April 24, 2020
In today’s world, practitioners must be ready to handle a prenuptial agreement that has been prepared in a foreign jurisdiction and to prepare a prenuptial agreement that may later be enforced in a jurisdiction other than Tennessee. Knowledge of the best way to enforce the parties’ agreement will be necessary given the multitude of possible differences between jurisdictions.
Preparing a prenuptial agreement that will be enforceable if the parties choose to move to a foreign jurisdiction after living in Tennessee provides a client with a valuable service that can insure their pre-marital designs will be carried out upon the unfortunate event of divorce in another country.
If you are drafting a prenuptial agreement that may be enforced in the future in a foreign jurisdiction, several things should be kept in mind. A choice of laws clause citing the jurisdiction of the divorce, would assist a court in the future and provide some clarity to the parties about which jurisdiction’s rules relating to the prenuptial agreements will be honored. A full disclosure of assets by both parties is required in Tennessee and is the best practice even if another, foreign jurisdiction is not as stringent about this requirement. Having more transparency between the parties prior to entering the agreement will help to satisfy the requirements of any jurisdiction that may be asked to enforce the agreement in the future. Similarly, providing both parties sufficient time for review of the agreement and the opportunity to seek independent legal counsel may not be a requirement in a foreign jurisdiction, and is not even strictly required in Tennessee, but it is the best practice to provide the greatest protection for the agreement. If both parties are given time to consider, review and seek professional advice before entering the agreement, a foreign court will have a difficult time citing duress or ignorance as a basis for setting aside the agreement.
Preventative measures include having witnesses to the signing of the agreement — a notary and even a stenographer to record the signing, will prevent a potential duress claim. Particularly with spouses from different countries, collaborating with an attorney in the home country of the spouse would provide an additional layer of protection to ensure the agreement and the parties. Knowing and applying particularities of the foreign jurisdiction on the front end prevents unwanted consequences if you have the ability to forecast where, other than Tennessee, a divorce may take place. If the parties speak different languages, a full translation of the agreement into each language removes a potential barrier to enforcement.
From the side of the practitioner, make sure you carry adequate tail insurance. Unlike divorce decrees and other matters that generally resolve themselves in a few years, a prenuptial agreement may not be used until decades after your work. Any malpractice suit arising from alleged fault in the drafting of the document could hit you even into your retirement, so adequate insurance to protect you from this possibility is a very important consideration.
If a party attempts to challenge a prenuptial agreement that was drafted in a foreign country but is being enforced in Tennessee, there are several key points related to Tennessee law to bear in mind. The rules relating to the formation of a prenuptial agreement in the foreign jurisdiction versus the requirements in Tennessee may raise potential issues. Tennessee Code Annotated § 36-3-501 provides that any antenuptial or prenuptial agreement entered into by spouses concerning property owned by either spouse before the marriage that is the subject of such agreement shall be binding upon any court having jurisdiction over such spouses and/or such agreement if such agreement is determined, in the discretion of such court, to have been entered into by such spouses freely, knowledgeably and in good faith and without exertion of duress or undue influence upon either spouse. The terms of such agreement shall be enforceable by all remedies available for enforcement of contract terms.
A court being asked to interpret any such agreement in Tennessee would have to determine whether the spouses were knowledgeable when they entered the agreement as to the assets of each spouse, the contents of the agreement and the effects of the law upon the dissolution of a marriage. Tennessee cases further fleshing out the meaning of “knowledgeable” pursuant to the statute have stated that knowledge requires “the spouse seeking to enforce an prenuptial agreement must prove, by a preponderance of the evidence, either that a full and fair disclosure of the nature, extent, and value of his or her holdings was provided to the spouse seeking to avoid the agreement, or that disclosure was unnecessary because the spouse seeking to avoid the agreement had independent knowledge of the full nature, extent, and value of the proponent spouse’s holdings.”1 When evaluating whether the knowledge requirement has been met, a court should consider “the parties’ respective sophistication and experience in business affairs, the duration of the relationship prior to the execution of the agreement, the time of the signing of the agreement in relation to the time of the wedding, and the parties’ representation by, or opportunity to consult with, independent counsel” in order to render a decision about the agreement.2
The most effective way to insure that a party has the requisite knowledge is to have independent legal counsel advise him/her on the contents and import of the agreement; though “[S]ome states … require that each party have the opportunity to consult with legal counsel of his or her own choice, but do not require actual consultation for the agreement to be upheld,” while still other jurisdictions hold “that the presence or absence of independent counsel is just another factor to be considered when determining if the agreement was entered into knowledgeably.”3 Tennessee views access to legal counsel prior to the signing of an antenuptial agreement as one of many factors to be considered by the court in determining whether the “knowledge” requirement has been met.4
In some countries, citizens use people who are not trained as lawyers to draft documents and contracts — notaries or notaries. This is often an inexpensive alternative for citizens of those countries to get legal work done and documents prepared at a very basic level. However, it is not difficult to imagine that a spouse attempting to enforce such an agreement in Tennessee and the courts finding the knowledge requirement mandated by Tenn. Code Ann. § 36-3-501 lacking in many respects, particularly disclosure and advice of legal counsel among others. In evaluating a foreign agreement, be aware that in Tennessee there are certain issues that cannot be waived through a prenuptial agreement — most importantly child support. In all likelihood, an antenuptial agreement from a foreign jurisdiction that waived child support on the event of divorce would not be enforced by a Tennessee court at least as it relates to the portion regarding child support.
Knowing Tennessee law about prenuptial agreements will help counsel to draft and enforce these agreements in Tennessee or challenge them as the case may be. Taking into consideration the international aspects of prenuptial agreements is critical to competent practice.
1. Randolph v. Randolph, 937 S.W.2d 815, 821 (Tenn. 1996).
3. Id. at 822.
4. Kahn v. Kahn, 756 S.W.2d 685, 695 (Tenn. 1988).
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