Prenuptial: Parting Agreement – When Couples Write A Pact For Parting

Prenuptial: Parting Agreement – When Couples Write a Pact for Parting, Negotiating Prenups Before Marriage

Abstract:  Family law expert Peter M. Walzer is quoted in this article about prenups published in the Los Angeles Times

There were major revisions to California premarital agreement law since these articles were written. These articles are obsolete. For an update on premarital agreement law, click on “A California Guide to Premarital Agreements“.

Prenuptial: Parting Agreement – When Couples Write a Pact for Parting, by Darlene Sordillo, Published in the Los Angeles Times, February 21, 1990

• For better, for worse, for richer, for poorer… ’til the prenuptial pact do us part.

That may well be the official marriage vow of the 1990s. Just ask Donald and Ivana Trump, who last week announced their plans to divorce — and to duke it out over an amended prenuptial agreement that has him gloating and her steaming.

The Trumps are not alone. Other notables who were at loggerheads over such agreements last year included:

– Hotelier Leona Helmsley, who at one point was accused of violating the terms of her prenuptial agreement by trying to get control of her husband’s estate.

– Actor William Hurt, whose former live-in lover unsuccessfully alleged that they had entered into a prenuptial agreement.

– And Washington Redskins owner Jack Kent Cooke, who unsuccessfully contested his prenuptial agreement during divorce proceedings.

On a less controversial note, Playboy publisher Hugh Hefner and Kimberly Conrad signed an agreement before they strutted down the aisle. And designer Mary McFadden, 51, married 22-year-old Kohie Yohannan without a prenuptial agreement, although the couple reportedly vowed that a 20-pound weight gain would be grounds for divorce. Several months later, their marriage was over.

MIGHT A PRENUPTIAL AGREEMENT HAVE AFFECTED MCFADDEN’S ASSETS? WILL TRUMP’S PROTECT HIS?

The answers rest in the terminology of the agreement, the circumstances surrounding its signing and the laws of the particular state. As a general rule, a prenuptial (sometimes called “premarital” or “antenuptial”) agreement is a binding contract unless the person contesting it can prove that it is legally defective.

“In general, judges like to see people living with the consequences of their own decisions,” said Commissioner Robert Schnider, who presides on the family law bench in Los Angeles County Superior Court and who teaches a course in family law and marital property at Loyola Law School in Los Angeles. “There is an ethos in our society that people ought to be responsible for themselves and their decisions. If a party had an agreement presented to him it was up to him to say no and not sign it.”

Often, Schneider said, the decision to marry involves a weighing process. “Frequently, it’s a woman without assets marring a man with substantial assets. He’s promising her a nice life if things work out. It’s going to be a big change for her, a big step up. Now he’s making demands on her to protect himself or to protect his children from a previous marriage.

She has to decide: “‘Is it worth it taking a chance, going for this and giving up my rights, or should I just say no?’” A woman faced with that situation can turn it into a benefit, suggests Stuart Walzer, a partner with the family law firm of Walzer & Gabrielson in Century City.

Walzer, recently deemed “one of the deans of family law” in California Lawyer Magazine, said: “When a young woman in that situation comes to me and says, ‘My fiancé gave me this agreement and I want to sign it,’ I say, ‘No, you’ve got some bargaining power and you should use it.’ The man wants her. She’s never really going to be quite in the same position again.”

Schnider said court battles over prenuptial agreements are uncommon. In his 8½ years on the bench, he has presided at trials involving contested agreements “on the average about one per year.”

The most common ground for contesting a prenuptial agreement is duress, said Schnider, who typifies it as: “Shortly before the wedding, your fiancé puts a piece of paper in front of you and says, ‘Sign this or I won’t marry you.’ It’s the emotional pressure put on by having the invitations out, the gifts in, the guests coming, and having to embarrass yourself in front of all your friends by saying ‘It didn’t work out.’”

But duress, like any legal concept, is open to interpretation. Daniel Jaffe, of the elite Beverly Hills family law firm Jaffe & Clemens, settled this case last week:

Twenty-one years ago his wealthy client lived with a woman for five years. He insisted they would never marry and often pointed to a laminated check on the wall (his payment to a former wife), mounted above a sign bearing the word Think. When his live-in partner developed a serious illness, he offered to marry her — as long as she signed a prenuptial agreement. She did so, against her attorney’s advice. “Every time (a guest visited), the man would wave the agreement around, saying, ‘This is the best thing God and lawyers ever created,’” Jaffe said.

Now Entangled In A Divorce, The Wife Claims The Agreement Is Invalid Because She Signed It Under Duress.

“If ‘I won’t marry you without a prenuptial agreement’ is duress, then there are no (prenuptial) agreements that are any good,” Jaffe said. But rather than run the risk of trial the man gave his ex more money than the agreement provided.

In the Trump case, there are similar concerns, Walzer said, adding that what Ivana Trump’s lawyer is contending “is that Mr. Trump is so rich that he ought to give her more than what the agreement provides. But that would make all prenuptial or postnuptial agreement meaningless, absolutely meaningless.”

If couples won’t honor prenuptial agreements, what’s the point in having them? Said Schnider: “Probably 50% of these agreements aren’t challenged. Of those that are challenged, 60% or more are upheld. So over three-quarters of them are doing the job they were supposed to do.”

IN PRENUPTIAL AGREEMENTS HE DRAFTS, JAFFE OFTEN INCLUDES AN INCENTIVE TO ABIDE BY THEM: A CLAUSE STATING THAT IF A SPOUSE CONTESTS THE AGREEMENT AND LOSES, HE GETS NOTHING.

