Minnesota Antenuptial Agreement

Minnesota Antenuptial Agreement

Minnesota Antenuptial Agreement

Minnesota Antenuptial Agreement – Objectives

Unmarried persons who are planning to marry in Minnesota may enter into a Minnesota Antenuptial Agreement – also known as a Minnesota Prenuptial Agreement – with their prospective spouses before the date of the wedding, in order to allow each of the parties to determine, or perhaps limit, the rights that each party will have in the other party’s property, and perhaps in their income, in the event of:

  • the death of one or both of the parties, or
  • the dissolution of the marriage.

Minnesota Prenuptial Agreement – Default Rules

In the absence of a validly executed Minnesota Prenuptial Agreement – or other legally effective waiver, Minnesota spouses after the marriage may have certain rights to a share of the other spouse’s income, property rights in the assets owned by the other spouse, or both:

  • upon the death of one of the parties, or
  • upon the dissolution of the marriage.

Minnesota Antenuptial Agreement – Authority

Minnesota Antenuptial Agreements are enforceable in Minnesota if they satisfy the requirements of Minnesota Statutes, Section 519.11, and possibly common law requirements as well.

A. Non-marital Property

Minnesota Antenuptial Agreements must satisfy the requirements of Minnesota Statutes, Section 519.11, which:

  • addresses matters upon the dissolution of a marriage relating to the separate property which is either owned by each of the spouses upon commencement of the marriage, or acquired by gift or inheritance by each spouse during the marriage (“non-marital property”), and
  • allows one spouse to waive rights in the other spouse’s estate in the event of the death of the spouse.

B. Marital Property

Minnesota Antenuptial Agreements may also be required to satisfy Minnesota “common law” requirements – a body of law created by the courts – which address matters relating to:

  • each spouse’s rights in the marital assets acquired during the course of the marriage (“marital property”),
  • each spouse’s rights in other non-marital property,
  • a spouse’s rights to periodic ongoing spousal support payments in the event of divorce (“maintenance”, or “alimony”), and
  • a surviving spouse’s rights to periodic, ongoing spousal support payments in the event of the death of the other spouse (“probate maintenance”).

Minnesota Prenuptial Agreement – Common Law

Minnesota common law:

  • requires not only procedural fairness in the execution of a Minnesota Antenuptial Agreement,
  • but also a certain degree of substantive fairness in the division of property and/or income between the spouses upon the termination of the marriage due to divorce.

Minnesota Prenuptial Agreement – Statutory Matters

Minnesota Statutes, Section 519.11, adopted in 1979:

  • codified the common law requirements of procedural fairness in the execution of a Minnesota Antenuptial Agreement – addressing non-marital property issues, and
  • shifted the burden of proof with respect to nonmarital property from the proponent of the agreement, to the spouse opposed to its enforcement,

but did not eliminate the common law requirement of substantive fairness.

Minnesota Antenuptial Agreement – Procedural Fairness

The Minnesota statutory and common law burden of procedural fairness is met when:

(a)        there is a full and fair disclosure of the earnings and property of each party, and

(b)       the parties have had an opportunity to consult with legal counsel of their own choice.

However, the opportunity to consult with Minnesota legal counsel – while a statutory requirement – is only a factor to be considered under the common law when determining whether procedural fairness has been attained in the execution of a Minnesota Antenuptial Agreement.

Minnesota Prenuptial Agreement – Substantive Fairness

The common law requirement of substantive fairness – relating to the effect a Minnesota Prenuptial Agreement may have on the relative rights of the parties – guards against misrepresentations by the parties, and the overall unfairness of the Minnesota Prenuptial Agreement, and must be met both:

  • at the time that the Minnesota Antenuptial Agreement is entered into, and
  • at the time that enforcement of the Minnesota Antenuptial Agreement is sought.

Minnesota Antenuptial Agreement – Enforceability is Never Certain

Due to the subjective nature of both:

  • procedural fairness – which requires the full and fair disclosure of the earnings and property of each party, and
  • substantive fairness – which must be met both at the time that a Minnesota Antenuptial Agreement is entered into, and at the time that enforcement of the Minnesota Antenuptial Agreement is sought,

ensuring the complete enforceability of all provisions of a Minnesota Antenuptial Agreement at the time of its execution is not possible.

While it may be true in some situations that having a Minnesota Antenuptial Agreement provides better protection against claims made by a spouse upon death or divorce than not having a Minnesota Antenuptial Agreement, the enforceability of a Minnesota Antenuptial Agreement remains unpredictable, and subject to some uncertainty.

Minnesota Prenuptial Agreement – Separate Legal Counsel is Advisable, but Not Required.

While there is no formal requirement that both spouses be actually represented by separate legal counsel with respect to their interests in a Minnesota Prenuptial Agreement,

  • separate representation is generally advisable, and
  • may help to overcome any claim that the execution of the agreement was procedurally unfair.

