USA – MASSACHUSETTS Trends and Developments Contributed by: Patricia Annino, Rimon, P.C.
protecting the asset from being a countable marital asset), relying on two key factors – the independent trustees decanted without notifying the beneficiary, and an affidavit of the settlor’s intent. This case raises other significant issues such as whether the trustee may have a duty to decant. If there is a desire to remove gifted and inherited assets from a divorce, the best protection is for the party to enter into a prenuptial or postnuptial agreement that removes those assets from the marital estate. Mas - sachusetts does not have a statute that addresses the validity of a prenuptial or postnuptial agreement. Case law has shown that these agreements are valid if they are in writing and executed voluntarily between the parties. There is no requirement that each party be represented by counsel, but it is good practice to do so. Massachusetts has adopted the “second look” doc - trine. The agreement must be fair and reasonable at the time it is entered into, and fair and reasonable at the time of divorce. This is also referred to as a “conscionability standard”, meaning that it is only where the contesting party is essentially stripped of all marital interests that the judge may determine that the prenuptial agreement is not fair and reason - able, and therefore not valid. Case law has ruled that where there is no evidence that either party engaged in fraud, failed to disclose assets fully and fairly, or in some other way took advantage of the confiden - tial and emotional relationship of the other when the agreement was executed, the agreement will be valid unless its terms essentially vitiate the very status of the marriage.
Each party must fully and fairly disclose assets, income and liabilities, including the expectation of assets to be received in the future. If a party owns a hard-to-value asset, such as an interest in a closely held business, and that asset is removed from the divorce proceedings because of the existence of a valid prenuptial or postnuptial agreement, then the value of it may also be off the table and not subject to direct scrutiny. In negotiating a fair and reasonable prenuptial or post - nuptial agreement, one of the most difficult aspects is how phantom income (eg, earned during the marriage from a family enterprise but ploughed back into the business and not distributed) should be addressed for alimony purposes. Any provision pertaining to child support or custody is not valid. The court has jurisdiction to determine what is in the best interest of the child. In the absence of a valid prenuptial or postnuptial agreement, the equitable division rules apply in a divorce.
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