But it often doesn’t get that far. Many people who consult lawyers about prenuptial agreements never end up going through with them. Schnider, who practiced family law for 11 years before becoming a judge, said he “spent more time talking about (prenuptial) agreements than drafting them.”

Why do people get cold feet about prenuptial agreements? “It’s just not what people are thinking about when they are getting married,” he said. “Even if a person has been married previously he tends to be thinking, ‘I made a big mistake before, but this time I’ve finally found the right person. I’m doing the right thing. So if I’m getting an (prenuptial) agreement, does that mean I’m doing the wrong thing? Maybe I shouldn’t be getting married.’”

Negotiations over prenuptial agreements can raise havoc with partners’ emotions. “Ice water on romance” — that’s how Walzer characterized the agreements.

The document can, he added, chill a romance, because it sets a pattern for endless renegotiations. In a long document, such as a 55-page document he recently drafted, Walzer said, “it can get to the point where the couple is reading (the agreement) all night to determine whether they’re going to go out to lunch together the next day. Marriage just isn’t susceptible to a lot of lawyering — it’s too intimate a relationship.”

His son, Peter Walzer — also a family law specialist with his own practice in Century City — agreed. The younger Walzer, president of the Century City Bar Association’s family law section and treasurer of the Association of Certified Family Law Specialists, said such agreements can be “very difficult for newlyweds…. Basically one spouse is saying, ‘Do you trust me?’ and the other is saying, ‘No, I don’t.’”

Peter Walzer said he usually tries to arrange so couples marry without an agreement because “there always seems to be mistrust after that, and it’s a difficult way to start a marriage.” Were Walzer in that position, would he sign a prenuptial agreement? “No, I don’t think I would.”

Although prenuptial agreements have long been a part of life for the rich and famous, Stuart Walzer said they are not always necessary, even in a community-property state like California. Through prudent financial planning a person may be able to keep assets as separate property without a prenuptial agreement.

For example, he said, consider a man who inherited large family investments and lives off the passive income from them but does not manage them. “Even if the husband gets $1 million a year income from it, after a 10-year marriage the wife may have accumulated nothing because it is not community property,” Walzer said.

In that context, the wife would want a prenuptial agreement. “If she is marrying a very wealthy man, she may want to carve something out for herself. Her feeling may be, ‘I’m putting aside opportunities for other marriages, opportunities to advance my own career. I should be compensated for that,’” Walzer said, adding, “you hear young women sometimes saying, ‘I’d never have a prenuptial agreement; I’m so offended by the thought.’ A mistake.

“If she marries a high-roller, do-nothing kind of person who lives off his passive investments, she may end up with nothing except alimony at the end of a long marriage,” he said.

Who else would benefit from a prenuptial agreement? An enormously successful business person like Donald Trump, who has acquired a “trophy wife” — a beautiful, glamorous partner to enhance his public image — would want an agreement “very badly,” Walzer said. Because Donald Trump’s efforts directly contribute to the increase in his business profits, under a California law his wife could have a community property claim to part of those profits.

What about the less-moneyed? “Most people should think long and hard before they decide to have a prenuptial agreement. In a first marriage, for a young couple just starting out together, it’s insanity. They’re going to try to build a life together based on mutual sharing and trust. They have to learn to deal with each other as best they can. If they can’t make it, they can’t make it,” Walzer said.

“Even in relationships where there is a substantial disparity of money and power, I still wonder whether it isn’t an undue burden on the marriage” to have a premarital agreement, he said. “It’s important to be very careful of whom you marry and get to know them as well as you can. But to say that the agreement is going to solve the kind of problems that arise after marriage, I just don’t think so.”

Couples who negotiate a prenuptial agreement must realize they are “negotiating the divorce in advance of the marriage,” Walzer said. “A lot of people don’t want to face that.”

An agreement that virtually shuts one spouse out, Jaffe said, always gives that partner the feeling he’s not really part of a marriage. “Some wives have told me that their premarital agreement has been the bane of their existence very day of their marriage. Every day they hear ‘This is my house, this is my painting on the wall.’”

When the couple tires of living that way — or when one spouse wants to change the rules — the marriage ends, he said, “because that’s who he bought — he bought her, just like he bought the painting. And when she decides she wants to stand up and be a participant in the marriage, he says, ‘You’re changing our deal, this isn’t what I bought…. I don’t want to share and I’m not about to start now.’”

And if the emotional costs aren’t high enough, the financial considerations may make a couple pause at pursuing a premarital agreement. Legal fees for such agreements vary widely, depending upon their complexity and length and the lawyer’s expertise. Highly experienced family law specialists, such as Jaffe, often charge a minimum of $7,500, even if evaluating an agreement drafted by the other spouse’s counsel. General practitioners or younger lawyers may charge much less, often in the $2,000 range.

Judy Warren, an attorney with Cummins & White in Los Angeles, drafts prenuptial and postnuptial agreements as part of her estate-planning practice. Her fee is lower than that of a family law specialist depending largely on the extent of the property involved and how much research she has to do. “If you have a good accountant who can provide an up-to-date financial statement, then the lawyer’s fee will be considerably less because some of the work has been done,” Warren said.

Two weeks ago, she drafted what she terms a “fairly typical” 16-page prenuptial agreement. Another client brought in a one-page agreement for her to evaluate, but she said it is probably unenforceable.

It takes a lot of paper to set forth each person’s rights, what they’re giving up, what property is involve,” Warren said. “Without all that, the agreement isn’t worth the paper it’s written on.”