Navigating Prenuptial Agreements in Massachusetts: Legal Foundations and Advanced Planning
Marriage involves more than just romantic commitment; it includes navigating important financial conversations. Consider the experience of Alex and Jamie, a Boston couple preparing for their wedding. They proactively sought financial guidance and life coaching to align their resources with their individual and shared values.
Alex, a software engineer, and Jamie, a veterinarian with a thriving practice, wanted clarity and security. Jamie considered her practice and her beloved golden retriever, Scout, while Alex had established pre-marital investments that included company stock.
Their journey involved collaboration with both legal and financial counsel to facilitate open communication and put together a prenuptial agreement (prenup).
This blog is part two of our focus on prenuptial agreements. Part one focused on definition and processes. Here, we’ll explore the legal foundations in Massachusetts and how couples can leverage the expertise of both attorneys and financial life coaches for comprehensive pre-marital planning.
Massachusetts Legal Framework
Massachusetts law explicitly permits couples to enter into a prenuptial agreement that determines the rights of each spouse in the event of divorce or death. The state enforceability of these agreements is primarily determined by a “two-look” test established by the Massachusetts Supreme Judicial Court. This test requires the agreement to be:
- First Look: Fair and reasonable at the time of execution
- Second Look: Conscionable (fair and just) at the time of enforcement
When the agreement is initially signed, it must include several key elements:
- Full and Accurate Disclosure: Both parties must provide complete and honest disclosure of their assets, liabilities, and income. Withholding or misrepresenting financial information can jeopardize the enforceability of the agreement. Like Alex and Jamie, the initial steps often involve open and honest conversations about finances. Their financial life coach provided a neutral and supportive space for them to discuss their individual financial histories, values around money, and future aspirations. This clarity, facilitated by the coach, then informed the full and accurate disclosure required by their attorneys. Alex, for instance, had to fully disclose his stock options, while Jamie provided a clear picture of her practice’s finances.
- Understanding of Rights: Each party must have understood the rights they were waiving by signing the agreement. Their respective attorneys then played a crucial role in explaining the legal rights each was waiving by entering into the agreement, ensuring both Alex and Jamie had a clear understanding of the legal implications.
- Voluntary Agreement: The agreement must have been entered into voluntarily, without duress or coercion. Adequate time for review and consideration before the wedding is essential.
- Conscionable at the Time of Enforcement: Even if the agreement was fair at the time of signing, Massachusetts courts will also assess whether it is fair and just at the time of divorce.
While the financial life coach helped Alex and Jamie create an agreement that felt fair and reasonable to them, their attorneys ensured it met the legal standards of the “two-look” test under Massachusetts law, particularly regarding its conscientiousness at the time of enforcement.
Other key components include:
| Considerations Under Massachusetts Law | |
| Alimony | Prenuptial agreements in Massachusetts can address the issue of alimony (spousal support) in the event of divorce. Couples can agree to waive alimony, limit its duration or amount, or establish specific conditions for its payment.
However, Massachusetts courts retain the authority to review and modify alimony provisions if they are deemed unconscionable at the time of divorce. Factors like the length of the marriage, the economic circumstances of each party, and potential career sacrifices may be considered. Alex and Jamie, with guidance from their financial life coach, openly discussed their career trajectories and potential future changes, which informed the alimony provisions drafted by their attorneys. |
| Division of Property | Massachusetts is an equitable division state, meaning marital property acquired during the marriage is divided fairly, though not necessarily equally.
A prenuptial agreement can override this statutory framework by specifying how assets acquired before and during the marriage will be divided in case of divorce. This can be particularly important for protecting pre-marital assets, inheritances, and business interests. When it came to specific assets like Alex’s stock options and Jamie’s veterinary practice, their attorneys drafted the legally binding terms. However, the couple’s discussions with their financial life coach helped them articulate their intentions for these assets within their overall life plan, ensuring the legal terms aligned with their values and long-term goals. |
| Treatment of Specific Assets | |
| Business Ownership | Prenups can clearly define how business interests owned before or developed during the marriage will be treated. This can include outlining ownership stakes, valuation methods, and buy-sell agreements in the event of divorce. |
| Equity and Stock Options | Agreements can specify the division of stock options, restricted stock units (RSUs), and other equity compensation, especially if they vest during the marriage. |
| Inherited Assets | A well-drafted Massachusetts prenup can ensure that inherited assets remain the separate property of the inheriting spouse and are not subject to division in a divorce. |
| Pets | While Massachusetts law considers pets as personal property (chattel), a prenuptial agreement can explicitly outline the care and possession of pets in the event of separation, and Massachusetts courts will generally honor these agreements.
Alex and Jamie collaboratively outlined Scout’s care and custody in their prenup, demonstrating how the agreement can address unique personal concerns, a discussion facilitated by their financial life coach who understood the emotional significance of Scout in their lives. |
| No Legal Separation | It’s worth noting that Massachusetts does not have a legal process for “legal separation.” Therefore, a prenuptial agreement in Massachusetts primarily contemplates the financial arrangements in the event of divorce or death. |
Advanced Planning Within the Massachusetts Framework
Within the bounds of Massachusetts law, couples can utilize prenuptial agreements for sophisticated financial planning to:
- Address Career Sacrifices: If one partner anticipates taking a significant career break for family responsibilities, the prenup can include provisions to address the potential long-term economic impact of this decision. This often requires collaborative discussion and planning.
- Protect Future Earnings and Acquisitions: The agreement can specify how future earnings and assets acquired during the marriage will be classified and divided. This necessitates a shared understanding of future financial goals, a topic Alex and Jamie explored with their financial life coach to ensure their prenup aligned with their evolving financial landscape.
- Establish Financial Expectations During Marriage: While primarily focused on dissolution, some prenups may touch upon financial responsibilities and expectations during the marriage itself, highlighting the importance of open dialogue, often best facilitated by a neutral professional like a financial life coach.
Please note that Abaris Financial and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. If you would like to learn more about prenuptial agreements in Massachusetts, our team can connect you with experienced legal professionals. For couples seeking a holistic approach that integrates open communication, values alignment, and life planning into their pre-marital financial arrangements, engaging with a financial life coach can be an invaluable first step in this collaborative journey. Contact us today for a consultation to explore how our integrated approach can support you.