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Steven J. Eisman

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Are Prenups Dead?

Posted: 03/14/2013 7:44 pm

In a widely publicized matrimonial case, a New York appeals court has upheld a Long Island judge's decision to void the prenuptial agreement between Elizabeth Cioffi-Petrakis and her estranged husband, millionaire Peter Petrakis. Mrs. Petrakis claimed in her case that she was fraudulently induced into signing the agreement due to false promises made by her husband-to-be just days before their 1998 wedding, and the court agreed.

The question everyone asking now is: Are prenuptial agreements dead? The answer is no.

This particular case had a very unusual set of circumstances that are not likely to be routinely replicated, and looking at the specifics of the Petrakis case, this appeals court decision will not dictate the future of the prenup except in limited circumstances.

To begin with, the Petrakis case hinged specifically on verbal exchanges between the parties and the judge's assessment of the credibility of the litigants, Mr. and Mrs. Petrakis. In matrimonial cases in general, there are always "he said/she said" allegations.

Specific to this case, the court believed that Mr. Petrakis induced his wife-to-be to sign the prenup by promising that he would destroy it once the parties had their first child. She claimed that her husband gave her an ultimatum, threatening to call off the wedding four days before it was to take place and after it had been paid for by her father. Furthermore, the husband had promised to put her name on the deed to the house -- two things that were not spelled out in the prenup and that he refused to do after they were married.

Given this information, the court validated Mrs. Petrakis' assertion that the prenup itself was the result of overreaching and signed under duress.

While some say this sets a new precedent for prenuptials, I'd argue that they are still important and that there are some teachable moments from this case for couples.

The months leading up to a wedding are an emotional time, and negotiating a prenuptial agreement can be stressful. Certainly nobody wants to think about divorce while planning a wedding. However, the issues of asset protection and support, among other things, loom large in the minds of many prospective brides and grooms who enter the marriage with significant assets and income, and there are some very simple procedural steps to painlessly enter into a prenuptial agreement.

The first step is for each party to hire their own attorney. Then all assets on both sides need to be identified and disclosed in order that the party waiving a right to any future potential "marital" property does so in a knowing and intelligent manner. Finally, commencing and completing the process well in advance of the wedding date will greatly aid in defeating claims of duress and overreaching.

But couples should remember that a prenup is an agreement that both the bride and groom must make willingly, with their eyes wide open, and entered into with the advice of counsel.

The decision by this Appellate Court to uphold the vacature of this particular agreement is hardly a death knell for prenuptial contracts. It will simply be another arrow in the quiver of matrimonial trial lawyers who take aim at setting aside existing agreements -- and more often than not, in the case of well-drafted agreements, it will fall far short of its mark.

 
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