Monday, March 23, 2009

Iowa Courts Fail to Honor Postnuptial Agreement Terms

A recent ruling from the Iowa Court of Appeals continued to reinforce the surviving spouse's right in the case of In the Matter of the Estate of Herbert C. Shaffer, issued March 11, 2009.  Husband and wife had executed a postnuptial agreement (presumably in another state as postnuptial agreements - agreements entered into after a marriage - are not recognized in Iowa but are recognized in other states).  The postnuptial agreement basically provided that each would be responsible for their own expenses and would not look to the other party for reimbursement.  Subsequently, husband executed a will in which he left all of his property to his children from his earlier marriage.

After husband died, wife had a change of heart and decided to exercise certain rights of a surviving spouse.  Specifically, she sought to elect to (1) take against the will and (2) request spousal support.  

First, a little background on these rights.  Basically, you can't disinherit your spouse unless he or she agrees to it.  If a spouse is excluded, they have the right to declare the disinheriting provision of the will as invalid and receive a share of the estate, despite the will.  This is the right to elect against the will.  A second right of a surviving spouse is the right to request a spousal allowance.  After taking into consideration certain factors, a court can award an allowance from an estate for twelve months of support to a surviving spouse, whether they need an allowance or not.

Despite the provisions of the postnuptial agreement, the Iowa Court of Appeals determined that a postnuptial agreement could NOT waive the right to elect against the will.  Thus, while while a premarital agreement could permit a spouse to waive the right to elect against the will, a postnuptial agreement, even though presumably valid where executed, will not be enforced in Iowa to force a waiver of that right.  Interesting result leads to some interest scenarios.  

Additionally, the Court of Appeals further authorized the spousal allowance the surviving spouse sought.  Under Iowa Code 633.374 and prior cases, the spousal allowance provisions cannot be waived by agreement.  

The Court of Appeals has basically called out the Iowa legislature to amend the Iowa Code to approve postnuptial agreements by statute, as the court will not accept the limiting provisions otherwise.  Thus, if you have a postnuptial agreement, be wary of moving to Iowa or other states that have not adopted postnuptial agreements.

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