Minnesota Antenuptial Agreement – Requirements

According to the statute, in order for a Minnesota Prenuptial Agreement to be valid and enforceable, the agreement must be:

  • in writing;
  • witnessed by two persons who are not parties to the agreement;
  • acknowledged by the parties before a notary public;
  • entered into prior to the marriage, and
  • Procedurally Fair.

The requirement for Procedural Fairness in Minnesota is satisfied when:

(a)        there has been a full and fair disclosure of the earnings and property of each party, and

(b)       each of the parties has had an opportunity to consult with legal counsel of their own choice.

Minnesota Antenuptial Agreement – Property Rights of Married Persons

In general, assets titled in the names of both Minnesota spouses are presumed to be owned by both spouses equally.

Minnesota Antenuptial Agreement – Property Rights Upon Dissolution

Regardless of which spouse “owns” an asset – in the sense that his or her name is exclusively listed on the title – all assets owned and/or acquired by each of the spouses during the marriage are generally divided into two classes:

  • marital property, and
  • nonmarital property.

Minnesota Antenuptial Agreement – Marital Property

Minnesota statutes define marital property as:

  • real or personal property, including vested public or private pension plan benefits or rights,
  • acquired by either spouse to a marriage dissolution at any time during the existence of the marriage relation between them – prior to the date of the initially scheduled pre hearing settlement conference incident to the dissolution (the “Valuation Date”).

Minnesota statutes further provides that all property acquired by either spouse:

  • subsequent to the marriage, but
  • before the Valuation Date,

is presumed to be marital property regardless of whether title is held:

  • individually or
  • by the spouses in a form of coownership, such as joint tenancy or tenancy in common.

The increase in the value of either marital or nonmarital property attributable to the efforts of one or both spouses during the marriage is also classified as marital property.

Such active appreciation includes whatever appreciation is derived from the active management of a business, or the supervision of investments.

Cash dividends on stocks, and rental income – even from nonmarital property, are two forms of income which may be considered to be marital property.

Minnesota Antenuptial Agreement – Non-Marital Property

Minnesota statutes define nonmarital property to be real or personal property acquired by either spouse before, during, or after the existence of the marriage, which:

  1. is acquired as a gift, bequest, devise or inheritance from a third party to only one of the spouses;
  2. is acquired before the marriage;
  3. is excluded by a valid antenuptial contract, or
  4. is acquired in exchange for, or is the increase in value of, property which is described in one of the above clauses.

The increase in the value of nonmarital property which is attributable to inflation or to market forces or conditions may retain its nonmarital character.

Such passive appreciation would include the increase in value of stock over a period of time.

Minnesota Antenuptial Agreement – Division of Marital Property upon Divorce

A Minnesota court has broad discretion to divide marital property between the spouses in the event of a marriage dissolution (divorce) proceeding.

Minnesota statutes provide that upon dissolution, the court shall make a just and equitable division of the marital property of the parties without regard to marital misconduct, after giving consideration to all relevant factors, including:

  • the length of the marriage,
  • any prior marriage of a spouse,
  • the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each spouse,
  • the contribution of each spouse in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property, and
  • the contribution of a spouse as a homemaker.

Minnesota statutes also provide:

  1. for a conclusive presumption that each spouse made a substantial contribution to the acquisition of income and property while they were living together as husband and wife; and
  2. that the court may award the household goods and furniture of the parties – whether or not acquired during the marriage – to either spouse.

Minnesota Antenuptial Agreement – Division of Non-Marital Property upon Divorce

In contrast to its broad powers over marital property, a Minnesota court has less discretion to divide non-marital property between spouses in the event of a dissolution.

Minnesota Statutes provide that if a court finds that:

  • either spouse’s resources or property – including the spouse’s portion of the marital property,
  • are so inadequate as to work an unfair hardship – considering all relevant circumstances,

the court may, in addition to the marital property, apportion up to one-half of the nonmarital property in order to prevent the unfair hardship.

If a Minnesota court apportions nonmarital property between the spouses, it shall consider all relevant factors including:

  • the length of the marriage,
  • any prior marriage of a spouse,
  • the age, health, station, occupation, amount and sources of income, vocational skills, employability, assets owned by each spouse, and
  • the liabilities, needs, and opportunity for future acquisition of capital assets and income of each spouse.

Minnesota Antenuptial Agreement – Property Rights in the Event of Dissolution

Minnesota Statutes provides that a Minnesota Antenuptial Agreement made in conformity with the statutory requirements may determine the rights each spouse has in the nonmarital property of the other spouse upon dissolution or legal separation.

 A Minnesota Antenuptial Agreement may also determine or limit the rights that each of the spouses has in the property of the other spouse upon the death of such other spouse.

