The Kinney case out of Minnesota offers a good review of the general requirements for a valid prenuptial agreement. The appeal also shows a modern trend in which courts view such agreements with suspicion when one party is not represented by counsel. Of course, decisions in most cases turn on the facts, but courts tend to enforce prenups when the playing field is more level. The litigants in Kinney appear headed for another round to determine the facts and fairness of the agreement. Estate of Kinney, 733 N.W.2d 118 (Minn. June 14, 2007).
Howard Kinney's first wife, Mary, died in 1967, leaving her estate to Howard and their three children. Howard's share of Mary's estate included a one-third interest in Illinois and Indiana farm property; the children shared the remaining two-thirds interest.
Howard began dating a woman named Lillian, and asked his children to grant him a life estate in the farm property in exchange for which he would execute a will leaving them everything he'd received from Mary. Howard also promised that, should he remarry, he would ensure a "strong" prenuptial agreement was executed to leave all of his assets to his children.
Howard and Lillian were married on Aug. 29, 1969, when Howard was 55-years-old and Lillian was 45. At the time, Lillian was employed as a manager at Prudential Insurance Company, where she'd worked for more than 20 years. On the morning of their wedding, Howard picked Lillian up at her apartment and drove her to downtown St. Paul to "sign some papers" at his attorney's office. Those papers turned out to be a prenuptial agreement.
They were married for 35 years. Howard died in 2004, and was survived by Lillian.
After Howard's death, Lillian claimed her elective share of Howard's estate pursuant to Minnesota Statute Section 524.2-202(a), which (based upon the length of their marriage), would have constituted one-half of the estate. Harold's executor argued that what the court referred to as the "antenuptial" agreement waived Lillian's right to take an elective share.
Lillian argued that the agreement was invalid for three primary reasons:
(1) Notwithstanding language in the agreement stating that Lillian fully understood its provisions, Lillian testified that she had not understood certain legal terms, including those related to her "elective share;"
(2) Lillian alleged that she'd entered into the agreement under duress, because she first viewed the agreement on the morning of her wedding; and
(3) Lillian argued that she was not offered an opportunity to consult with independent legal counsel before executing the agreement; and, even if Howard and his attorney had offered her such an opportunity, she did not know an attorney from whom she could seek counsel.
The parties filed cross motions for summary judgment in the lower court. The lower court granted Lillian's motion and held that the agreement was invalid, because Lillian lacked knowledge of her right to seek legal counsel. (Section 519.11 of the Minnesota Statutes provides that an antenuptial agreement is valid only if the parties have "an opportunity to consult with legal counsel of their choice.") The appellate court affirmed.
The Minnesota Supreme Court granted review on the narrow issue of whether an antenuptial agreement is invalid when the party challenging the agreement did not have an opportunity to consult with separate counsel.
The state high court held that common law applied, because the agreement was executed before the legislature enacted Section 519.11. But, under applicable common law, the court found that a valid antenuptial agreement must be fair and equitable, as determined by four factors:
(1) full and fair asset disclosure;
(2) sufficient consideration;
(3) the parties' understanding of the agreement's relevant provisions as well as how those provisions impacted their rights in the absence of the agreement; and
(4) whether the agreement was procured by an abuse of fiduciary relations, undue influence or duress.
The high court also said that while an opportunity to consult legal counsel was relevant to a common law analysis of an agreement's validity, this opportunity was not in and of itself a separate requirement for an agreement to be valid. Therefore, the court reversed the lower courts' decisions granting and affirming summary judgment to Lillian.
Finally, the high court held that, when an antenuptial agreement is supported by adequate consideration, the burden of proof lies with the party contesting the agreement. But if the parties occupy a confidential relationship and the agreement in not supported by adequate consideration, the burden is on the agreement's proponent. Because the district court found (and Lillian acknowledged) that the agreement was supported by adequate consideration, Lillian bore the burden of proof as the party challenging the agreement. The high court then remanded the remainder of the proceedings to the lower court.
All is not lost for Lillian. The court did not grant the executor's cross motion for summary judgment, because it found factual disputes about Lillian's knowledge of her rights in the absence of the agreement and about whether the agreement was the product of duress or undue influence. While Lillian will bear the burden of proof on these issues, the court cited a number of cases helpful to her argument, and noted that the parties to such agreements are usually presumed to stand in a fiduciary relationship to one another. This presumption will likely require the court on remand to inquire further as to whether Lillian's agreement "was equitably and fairly made."
