The 1990 landmark case allowing the use of prenuptial agreements in Kentucky

Mr. and Mrs. Edwardson entered into a prenuptial agreement that provided for maintenance payments of $75 per month if they got divorced. The spouses filed for divorced, and Mrs. Edwardson sought enforcement of the prenup. At first, the lower courts declined Mrs. Edwardson’s request because prenuptial agreements weren’t allowed in Kentucky at the time. Mrs. Edwardson brought this issue all the way up to the Supreme Court of Kentucky. There, the judges agreed with Mrs. Edwardson and overturned the long-standing law holding prenups invalid. The previous decisions of the Kentucky court declared prenups void as violating public policy. It was thought that prenups promoted marital instability and were detrimental to women.

The judges in the Edwardson case had some big changes to make that day. They declared that in today’s day and age, prenups no longer promote marital instability and that women no longer needed “protecting” from prenups. The court further clarified that if there has been full financial disclosure, there is no unconscionability surrounding the agreement, and it was not obtained under fraud, duress, or mistake, then it should be validated. That’s a win for modern marriages!

Edwardson v. Edwardson, 798 S.W.2d 941 (1990)

John and Erin signed a prenuptial agreement, to Erin’s disapproval. John presented the prenup to Erin just days before the wedding. Erin vehemently disagreed to it at first. Then, after John told her he would not get married without her signing it, Erin agreed to discuss it. John’s attorneys referred Erin to a recent law school graduate who had never negotiated a prenuptial agreement. This attorney “represented” Erin and negotiated 1/6th of John’s estate in the prenup. He was also not able to verify John’s financial disclosure provided and decided that this was okay because it would probably be in Erin’s favor anyway.

Erin was sobbing uncontrollably during the negotiation meeting because she did not want to do this. She felt backed into a corner because 200 guests were already on the way, including her parents, who flew in from Thailand.

When John died, Kathryn, John’s first wife, sought to enforce the prenup, while Erin sought to throw it out because she did not sign it voluntarily. The court agreed with Erin and declared the prenup invalid based on duress. The court explained that if an agreement was signed under duress, it was not signed voluntarily. The circumstances were coercive, one party exerted wrongful pressure, and the person had no other alternative but to sign the agreement. The court also noted that timing is a huge factor; the prenup should be presented at least 30 days before the wedding.

In this case, the court said that Erin did not sign voluntarily based on several reasons:

• If she refused to sign the prenup, she would have to cancel a 200-person wedding and lose her means of support (i.e., John). He had encouraged her to quit her job so he could support her.
• John contemplated the prenuptial agreement two years before the wedding, yet he only presented it to her a few days before it. This left Erin with very little time to obtain her own attorney and negotiate the contract.
• Erin’s so-called attorney was not an adequate representative, he had no experience in negotiating contracts, and he never verified John’s financials.

The court said Erin did not sign this prenup voluntarily with all of these things considered.

In re Est. of Hollett, 834 A.2d 348 (N.H. 2003)

What if you end up divorcing with a much higher net worth than when you signed the prenup?

An important case from 2001 arose out of a Kentucky Court of Appeals. Husband and Wife were married twice, with a prenup preceding the second marriage. At the time of the second marriage, Husband’s net worth was around $5 million, and Wife’s was $190,000. They finally settled on a prenup which provided that each spouse’s separate property would remain separate in the event of a divorce, and Wife will receive a car, furniture, certain personal items, and cash in an amount reflecting the length of the marriage (which in this case came out to be $650,000).

At the time of the (second) divorce, Husband asked the court to enforce the prenup. Wife argued it was unconscionable because the circumstances had changed so drastically. Husband’s net worth dramatically increased since they signed the prenup. Husband’s net worth grew to around $24 million. She argued it was grossly unfair and thus, unenforceable.

In Kentucky, there is a three-prong test (known as the “Gentry test”) courts use to determine the enforceability of a prenup: (1) Was the prenup obtained through fraud, duress, or mistake? (2) Is the agreement unconscionable? (3) Have the circumstances changed so as to make the agreement unreasonable? Here, Wife is arguing prong #3, that Husband’s net worth has grown so much that it renders the agreement unreasonable. There’s no bright line for determining which circumstances are unreasonable, judges must decide it on a case-by-case basis.

In this case, the court sided with Husband and declared that increasing one’s net worth is not the type of change in circumstances that renders a prenup unreasonable. In other words, just because Husband’s monetary value increased drastically does not mean the prenup should now be considered unfair. Wife decided to sign a contract, and just because he has more money now doesn’t mean the contract can be thrown out. The court further explained that to throw out this prenup, Wife would have had to show that not only did Husband’s financials drastically improve but that her financials drastically got worse. That is not the case; her situation did not get worse.

What’s the lesson learned here? You should know what you’re getting yourself into when you sign a contract, especially a prenup; and if you don’t, you should get a lawyer! When you waive your right to certain property or finances, you will be held that standard and a court will not help you out just because you made a poor contract choice. When you were a kid, there were no “takebacks” on a pinky promise. Same goes for prenups.

Blue v. Blue, 60 S.W. 3d 585 (Ky. App. 2001)

Here is a cautionary tale of the pitfalls that you may encounter if you do not disclose your financials in a prenup. In 2012, Husband (a doctor) and Wife (a nurse) met, fell in love, and began planning their wedding. This was both their second marriage.

Shortly before their wedding, they prepared a prenup which stated he was required to pay her the equivalent of her salary and double that amount if he were unfaithful. In the event of his death, she would receive $200,000 and her own, separate property. The prenup also contained a clause stating that the spouses acknowledged they had made full disclosure of the nature, extent, and value of each spouse’s separate estate and financial condition as of the date of the agreement. In reality, neither spouse sent over financial statements to the other, nor were there any statements attached to the prenup itself (red flag!).

Husband ended up dying four years later. At the time of his death, his net worth was $5.2 million. Wife sought to invalidate the prenup because neither of them provided financial disclosures when executing the prenup. She testified that she was not aware of his full financial situation. Under Kentucky statutory law, Wife would most likely receive more money than she contracted in the prenup. Husband’s children from his previous marriage sought the opposite: to enforce the prenup so Wife would get less money from his estate.

In assessing the validity of a prenup, the court must ask: “Was there a full and complete disclosure of the financials by each spouse at the time the prenup was entered into?” In this case, the answer is “no.” Even though the prenup contained a clause stating that each party had full knowledge of the other’s financial situation, Wife’s testimony was enough evidence to show that she did not know his financials. The court ultimately agreed with Wife and declared the prenup void because the parties did not adequately provide financial disclosure.

What can you learn from this case? Always. Disclose. Your. Financials. And. Attach. Them. To. Your. Prenuptial. Agreement.

King v. King, 638 S.W. 3d 464 (Ky. App. 2021)