Minnesota Antenuptial Agreement – Summary Property Rights Upon Dissolution

Assuming the presence of Procedural Fairness in the development and execution of a Minnesota Antenuptial Agreement, such an agreement can be effective pursuant to statutory authority to:

  • determine or limit the rights each spouse has in the nonmarital property of the other party upon dissolution of the marriage; and
  • bar each spouse of all rights in the estate or the other spouse not so secured to them by their agreement,

In addition, and assuming the presence of Procedural Fairness in the development and execution of a Minnesota Antenuptial Agreement, such an agreement can be effective – pursuant to non statutory common-law authority – to determine or limit the rights that each spouse will have upon dissolution of the marriage in the marital property of the other spouse.

However, any predetermined dissolution plan with respect to the division of nonmarital property will be required to be Substantively Fair both:

  • at the time of execution of a Minnesota Prenuptial Agreement, and
  • at the time enforcement of the Minnesota Prenuptial Agreement is desired.

Furthermore, any agreed upon limitations on the division of nonmarital property will only be enforceable to the extent that there has been a full and fair disclosure of the earnings and property of each party.

While a Minnesota Prenuptial Agreement can also be effective under common law authority to determine or limit the rights each party has in both the nonmarital and marital property of the other party upon dissolution of the marriage, any such limitation of property rights must be Substantively Fair at the time of enforcement.

Minnesota Maintenance (Alimony) – Defined

In addition to any division of property, spouses involved in a marriage dissolution typically address the issue of maintenance – formerly known as alimony – which is an award made in a dissolution or legal separation proceeding with respect to:

  • payments from the future income or earnings of one spouse,
  • for the support and maintenance of the other.

Minnesota Statutes provides that in a proceeding for the dissolution of a marriage or a legal separation, the court may grant a Maintenance Order in favor of either spouse if it finds that the spouse seeking maintenance:

(a)        lacks sufficient property, including marital property apportioned to the spouse, to provide for the reasonable needs of the spouse, considering the standard of living established during the marriage – especially, but not limited to, a period of training or education, or

(b)       is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances, through appropriate employment, or

(c)        is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.

Two of the three conditions for the payment of maintenance specifically take into consideration  the standard of living which the parties established during the marriage – which is a necessarily subjective matter – and the third condition does so implicitly.

Minnesota Prenuptial Agreement – Effect on Maintenance Rights

The Minnesota statutory provisions regarding Minnesota Antenuptial Agreements do not address rights to maintenance.

Therefore, the effect of a Minnesota Antenuptial Agreement on maintenance rights must be determined by the application of common law principles.

Under the common law, a Minnesota Antenuptial Agreement must be substantively fair – both at the time that the agreement was entered into, and at the time of enforcement.

Substantive unfairness can occur when:

  • one spouse winds up with significantly greater net worth and/or earning potential, or
  • if one spouse has custody of children and thus higher living expenses, without a proportionate increase in resources.

Substantive unfairness can also occur:

  • when the premises or assumptions upon which the original Minnesota Antenuptial Agreement were based,
  • have so changed that enforcement of its terms would not be consistent with the reasonable expectations of the parties at the time the Minnesota Antenuptial Agreement was entered into,
  • to such an extent that to validate the terms of the Minnesota Antenuptial Agreement at the time of enforcement would be patently unfair.

Maintenance in Minnesota may be either temporary or permanent in nature, with permanent maintenance more likely to be awarded in long-term marriages.

Minnesota Antenuptial Agreement – Property Rights Upon Death

In the absence of a valid Minnesota Prenuptial Agreement, or other legally effective waiver, a Minnesota surviving spouse will have statutory rights to make certain claims against the estate of a deceased spouse.

Minnesota Antenuptial Agreement – Elective Share

Depending on the length of the marriage, a Minnesota surviving spouse has the right to elect to receive from:

  • the estate of a deceased spouse, or
  • other assets of the spouse,

a certain percentage of a calculated asset value known as the Augmented Estate – if the decedent’s Will does not provide a greater amount to the surviving spouse.

Initially, the elective share percentage is very small – not exceeding six percent during the first three years of marriage.

However, the elective share percentage can rise to 50% if persons stay married for 15 years.

The calculation of this elective share amount is very complex, and takes into consideration numerous factors.

However, the wealthier spouse can never obtain an award of an elective share because the formula takes into consideration the assets of both spouses.

Minnesota Antenuptial Agreement – Homestead Rights

 In general, a surviving spouse will have certain ownership rights in their homestead in the absence of a valid Minnesota Prenuptial Agreement, or other legally effective waiver.

If a deceased spouse has surviving descendants, a surviving spouse will have the right to petition the probate court to receive a life estate in the homestead – in addition to any title interest the spouse may have in the homestead.

