Maryland Supreme Court says postnuptial “bad boy” clause can apply
Maryland public policy allows enforcement of a $7 million postnuptial clause, which penalizes a spouse for adultery, the Maryland Supreme Court has ruled.
in View August 30thThe Maryland Supreme Court ruled in favor of Anna Cristina Nikita, who negotiated the sentence with her husband, Thomas Lloyd, after his first incident of adultery.
“We reject the claim that remaining faithful to one’s spouse is an overly onerous obligation,” the Maryland Supreme Court said.
The state Supreme Court said it agreed with a circuit court’s observation that agreeing to transfer $7 million “may have been improper,” but that alone did not warrant invalidation of a clause the parties negotiated with the assistance of counsel.
The state supreme court said Lloyd, the wealth manager, is the grandson of Rachel “Bunny” Mellon, who left him $10.7 million after her death in 2014. Nikita was an event planner and White House social secretary between February 2017 and January 2021.
The post-nuptial period required Lloyd to transfer his inherited money into joint accounts. He will have to pay Nikita $7 million if the parties separate after he engages in adultery or inappropriate sexual behaviour, with the money coming from his 50% share of the joint assets.
As a result, the Maryland Supreme Court said the postnuptial penalty cannot amount to more than 50% of Lloyd’s share in the couple’s joint assets. The state supreme court provided an example. If the joint assets are $28 million, then Lloyd can meet a fine of $7 million of his half of $14 million. However, if the joint assets are less than $14 million, Lloyd will not have to pay the full $7 million.
The Maryland Supreme Court has said that public policy in Maryland supports the distribution of marital assets based on adultery for two reasons.
First, the state currently allows fault-based divorce, including for adultery. Second, the state allows courts to consider adultery when determining financial compensation.
Other jurisdictions that have rejected adultery penalties have concluded that they violate no-fault divorce laws.
“We have concluded that Maryland public policy currently allows spouses to transfer assets to each other on the basis of adultery that results in the dissolution of the marriage,” the Maryland Supreme Court said. “The Court does not hold that spouses may impose on each other financial penalties unrelated to marital assets or unrelated to the division of such assets during a divorce; rather, the Court narrowly holds that spouses may allocate marital assets in the event of adultery divorce.
Tip of the hat to Legal profession blogWho published the most prominent of the opinion.