[The following summary was written by Ethan Olson, a law clerk in Nyemaster Goode’s summer program.]
Is a post-nuptial agreement, entered into in Florida and with a Florida choice of law provision, enforceable in Iowa, even if it would normally be invalid as violating public policy? Yes, said the Iowa Supreme Court today.
Herbert Hussemann Sr. and Velma Hussemann were married in Florida in 1991. Both of them were Florida residents. Shortly after their marriage, they entered into a post-nuptial agreement in which Velma renounced all rights in and claims against the estate of her husband upon his death, including any elective share. The agreement contained a provision stating that all questions relating to the validity and construction of the agreement were to be decided under Florida law. That same day, Herbert Sr. transferred his assets into a trust, which contained no provision for Velma, and named his sons Herbert Jr. and Robert as successor trustees.
Herbert Sr. and Velma continued to reside in Florida until 2005, when they moved to Iowa. When Herbert Sr. died in 2012, Velma attempted to claim her elective share under Iowa law. The trustees asserted that Velma had waived her rights under the post-nuptial agreement entered into in Florida and, since Florida law applied, the waiver was valid and enforceable because such waivers were recognized in Florida. Velma disagreed, arguing that the entire post-nuptial agreement, including the waiver, was invalid as violating Iowa public policy. Both of the parties are correct in that Florida law recognizes post-nuptial agreements and Iowa law does not.
The District Court ruled in favor of the trustees, noting that the choice of law provision controlled and that, since Iowa law did not apply, neither did Iowa public policy. It reasoned that allowing Velma to prevail would invite parties validly entering into post-nuptial agreements to simply move to invalidate them. Velma appealed.
The Iowa Supreme Court affirmed the District Court’s ruling. The court noted that the case turned upon whether enforcing the choice of law provision in the contract would be contrary to a “fundamental policy” of Iowa, and whether Iowa had a “materially greater interest” than Florida in the determination of this issue. In this case, the fact that Herbert Sr. and Velma executed the agreement in Florida as Florida residents, and contemplated that the agreement would be performed in Florida was enough to find that Iowa’s interest in the dispute was not materially greater than Florida’s. Said Justice Mansfield, who wrote the Court’s opinion, “Florida has a significant interest in assuring that a Florida marriage, including any accompanying agreements, is recognized and carried out in a manner consistent with its own law.”
The Court held that Iowa’s public policy interest in refusing to enforce post-nuptial waivers was of a low order since the creation of one bears no criminal or civil penalties. Instead, the Court reasoned that the justified expectations of the parties entering into the agreement are critical and, in today’s mobile society, parties entering into a contract in one state generally do not expect that contract to become invalid simply by their moving. Finding that its determination on this issue was in accord with similar decisions across the country, the Court upheld the choice of law provision, applied Florida law and affirmed the decision of the District Court.