PreNuptial Agreements and the Petrakis Decision
The New York State Appellate Division, Second Department recently ruled in favor of Elizabeth Petrakis who sought to set aside the prenuptial agreement she and her husband, millionaire Peter Petrakis, had asked that she sign six weeks before they were to be wed and which she entered into four days before their wedding day. In part, the decision rested upon an oral promise, made by the husband, to tear up the agreement once the couple began to have children. He never did so.
In 1998, coincidentally the same year the Petrakis’ couple wed, the New York State Court of Appeals affirmed New York’s “strong public policy favoring individuals ordering and deciding their own interests through contractual arrangements.” See In the Matter of Greiff, 92 NY2d 341 (1998). The same decision established that the spouse who contests the validity of a prenuptial agreement bears the burden to establish the “fact-based, particularized inequality” [of the agreement] before the burden shifts to the party seeking to uphold the validity of the agreement to disprove fraud or overreaching.”
The news outlets are reporting the “groundbreaking” nature of the Petrakis decision.
The reason for this media attention is ostensibly due to the oral representations alleged to have been made by the husband, relied upon by his wife and ultimately believed by the Court. Elizabeth Petrakis was found to be a credible witness at trial. Her credibility paved the way for the Court to determine that her husband had fraudulently induced her to sign an agreement by promising to tear it up once they started a family. Another reason for the media attention has to do with the financial status of the parties themselves.
The agreement provided that should the couple divorce, Mrs. Petrakis would be entitled to $25,000 for every year the couple were married and nothing more. However, Mr. Petrakis was and remains a multi-millionaire.
The prospect of vowing to marry and commit to a life partnership does not usually initiate thoughts of protecting and preserving ones separate assets. There are times when this may be a prudent measure when one or both parties enter the relationship with vast wealth and/or property that is meaningful. There aren’t any “dos or don’ts” to impart in this situation, just information to be aware of. The Petrakis matter may still be the subject of Appellate court review, however it symbolizes a cautionary tale and one that should not be forgotten.