The Importance of Financial Disclosure in Prenuptial Agreements

When you sign a prenuptial or postnuptial agreement, it’s important that both parties have attorneys to represent their interests. One party would not present the other with a prenuptial agreement to sign without having a lawyer weigh the risks and benefits. In addition, both parties must make full financial disclosure by disclosing their assets and liabilities during the drafting of such an agreement. Failure to do so could mean that your prenup is voided by the Florida courts. That’s what happened in Hjortaas v. McCabe, 656 So. 2d 168 (Fla. 2d DCA 1995). Ultimately, the prenuptial agreement was found to be invalid because the husband failed to make full financial disclosure to his wife.

Background of the case 

In this case, the wife and husband planned to marry on May 1, 1987. The husband proposed the prenuptial agreement in early April, but the actual agreement was drafted on April 28, 1987, and signed by both parties the day before their wedding. This was the first mistake. At the time of the signing, no financial disclosures were provided. They would be prepared one month later. At the time, the husband’s net worth was around $2 million. The wife had no notable assets.

Under the prenup, in the event of a divorce, the wife would receive a lump sum based on the length of the marriage or approximately $48,0000, with a potential maximum of $98,000.

Legal reasoning for the outcome

Essentially, the court ruled that the wife was under duress when she signed the agreement due to the timing. Ultimately, you want to sign your prenup well before the marriage takes place. The court emphasized that presenting the agreement just two days before the wedding, when the wife had virtually no time to seek counsel, fully evaluate the contract, or cancel the wedding, strongly indicated that her consent was coerced by the husband.

That wasn’t the only problem with the prenup, however. In addition, the agreement lacked any financial disclosure at the time it was signed. Given the disparity in financial standing between husband and wife, the court found that the disclosure was wholly deficient as a matter of law.

Applying Casto v. Casto, the court reaffirmed that a prenuptial agreement can be invalidated if:

• It was entered into under fraud, duress, coercion, misrepresentation, or overreaching
• It was unreasonable or unfair, coupled with insufficient disclosure, unless the party challenging the prenup had general knowledge of the other party’s finances.

In this case, both grounds for tossing a prenup applied to the case, indicated duress, and were legally insufficient. The appellate court reversed the trial court’s decision to enforce the agreement and remanded the case for equitable distribution proceedings.

Talk to a Tampa, FL, Family Law Attorney Today

Westchase Law, P.A., represents the interests of Tampa residents who are looking to sign a prenuptial or postnuptial agreement. Call our Tampa, FL, divorce lawyers today to schedule an appointment, and we can begin discussing your next steps right away.

Sources:

law.justia.com/cases/florida/supreme-court/1987/66325-0.html

casemine.com/judgement/us/59148429add7b049344b295f