collectively streamline the drafting process for premarital agreements.

Rhode Island’s Take on the UPAA

As of the publication of this article, 26 states have adopted some version of the UPMAA, with one more in the pipeline[7]. However, as is often the case with most “uniform acts,” not all states have adopted identical versions of the UPMAA.

For instance, Rhode Island has codified a version of the UPMAA that places a heavy burden on the party seeking to invalidate a prenuptial agreement (known in Rhode Island as premarital agreements), thereby reinforcing the validity of such agreements.[8] The Rhode Island Legislature made several amendments in its codification of the UPMAA that “evidenced its intent to preserve the validity of such agreements.”[9] Notably, the Legislature altered the wording from “and” to “or” in subsection (a)(1), requiring the party challenging the agreement to prove all elements in 15-17-6(a)(1) and (2).[10] The Rhode Island Legislature further mandated that the burden of proof must be by “clear and convincing evidence,” a standard absent from the original UPMAA, thereby increasing the difficulty for a party seeking to invalidate a premarital agreement.

Those entering into a premarital agreement in Rhode Island or choosing Rhode Island as the state to use for the choice of law provision must be aware of the hardship that courts place on those seeking to find such agreements unenforceable.

Florida’s Take

Conversely, Florida’s version of the UPMAA imposes a lighter burden on those seeking to contest a prenuptial agreement (known in Florida as premarital agreements). Florida’s statute explicitly identifies two scenarios under which an agreement may be deemed unenforceable, relying more heavily on the original language from the UPMAA. The first is if a party did not voluntarily execute the agreement due to “fraud, deceit, duress, coercion, misrepresentation, or overreaching.”[11] The second is if the agreement was unconscionable at the time of execution, and the other party was not given fair and reasonable disclosure of their property or financial obligations, did not waive the right to such disclosure in writing, and lacked adequate knowledge of the other party’s assets.[12] This distinction allows one party to pursue enforceability through two separate avenues, while Rhode Island’s laws require all of the pieces from both avenues to be fulfilled in order to invalidate a premarital agreement. As such, those living in Florida, or adding a Florida choice of law provision into their agreement, have greater leeway when seeking unenforceability of the contract.

Massachusetts – Common Law Principles

For those residing in states which have not enacted the UPAA, such as Massachusetts, the enforceability of a prenuptial agreement (known in Massachusetts as antenuptial agreements) is governed by common law. While Massachusetts has included a statute allowing parties to enter into antenuptial agreements,[13] caselaw governs enforceability of these contracts. Notably, DeMatteo v. DeMatteo holds that Massachusetts antenuptial agreements must be “fair and reasonable” both at the time of agreement and at the time of enforcement.[14] While this standard resembles the UPMAA requirements expressed in Rhode Island’s statutes, Massachusetts courts maintain a more comprehensive and fact-based approach regarding enforcement of such agreements.[15] By opting not to adopt the UPMAA, Massachusetts allows contracting spouses greater latitude to challenge the enforceability of an antenuptial agreement.

Conclusion

In conclusion, prenuptial agreements are essential instruments for individuals aiming to protect their financial interests, clarify asset distribution in the event of death or divorce, or otherwise remove assets considerations from the decision to get divorced. A properly prepared prenuptial agreement, which adequately considers the choice of law and enforceability requirements of the state which it chooses, can ensure that you, your spouse, your children and your family end up with the legacy you envision. A careful consideration of the state’s enforcement precedent, and the leeway that each state grants contracting spouses, can protect individuals from the risk of prolonged litigation. Ultimately, a well-structured prenuptial agreement not only symbolizes a commitment to one another but also represents a prudent approach to estate planning and asset protection.

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[1] N.E.3d 1113 (Mass. 2018).

[2] 40 So.3d 78 (5th Dist. Ct. App. Fla. 2010).

[3] See Gabe’s Const. Co., Inc. v. United Capitol Ins. Co., 539 N.W.2d 144 (Iowa 1995) (applying the significant relationship test in the absence of a choice-of-law provision); Cooper and Sinha, 30 Wash.App.2d 1023 (Ct. App. Wash. 3rd 2024) (acknowledging an Arizona choice of law provision but ultimately applying Washington law due to the couple’s prolonged residency in the state).

[4] See Uniform Premarital Agreement Act (1983), Prefatory Note.

[5]  See Uniform Premarital and Marital Agreement Act (2012), Prefatory Note.

[6] See “Why States Should Adopt the Uniform Premarital and Marital Agreements Act,” 2012, Uniform Law Commission, National Conference of Commissioners on Uniform State Laws.

[7] see Premarital and Marital Agreements Act, Summary, UNIFORM LAW COMMISSION, https://www.uniformlaws.org/committees/community-home?CommunityKey=2e456584-938e-4008-ba0c-bb6a1a544400 (last accessed September 24, 2024)

[8] See Rubino v. Rubino, 765 A.2d 1222, 1225 (R.I. 2001).

[9] Penhallow v. Penhallow, 629 A.2d 1016 (R.I. 1994).

[10] Id.

[11] See Bates v. Bates, 345 So.3d 328 (46 Fla. L. Weekly D287 (Fl. 2021).

[12] Id.; See Fla. Stat. § VI.61.079(7)(a).

[13] M.G.L. c. 209, § 25

[14] 436 Mass. 18, 762 N.E.2d 797 (2002).

[15] See Rosenberg v. Lipnick, 377 Mass. 666, 389 N.E.2d 385 (1979) (establishes that a prenuptial agreement must be free from fraud, imposition, deception, or overreaching by one party against the other); Matter of Estate of Stacy, 136 N.E.3d 1233 (Mass. 2019) (allowing spouse to waive any and all rights to decedent’s separate property upon death or divorce).