Prenuptial agreements are becoming increasingly common between parties that marry, especially when either party has a high net worth prior to marriage or anticipates a substantial inheritance. While prenuptial agreements offer a way to protect ones assets in the unfortunate event of a divorce, a premarital agreement must be negotiated and executed appropriately to ensure that it is enforceable. In a case that has been hailed in the media as precedent-setting, Peter Petrakis, a successful New York real estate investor, learned this the hard way. A Brooklyn Appellate Court panel set-aside his prenuptial agreement based on the rationale that he “fraudulently induced” his wife Elizabeth to execute the prenuptial agreement four days prior to the couple’s wedding.
In challenging the prenuptial agreement, Elizabeth argued that she was coerced to sign the prenup because her husband bullied her to sign the agreement by threatening to cancel the wedding. Elizabeth alleged that she felt she had no choice but to agree and sign the agreement because her father had already spent $40,000 on the wedding. Because Elizabeth did not want her father to lose tens of thousands of dollars, she reluctantly signed the prenuptial agreement. However, she also testified that Peter verbally promised that they would “rip up” the agreement once they had a child. While Peter denied these claims, the court did not find his testimony credible.
Because the court decided to invalidate the prenuptial agreement, it will no longer determine the distribution of the estimated $20 million in real estate holdings in the name of the husband. The decision is being viewed as groundbreaking in part because the court disregarded the terms of the prenuptial agreement, which included language that the agreement could only be modified in writing. However, the court relied on the alleged verbal representations of Peter that they would “rip up” the agreement. The case is also unusual because successful challenges to prenuptial agreements are uncommon.
When challenging a prenuptial agreement in Kansas, the party seeking to avoid enforcement of the prenuptial agreement must establish either:
The spouse contesting the marital contract did not execute the agreement voluntarily; OR
The agreement was unconscionable when executed, and all of the following were true before execution of the agreement:
- A fair and reasonable disclosure of assets was not made to the challenging party.
- The challenging party did not or reasonably could not have known of the assets or debts.
- There was no express voluntary waiver of the disclosure requirement.
An unconscionable agreement essentially means one that is extremely unfair and one-sided. The agreement in the Petrakis divorce may have been considered unconscionable because it awarded ALL marital assets in the husband’s name to Peter. The threat to cancel the wedding despite the father-in-law’s $40,000 investment also may have made the wife’s signing involuntary.
If you have questions about preparing, enforcing or challenging a prenuptial agreement or other questions about high net worth divorces, Kansas divorce attorney Thomas C. McDowell has been practicing law for over two decades. We provide legal representation in all types of divorces from simple uncontested divorce to complex divorces involving high net worth marital estates. So please call us today at 316-269-0746 or submit an online case evaluation form.
