Family Law – Interpreting Antenuptial Agreements in Minnesota

The Minnesota Court of Appeals recently addressed antenuptial agreements in Peterson v. Deeb, A13-2259 (Apr. 27, 2015).  As opposed to the more well-known “prenuptial agreement,” antenuptial agreements are made between partners after they are already married. The details agreed to in the contract are typically the same as those in prenuptial agreements, including property division, support, and similar matter.


Minnesota courts have long recognized antenuptial agreements, which change the statutory provisions for dividing both marital and nonmarital property when marriages are dissolved. Minnesota Statute Section 519.11 codifies the state law on antenuptial agreements.  Agreements are enforceable if the parties provide each other with a full and fair disclosure of their assets and income and the parties have the opportunity to consult with independent legal counsel of their own choice.  When these two requirements are met, the party who challenges the agreement has the burden of proof to show that the agreement was invalid.


New MN Family Law Case


In this case, the wife had been the sole owner of the parties’ home before the marriage; her equity was $75,000.  There was no dispute that the parties disclosed all of their assets and were represented separately by independent counsel throughout the negotiations and drafting of the agreement.  Under the terms of the agreement, the wife retained her $75,000 nonmarital interest in the home, but the parties agreed that any future increase in value would be considered marital property.  Thus, within 30 days after the marriage ended, the homestead was to be transferred into joint tenancy, with both parties as obligors of the mortgage.


After the antenuptial agreement was signed, the parties refinanced the homestead and used that money to purchase a cabin.  The district court found that the parties’ equity in the homestead, including both marital and nonmarital assets, had been eliminated by both the refinancing and by a decline in market value.  Thus, the district court found that selling the parties’ cabin and other real property would enable them to pay each for their nonmarital contributions to the purchase of these assets.  However, the district court awarded the wife $75,000, her interest in the homestead protected in the antenuptial agreement, and the husband was awarded $15,417 for his nonmarital contribution.


Points of Contention


In this case, the issue was the interpretation of the agreement, not the validity of the antenuptial agreement itself. The district court rejected the husband’s argument that the wife’s nonmarital interest of $75,000 was eliminated when the parties refinanced the homestead and its value decreased.  The Court of Appeal upheld the district court ruling.


In reviewing that lower court decision, the Court of Appeals noted that the purpose of contract interpretation is “to give effect to the parties’ intent,” and that a court should “avoid any interpretation that would make a contractual provision meaningless.” The Court of Appeals found that the “overriding purpose and intent of the parties” was to protect each party’s nonmarital party in the event the marriage was dissolved, including both the wife’s $75,000 in equity and the husband’s separate bank account.  The agreement itself did not indicate that purchasing other assets with non marital funds or commingling marital and nonmarital property would result in the marital property being eliminated.


The district court held (and the Appeals Court agreed) that the husband’s interpretation, which would eliminate the wife’s nonmarital asset, was “unconscionable” and unfair.   The Appeals Court also found that the district court’s enforcement of the agreement was fair and equitable.  When the parties married, their only real estate asset was the wife’s $75,000 in equity.  When they divorced, more than twelve years later, their equity had increased to $235,000, so the wife’s nonmarital asset ($75,000) was now only 31.9% of the parties’ total equity.  After the awards to each party of their nonmarital assets, 61.5% of the equity remained to be distributed as marital property.   Thus, the parties had obtained a significant increase in their joint assets during the course of the marriage.


Get Legal Help
This case illustrates the importance of obtaining legal counsel whenever an antenuptial agreement is considered.  For questions about these or any other Minnesota family law issues, be sure to seek out the aid of an experienced family law attorney for tailored guidance.