Maryland Divorce Lawyer Blog
Any contractual agreement you sign with your sign that governs the distribution of assets — whether it is a prenuptial agreement, a postnuptial agreement, a marital property agreement, or a divorce settlement agreement — deserves your utmost attention. Because of the high stakes involved, it also calls for advice and counsel from an experienced Maryland marital agreement lawyer.
One of the essential aspects of any marital agreement is understanding your rights and obligations, including recognizing what actions may act as a waiver of legal rights you would otherwise have had.
A Montgomery County couple’s marital property agreement dispute clearly illustrates this concept.
When the couple married in 1996, John was in his early 60s, and Dorothy was in her mid-50s. The husband was a highly successful wealth manager and securities advisor, and the wife had a high school education. The couple did not establish a prenuptial agreement before marrying.
Shortly after John turned 75, the couple consulted with an estate planning attorney in Bethesda. The lawyer crafted a plan for the couple, including two revocable trusts, one for each spouse. The husband’s trust said that if he died before the wife, she would get “a trust consisting of 50% of the trust assets at the time of his death or five million dollars, whichever was greater.”
Four years later, the husband reluctantly agreed to establish a new irrevocable trust to provide the wife with additional income. In exchange, the husband demanded that the wife “give up her rights to assert additional claims against his assets in the event of his death or their divorce.” To make those terms—including the waiver of rights and the establishment of the new trust—binding, the lawyer drafted a marital property agreement, which the couple signed in March 2016.
Nearly five and a half years later, the wife sought a court order declaring the property agreement void. By then, the irrevocable trust had distributed roughly $450,000 to Dorothy in monthly payments.
The Doctrine of Waiver
The wife’s receipt of those payments was crucial to the case’s outcome. Because the wife had already received approaching a half-million dollars across more than 60 months — and continued to accept monthly funds — she gave up her right to seek the nullification of the agreement. Specifically, the court wrote that the wife waived “her right to challenge the validity of the marital property agreement by accepting the benefits of that agreement after she was indisputably placed on notice.” That notice occurred when “her claim against [the husband’s probate estate] was barred based upon [her] failure to surrender all the benefits she received from the 2016 estate planning documents.”
In entering its judgment in favor of the husband’s estate, the court concluded that the wife’s conduct triggered the application of the doctrine of waiver. In reaching that outcome, the court cited a few cases worth highlighting. The court pointed approvingly to a 2006 California case where that state’s appellate court said that a wife “waived her right to challenge the provisions of a property settlement agreement by willingly accepting all of the substantial financial benefits to which she was entitled under the Agreement for more than five years.” Additionally, the court noted a 1972 case from this state, Saggese v. Saggese, that ruled that a wife “waived her right to rescind a marital separation agreement on the basis of “duress, undue influence, [or] oppression… because the spouse waited for approximately two years before challenging the validity of the agreement.)” Decades earlier, the Supreme Court of Maryland said something similar in a non-marital setting. In 1920, the state’s highest court wrote that “a person by the acceptance of benefits may be estopped from questioning the existence, validity, and effect of the contract.”
If you are thinking about signing a prenuptial agreement, a postnuptial agreement, a divorce settlement agreement, or a marital property agreement, you should understand that the law gives you the option to contest the agreement if its terms are illegal or its formation occurred in an impermissible way. However, you may lose — via the doctrine of waiver — your right to challenge the contract’s validity if you have accepted benefits under the agreement. Whatever you choose to challenge an agreement you signed or receive the benefits owed to you under the contract’s terms, your choice will come with specific legal consequences. To ensure the choices you make are wise ones, talk to the skilled Maryland family law attorneys at Anthony A. Fatemi, LLC. Contact us today at 301-519-2801 or via our online form to set up your consultation to get the answers you need and the advocacy you deserve.