Balogh v. Balogh – Post-Nuptial Agreements Can Protect Property

By now, most people are familiar with the concept of pre-nuptial agreements. These are contracts signed before a couple recites their vows, and are typically intended to protect assets acquired by the individuals prior to the union.

Less recognized, but no less formal before the courts, are post-nuptial agreements. These contracts are very similar, except that they occur after the marriage. Our Hammond family law attorneys recognize that while the courts will give great weight to contracts signed by both parties at any point, having the record drafted or reviewed by an experienced lawyer can help eliminate the possibility that a judge might later find it unenforceable due to being unconscionable and/or involuntary.

It’s worth noting there are some elements – such as child support or child custody – that generally can’t be decided in such a contract. The courts are more concerned with the child’s well-being than the desires of the adults in the situation, and that will take precedent.

However, there is a lot of property that likely will be protected with such a contract. A post-nuptial agreement could reverse the terms of a pre-nuptial agreement, or it might set new parameters. While it generally doesn’t seem like the most romantic thing, some couples find it to be a stabilizing force, an assurance that their spouse values them and wishes to treat them fairly.

That was the intent when the parties involved in Balogh v. Balogh signed a series of post-nuptial agreements. According to court records, the pair was in the throes of marital turmoil, and the wife wanted assurance the husband was committed to making it work. The husband agreed to sign.

When the couple did in fact later end up divorcing, there was a battle over whether the agreement was valid, largely because it was skewed heavily in favor of the wife. In the end, however, the court agreed to enforce certain agreements, but not others.

Here’s what happened:

The couple, married since 1981, moved from New Jersey to Hawaii in 2003, and began building a home on a vacant lot they purchased there. The expensive construction project was to be completed within two years, but the builder was unreliable. After a battle with the homeowners’ association over penalties for the ongoing construction, the couple hired another company to complete the work, spending far more than originally intended.

This created tension in the marriage. Additionally, the husband also lost weight, was working out and getting tan, causing his wife to suspect an affair.

After months of arguing, the wife suggested they “write something up.” The subsequent agreement indicated in the event of divorce, the wife would receive 75 percent of the profits from the Hawaii property, all vehicles and the contents of the home, excluding the husband’s clothing and tools. Both parties signed this agreement. The wife would later say she was not thinking about divorce at the time, but instead believed it a symbol that her husband was committing to their marriage. The husband would later concede he agreed to sign the document as a good faith showing of his marital commitment, and he had not been threatened or forced. He did say, however, he was “not in his right mind” at the time.

Two weeks after this was signed, the couple executed a “memorandum of understanding,” signed by both and stamped by a notary. The terms were virtually the same as the handwritten agreement, but included a provision the wife was to receive $100,000 from the husband in lieu of alimony.

In the year that followed, the husband began acting strangely, venturing out into the yard without clothing, drawing the ire of the association. He was also contacted by police on several occasions regarding indecent exposure. The husband agreed to move out. Before he did so, his wife overheard him speaking to his sister about the possibility of divorce. Insisting she needed security to ensure a divorce was not imminent, she requested he sign the house over to her. He agreed.

Two weeks after the husband moved out, the pair signed a quitclaim deed, in which the husband granted his interest in the property to the wife. The husband later said he thought the agreement temporary, and that it would protect the home from potential lawsuits against him, and the title would eventually be transferred back to joint ownership.

That is not exactly what happened.

When divorce documents were eventually filed, the family court refused to recognize the quitclaim deed, awarding him one-half the interest in the home. Further, the court found the other agreement inequitable and therefore unenforceable.

The wife appealed, and the appellate court agreed the family court erred in finding the agreement unenforceable. Noting, “there is nothing in the record that indicates this is an unfair surprise,” and found the husband had entered into both agreements freely an voluntarily.

The husband appealed, but the state supreme court affirmed.

This is a good example of why these agreements should be reviewed by a lawyer. Here, the wife might not have had to fight so hard to ensure enforcement. The husband, meanwhile, might have been advised against signing such a skewed agreement.

Indiana Family Law Attorney Burton A. Padove handles divorce and child custody matters throughout northern Indiana, including Gary and Hammond.

Additional Resources:
Balogh v. Balogh, Aug. 7, 2014, Hawaii Supreme Court
More Blog Entries:
Bifurcated Divorce in Indiana Can be Beneficial, May 9, 2014, Hammond Divorce Lawyer Blog