The remainder interest in the homestead – which can only be enjoyed by the initial remainder persons by surviving the owner of the life estate – would be held by the deceased spouse’s descendants.

If a deceased spouse has no surviving descendants, a surviving spouse would have the right to petition the probate court for complete ownership of the homestead.

Minnesota Antenuptial Agreement – Rights in Exempt Property

In addition to rights to an elective share and rights in the homestead, in the absence of a valid Minnesota Antenuptial Agreement, or other legally effective waiver, a surviving spouse would have the right to elect to receive from the estate of a deceased spouse the following items:

  1. Furniture, household goods, personal effects, or other personal property, not exceeding $15,000 in value; and
  2. One automobile, without regard to value.

Minnesota Antenuptial Agreement – Probate Maintenance.

In addition to a right to an elective share, rights in the homestead, and rights to select items of exempt property, in the absence of a valid Minnesota Prenuptial Agreement, or other legally effective waiver, a surviving spouse has the right to receive from the estate of a deceased spouse reasonable support maintenance for a minimum period of 18 months, and possibly longer, at the discretion of the court.

Since a determination of reasonable support maintenance can take into consideration the standard of living to which the spouse had been accustomed to living, such payments can be significant, especially when they continue indefinitely.

Minnesota Antenuptial Agreement – Intestate Share

If one spouse dies without having executed a Will, in the absence of a valid Minnesota Antenuptial Agreement, or other legally effective waiver, the surviving spouse may have a right to receive a certain amount of the decedent’s probate assets pursuant to Minnesota’s laws of intestacy which govern property disposition where there is no Will.

The surviving spouse would be entitled to the entire intestate estate:

  • if the decedent had no descendants, or
  • if all such descendants were also descendants of the surviving spouse.

However, in a situation where there is a surviving spouse and one or more children of the decedent who are not children of the surviving spouse, the surviving spouse would be entitled to:

  • the first $225,000 of the decedent’s probate estate, and
  • one half of the balance of such probate estate.

Rights of a Minnesota “Omitted Spouse” to an Intestate Share

If a decedent spouse’s Will was drafted prior to the marriage, a surviving spouse may be entitled to an intestate share of the decedent’s probate estate unless:

(1)       it appears from the Will or other evidence that the Will was made in contemplation of the testator’s marriage to the surviving spouse;

(2)       the Will expressed the intention that it is to be effective notwithstanding any subsequent marriage; or

(3)       the testator provided for the spouse by transfer outside the Will, and the intent that the transfer be in lieu of a testamentary provision is either shown by the testator’s statements, or is reasonably inferred from the amount of the transfer or other evidence.

Minnesota Antenuptial Agreement – Effect on Probate Rights

The Minnesota Antenuptial Agreement statute provides that a valid Minnesota Antenuptial Agreement made in conformity with the statutory requirements may bar each spouse from all rights in the other spouse’s estates not granted to them by their agreement.

Minnesota’s common law, as well as Minnesota’s probate statutes, may also permit a valid Minnesota Antenuptial Agreement to determine or limit the rights of a surviving spouse in such property.

Therefore, all of the above identified rights of a surviving spouse should be waivable by a party to a Minnesota Antenuptial Agreement in the Agreement itself.

Waivers of Federal Pension/ERISA Rights

In general, a Minnesota Antenuptial Agreement will not be effective to waive a spouse’s rights to receive benefits under a federal pension or retirement plan arising under federal law – either ERISA or REA – but a Minnesota postnuptial agreement or other qualifying waiver can be effective to waive such rights.

Since the parties to a Minnesota Antenuptial Agreement are by definition not yet married, they cannot waive federal pension rights which are reserved to a spouse.

Conclusion; Minnesota Antenuptial Agreements – Minnesota Prenuptial Agreements

While the execution of a Minnesota Antenuptial Agreement prior to marriage is generally advisable, such documents are not simple, and require a considerable amount of legal advice in order to increase the chances of such agreements being legally enforceable, and suitable for each person’s situation.

Consequently, parties considering the execution of a Minnesota Antenuptial Agreement prior to marriage should budget for a fair amount of legal fees, and not try to get by with a minimal amount of documentation and legal advice.

An effective Minnesota Antenuptial Agreement is generally not suitable for do-it-yourselfers.

Copyright 20017 – All Rights Reserved

Gary C. Dahle – Attorney at Law

2704 County Road 10, Mounds View, MN 55112

Phone:  763-780-8390

Fax:     763-780-1735

Legal Disclaimer

Information provided herein is only for general informational and educational purposes. Minnesota Antenuptial and postnuptial agreements involve many complex legal issues. If you have a specific legal problem about which you are seeking advice, either consult with your own attorney or retain an attorney of your choice.

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