Appellate Court Voids Prenup on Basis of Fraud

March 21, 2013
By Thomas M. Huguenor on March 21, 2013 8:01 AM |

332157_contract (1).jpgJust last month, an appeals court in New York sided with a wife who had been on the losing end of a prenuptial agreement -- and essentially threw it out. While the laws in New York do not govern marriages that take place San Diego, the unexpected decision is sending shockwaves through the Family Law community at large. Divorce attorneys throughout the country are talking about the decision, and many believe that a solidly drafted prenup will still hold up in court, despite the surprising decision. If you are contemplating marriage and believe a prenup is the right agreement for your situation, it is imperative, now more than ever, that you consult an experienced, local attorney to draft the agreement.

According to a Wall Street Journal article, four days before their wedding, Peter Petrakis asked his soon-to-be wife, Elizabeth Cioffi, to sign a prenuptial agreement. He gave her an ultimatum - if she didn't sign the document, he would call off the wedding that was already paid for by Elizabeth's father. She agreed to sign, but only after Peter promised to tear up the agreement once they had children. He also promised to put her name on the deed to the house. These last two provisions were not included in the prenup.

After having two sons and one daughter, Elizabeth claimed that Peter reneged on his end of the bargain. Under the prenup, Elizabeth is entitled to $25,000 a year. She argued in court that Peter fraudulently induced her to sign the agreement just days before their wedding. The court agreed, even though Peter's promise was not part of the prenup. It is reported that Peter will appeal the decision to the highest court in the state.

With the prenup decision under her belt, Elizabeth plans to initiate divorce proceedings and will seek half of her husband's assets, estimated at $20 million. Some divorce attorneys have speculated that this decision could be quoted in every case going forward. Others are not sure whether the ruling will establish precedent or if it will be considered a singular decision, applicable only to the facts in this case.

California law requires parties to wait seven days from the day they first see the prenup before signing the document. And as we discussed in an earlier blog post, two important rules governing prenups dictate that the agreement must be in writing and must be fair. "Fair" means that the parties are expected to disclose all relevant financial information, a party must not coerce the other party to sign, and both parties must fully understand what they are signing. As we have seen from the decision in New York, the court agreed that the prenup was not fairly executed, as Elizabeth relied on her husband's verbal promises to tear up the agreement after they had children.

In order to avoid, or at least minimize, unexpected arguments concerning the validity of a prenup, parties are strongly encouraged to contact a local, experienced family law attorney for guidance through this complicated process.

For more than 35 years, San Diego certified family attorney Thomas Huguenor has represented people navigating the California marriage and divorce process. For a free and confidential consultation, contact him today online or at (858) 458-9500.

Related Blog Posts:

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Nullify, Dissolve, or Legally Separate? Understanding California's Divorce and Annulment Laws