Cases involving family law issues can be very complicated, and there are some situations where the decisions made in family court may be challenged by one of the parties involved. During an appeal, a person may argue that errors were made during the original case and that the decisions were based on an incorrect interpretation of the law. Appeals are usually only needed in extraordinary circumstances, but they may be necessary to ensure that a person is treated fairly.
Not all appeals are successful, and unfortunately, appellate court judges sometimes make decisions that may be viewed as unfair and unjust by those who were involved in a case. Attorney Amanda Oliver recently represented a client in an appeal involving the enforceability of a postnuptial agreement, and while the court ruled against her client, the case illustrates some of the issues that may be addressed when these types of matters are contested. The case in question involved a high net worth divorce, in which the wife wished to leave a marriage with a husband that she claimed was emotionally abusive. The husband convinced the wife to sign a one-sided postnuptial agreement, and after the wife filed for divorce, the husband took action to enforce this agreement. The wife argued that the agreement should not be enforceable because it was unconscionable, or grossly unfair. However, the trial court ruled against the wife and upheld the terms of the agreement.
The wife made multiple arguments detailing why the agreement was unfair, including that it provided her with only a small fraction of the couple’s marital estate. Under the agreement, the wife received a property settlement in return for waiving a claim to spousal maintenance, and while the husband kept the couple’s marital home, the wife received several hundred thousand dollars that could be used to purchase a new residence. However, the husband ended up keeping the majority of other assets, including real estate investment properties, retirement accounts, vehicles, cash funds, and investment accounts.
The agreement also allowed the husband to keep all assets in the business he owned. According to the wife, the agreement granted her only 13.5 percent of the total value of the marital estate, and a significant portion of the assets she received were trust accounts containing funds that belonged to the couple’s children. Ultimately, the vast majority of the couple’s assets, which were valued at $3.8 million, went to the husband.
In addition to arguing that the postnuptial agreement divided property unfairly, the wife argued that she was coerced into signing the agreement by her husband. She claimed that he was very controlling and that he became verbally and emotionally abusive if she did not do what he wanted. During the couple’s marriage, the husband encouraged the wife to stay home to raise the couple’s children rather than work outside of the home, while he maintained primary control over the family’s finances.
The wife also testified that after she asked for a divorce, the husband threatened to kick her out of their family home and cut her off from contact with her children. When he presented her with the postnuptial agreement, he attempted to dissuade her from hiring an attorney and would not allow her to make any changes to the agreement. He also took steps to pressure her into signing the agreement, including initiating arguments on a daily basis, stating that he would fight her on child custody issues during their divorce case if she did not agree to his terms, and contacting her parents to put additional pressure on her.
While the wife did briefly consult with two attorneys, both of them advised her not to sign the agreement. Even though the wife believed the agreement was unfair, she ultimately signed it without having legal representation, because she believed it was necessary to prevent consequences threatened by the husband such as being unable to see her children. While she knew that the agreement would give her husband the majority of the couple’s assets, she did not realize at the time how large the disparity would be or how small a portion of the marital estate she would receive.
After reviewing the case, two of the three appellate court judges believed that the couple’s postnuptial agreement was not unconscionable. The majority opinion stated that because the wife wished to end the marriage and receive a fresh start, she understood the choices she was making. Even though the husband took steps to pressure her into signing the postnuptial agreement, the appellate court decided that these actions did not constitute duress, and it stated that the wife knew what she was signing and chose not to secure legal representation.
The majority opinion also stated that even though the husband received a much larger portion of the marital estate, this division was not so unfair as to be considered unconscionable. Even though the husband received 99 percent of the couple’s cash and investment accounts, 93 percent of the couple’s retirement accounts, 89 percent of the couple’s real estate holdings, and 73 percent of the value of the couple’s vehicles, the appellate court found that the postnuptial agreement was not so unfair that it would be inconsistent with the interests of justice. Because the value of the stock options in the husband’s business was disputed, the appellate court chose not to consider these assets, even though they had a potential value of several million dollars and were allocated entirely to the husband.
Dissenting Opinion Addresses Unconscionability in Postnuptial Agreements
The appellate court judge who did not agree with the court’s ruling provided a dissenting opinion, in which he stated that the majority’s decision created a troubling precedent. By ruling that this postnuptial agreement was not unconscionable, the appellate court created a heavier burden for those who wish to challenge agreements that are unfair in the future. He also noted that because women are more likely to be affected by this issue, the ruling is a “step backward for gender equality.”
