WIFE’S WAIVER OF INTEREST IN A FAMILY-OWNED COMPANY PURSUANT TO A POST-NUPTIAL AGREEMENT INVALIDATED BASED ON HUSBAND’S LACK OF DISCLOSURE ANDMISREPRESENTATIONS TO WIFE

Citing the fiduciary relationship between married spouses, a Florida Court of Appeals recently affirmed a trial court’s invalidation of a post-nuptial agreement waiving a wife’s interest in a family-owned business for $3 million where the husband’s financial disclosures to the wife were neither full nor fair; the husband had misrepresented material facts to the wife about financial transactions involving their company; and the husband had misled the wife with respect to the motivations and merits of a review of the agreement undertaken by wife’s counsel.
The Court of Appeals affirmed trial findings that although the husband encouraged his wife’s retention of independent counsel, he contemporaneously told her that the reviewing attorneys would dissuade her from signing the agreement because they would not be able to understand what the agreement was intended to accomplish. Husband also told wife that she should therefore ignore any potential advice not to sign the agreement. In so doing, the trial judge found that the husband effectively “…’inoculated’ [wife] against any advice from independent counsel by telling her the advice would be a product of their lack of understanding.” Kearney v. Kearney, No. 1D12-0754, Florida District Court of Appeal (First District), November 12, 2013.
The husband also made material misrepresentations to the wife about the potential negative effects on the subject company if the wife did not sign the post-nuptial agreement, and withheld critical facts from the wife with respect to financial distributions accruing to the husband as the result of a closely following business transaction. The husband also made “unclear and ambiguous” financial disclosures of income and assets that were insufficient to provide the full and complete disclosure necessary to a valid and enforceable post-nuptial agreement.