Validity of Premarital Agreements
Arizona law, like that of most states, permits couples to enter into premarital agreements about their finances.
In Arizona, an agreement is valid as long as both spouses enter into it voluntarily and with full financial disclosure. If that is not the case, the agreement will not be enforced in Arizona.
So, does Arizona law apply to a premarital agreement when a couple marries in Arizona but moves elsewhere immediately? In Estate of Knipple v. Marshall & Ilsley Bank, 96 N.W.2d 514 (1959), the Wisconsin Supreme Court reviewed this issue.
Facts of the Case
Mr. Knipple and Mrs. Knipple married in Arizona, the state where wife lived. Soon after, they moved to Wisconsin, the state where husband lived and stayed there through his death.
Before the couple married, they signed a premarital agreement in Arizona prepared by husband. Under this agreement, wife was to receive a one-third life estate in husband’s estate when he died.
Husband did not disclose to her anything about his finances before she signed the agreement. In fact, he misinformed her about the result of signing it.
He said that if she didn’t, his children from an earlier marriage would receive more and she would receive less.
Wife saw the agreement 20 minutes before she was asked to sign it. She did not have a chance to get it reviewed by an attorney.
When husband died, his will went to probate in Wisconsin.
Wife asserted that the premarital agreement was invalid, since husband did not give full disclosure. The trial court ruled against Mrs. Knipple, upholding the agreement. This appeal followed.
Validity of Premarital Agreement – Arizona or Wisconsin Law?
The Wisconsin Supreme Court questioned whether Arizona or Wisconsin law applied to determine the validity of the premarital agreement.
The Court noted that different courts have different opinions about what law to use to determine the validity of premarital agreements.
Some use the law of the state where the agreement was made. Others use the law of the state where the couple first lived. It reviewed different approaches.
The Court concluded it was not required it to apply Arizona law to judge the validity of the Knippel agreement. It ruled that it should apply an “intention of the parties” rule.
Alternatively, it could look to whichever state had the most contacts with the situation. Under either test, the Court found, it should apply Wisconsin law.
Applying Wisconsin Law
The Court reviewed cases regarding a husband’s duty to disclose his finances before his wife signs a prenuptial agreement.
In the present case, it was acknowledged that there was no disclosure. However, the Court ruled that the lack of disclosure was irrelevant.
Since Wife agreed to take one-third of the estate, the bigger the estate, the more she would get.
Next, the Court determined that husband’s misrepresentation was not necessarily fraudulent. It said that Mrs. Knipple was a “highly interested witness” and that the trial court may have disbelieved her testimony.
The Wisconsin Supreme Court affirmed the lower court ruling. It upheld the validity of the prenuptial agreement under Wisconsin law.