As part of his opinion, the judge outlined a list of 10 factors that should be considered when courts determine whether a postnuptial agreement is unconscionable. These factors are:
- Independent counsel – Each party should be able to retain an independent attorney. In this case, the husband prevented the wife from retaining a lawyer. The attorneys the wife consulted with declined to represent her because the husband would only allow them to sign off on the postnuptial agreement without making any changes. The husband also warned the wife against receiving help from an attorney and stated that this would just cause the divorce process to be longer and more expensive. Because the husband had legal counsel and the wife did not, there was a significant disparity in bargaining power.
- Threats regarding legal disputes – An agreement may be unconscionable if one party threatens to draw out the legal process if the other party does not sign. During this case, the husband made repeated threats regarding the couple’s children and marital assets and stated that he would pursue prolonged litigation if the wife did not agree to his terms.
- Duress, fraud, or deception – A party may coerce their spouse into signing an agreement by placing pressure on them, misrepresenting facts, or failing to disclose important information. In this case, the wife stated that she signed the agreement because the husband had threatened to prevent her from seeing her children, which should constitute duress, regardless of whether she had wanted to end the marriage. The husband also acted deceptively regarding the couple’s assets. At one point, he stated that his stock options were worth $2.3 million, but he later testified that they had no value.
- Income disparity – An agreement may be unconscionable if one party has much greater income and earning power. In this case, the husband earned over $200,000 per year, but the wife did not maintain steady employment because the husband wanted her to be a stay-at-home parent. At the time the postnuptial agreement was signed, the wife relied on the husband for financial support.
- Financial control – One spouse may have primary or complete control over a couple’s finances and use their knowledge of financial affairs to prevent the other party from fully understanding the terms of a postnuptial agreement. In this case, the husband had full control of the couple’s finances, and the wife only had a superficial understanding of these matters, making it difficult for her to understand what she was signing.
- Disclosure – When making a postnuptial agreement, spouses should provide each other with a full disclosure of their assets and liabilities. In this case, the husband’s failure to fully disclose the couple’s assets affected the wife’s ability to make fully informed decisions.
- Understanding and free agreement to terms – Both parties should have a full understanding of the effects of signing an agreement. In this case, the husband provided the wife with information that indicated that she would receive around 45 percent of the couple’s assets, and this led her to agree to terms that provided her with a much smaller proportion of the marital estate.
- Length of marriage – The amount of time a couple was married is often used to determine whether spousal maintenance should be awarded to ensure that the spouses can maintain their standard of living. In this case, the couple was married for 23 years, and the wife had a much smaller earning capacity than the husband. The assets she received based on the postnuptial agreement were not sufficient to allow her to maintain the standard of living the couple enjoyed during their marriage.
- Abuse – Evidence of physical or emotional abuse may play a role in the unconscionability of a postnuptial agreement. In this case, the wife stated that the husband had not been physically abusive. However, he did have a history of verbal and emotional abuse and controlling behavior. By seeking a divorce, she was attempting to escape her husband’s abuse and control. The court should have considered how the husband’s history of abuse may have played a role in his attempts to pressure the wife into signing an unfair agreement.
- Disparity in allocation of assets and debts – A court should consider how a postnuptial agreement affects the parties’ economic circumstances. If one party is deprived of a fair share of the marital estate, an agreement may be unconscionable. In this case, the wife received around $580,000 of an estate that could be valued as high as $6.25 million, meaning that she only received about 9.7 percent of the marital assets. Even if the husband’s stock options in his business were excluded from consideration, the wife received around 25 percent of the marital assets. While the majority opinion stated that the wife got what she wanted by ending the marriage, her desire to leave the relationship should not overrule issues of fairness.
Contact Our DuPage County Postnuptial Agreement Lawyers
To avoid issues such as the ones that arose in this case, it is important for spouses to secure legal counsel before signing a postnuptial agreement. At Weiss-Kunz & Oliver, LLC, we work with our clients to ensure they fully understand the terms of an agreement. In cases where a prenuptial or postnuptial agreement was unfair or when a court issued an incorrect ruling, we can help pursue an appeal. To get experienced and dedicated legal help with these and other issues, contact our Elmhurst family law appeals attorneys at 312-605-4041.