A significant new Florida Supreme Court ruling offers some clarity into what had previously been a murky issue within family law: namely, the interpretation of certain waivers within premarital agreements. For individuals with high-value assets, the court’s new decision provides some helpful insight into the ways that the law allows you to structure your prenuptial agreements in order to ensure your assets are fully protected from a claim within a divorce proceeding.
The case centered on the divorce of Harry Hahamovitch, a successful mortgage broker from Palm Beach County, and Dianne Hahamovitch, his wife. In 1986, a month before they wed, the couple entered into a prenuptial agreement. That agreement contained several provisions for the separation of property between the two spouses-to-be. The agreement stated that any separate property a spouse brought into the marriage remained that person’s separate property. Also, if the husband bought property during the marriage in his name alone, that property would remain the husband’s separate property.
Twenty-two years after they married, the Hahamovitches divorced. The wife initially contested the agreement’s validity but lost. The courts determined that, based upon the fact that both spouses were represented by counsel when they signed the agreement, and the wife was set to receive a fair and substantial payout ($1.9 million over seven years), there was no basis for invalidating the agreement.
After failing to invalidate the agreement, the wife advanced a new legal argument. Although she had no claim to the husband’s separate property, she argued that she should receive a portion of the increase in the value of the husband’s separate property that occurred during the marriage. Since the prenuptial agreement had no provision in it governing what should become of this increased value, she argued equitable distribution should apply, and she should receive a portion of this increase. The wife’s argument had some basis in the law. Back in 2005, the 3d DCA decided that separate-asset value increases are subject to marital distribution if the prenuptial agreement doesn’t discuss them specifically, and the couple expended marital efforts to generate that increase.
However, in this case, the 4th DCA ruled that the agreement’s waiver applied, determining that, when viewing the prenuptial agreement as a whole, the waiver provisions in the Hahamovitch agreement were sufficiently broad to cover the separate-asset value increases to which the wife had asserted a claim.
The Supreme Court also sided with the husband’s position. In the Hahamovitches’ case, the agreement’s release covered “all rights and claims to the other spouse’s non-marital property.” Even without explicit language, this included the increases that the wife sought. Declining to enforce the release provisions would have been inappropriate when the couple’s agreement had releases as sweeping as the Hahamovitches’ document had. Even if a prenuptial agreement does not include terms specifically covering increases in value, these increases should not be subject to equitable distribution if the agreement has other language that “expressly waives all of the other spouse’s rights and claims in such property.” In the Hahamovitches’ case, the prenuptial agreement had sections entitled “DIANNE’S RELEASE” and “MUTUAL RELEASE” that established just such broad waivers.
If you live in South Florida and are going through a high net-worth divorce, you need capable counsel on your side. Contact the Florida family law attorneys at Stok Folk + Kon. Our divorce attorneys have the experience and determination to give you the representation you deserve in your divorce case.
Contact us online or by calling (305) 935-4440 to schedule a free consultation.
More blog posts:
Florida Trial Court’s Alimony Award Reversed for Exceeding Wife’s Established Need, Florida Business Lawyers Blog, Sept. 2, 2015
Your Florida Divorce’s Impact on the Business Interests You and Your Spouse Co-Own, Florida Business Lawyers Blog, July 2, 2015