When well-known public figures get divorced, journalists often report on a prenuptial agreement that may make the property settlement easy. Not too long ago, when country singers Blake Shelton and Miranda Lambert decided to end their marriage, the Oklahoma court proceedings hardly caught the attention of the press. In fact, the divorce was finalized almost before their fans even knew the couple had separated.
It was reported that the couple quietly relied on the terms of their prenuptial agreement and quickly settled issues surrounding the division of their assets. Their prenuptial agreement even determined how they would divide the horses they owned together and which one of them would get their rescue dogs.
Postnuptial agreements are not so well known or talked about, but they do happen. When written and prepared with care, they help a couple separate with less animosity, since how their property is to be divided was decided between them at a time when they supposedly still cared about each other.
When postnuptial agreements are not properly prepared, havoc may ensue. An example of this was the highly publicized postnuptial agreement and divorce between Frank and Jamie McCourt, which occurred a few years ago. Their story is an example of how not to draft a postnuptial agreement if you want it to hold up in court.
Jamie and Frank met when they were both college students at Georgetown University. After their marriage in 1979, Frank went into the real estate business and Jamie continued her education. She obtained an M.B.A. from Massachusetts Institute of Technology (MIT) and a J.D. from the University of Maryland, School of Law. She then practiced law for a number of years. Both husband and wife were very successful in their respective careers.
In 2004, Frank bought the Los Angeles Dodgers, including their stadium and surrounding acreage in Chavez Ravine. He paid $421 million for it all. About this time, Frank and Jamie both discussed the possibility of a postnuptial agreement with Frank’s attorney who had been helping him with estate planning for several years. Jamie was concerned about protecting their personal assets from business creditors. Frank was apparently concerned about protecting his interest in the Dodgers and accompanying acreage. So, the attorney prepared a Marital Property Agreement (MPA), also known as a postnuptial agreement, for both Jamie and Frank to sign.
The attorney had six copies of the agreement prepared. Jamie signed all six copies on March 31, 2004. Frank signed three copies on March 31, 2004, and the other three on April 14, 2004. As it turns out, the three copies signed on April 14 were not the same as the six copies signed by Jamie or the three copies signed by Frank on March 31.
As luck would have it, a few years after the postnuptial agreement was signed, the marriage hit a snag. On October 27, 2009, after the couple had been married for 30 years, Jamie filed for divorce in California. (The couple owned a number of different homes, including one in California and one in Massachusetts.) A trial was held between August 30 and September 29, 2010 solely on whether or not the postnuptial agreement would be enforced. The final decision of the court: No. This particular postnuptial agreement was unenforceable.
The main problem with this particular postnuptial agreement was that the three separate copies Frank signed and the six copies Jamie signed on March 31 all listed Frank’s separate property, but “excluded” from his separate property the Dodgers baseball team and surrounding property located in Chavez Ravine. The three copies signed by Frank on April 14 did not exclude the baseball club and surrounding property, but specifically included this property in a list of Frank’s separate property.
At the trial, both Jamie and Frank testified that they had not read the agreement closely before signing it and just trusted the attorney to follow their wishes. Jamie said she had no idea she was signing away her rights to the Dodgers and the Chavez Ravine property. All copies of the agreement were submitted into evidence.
The Los Angeles County Superior Court stated that spouses owe each other a fiduciary duty and must use “good faith and fair dealing, and disclosure of all material facts.” That was not done here, and there was no “meeting of the minds” as to the actual terms of the agreement. Therefore, according to contract principles, the agreement was not enforceable.
The case dragged on for a while before the couple came to a settlement agreement. Jamie later appealed, claiming Frank had misled her and the settlement was unfair. This time, she lost.
Each state has its own rules about how to evaluate a postnuptial agreement; however, five factors listed by the Supreme Judicial Court of Massachusetts are instructive and may be similar to factors considered by other state courts:
Some requirements that apply in most states in order for a prenuptial or postnuptial agreement to be enforceable include the following:
A New York family law attorney writing for the Huffington Post outlined a number of reasons why preparing a postnuptial agreement with the assistance of an attorney may actually help improve a marriage that is in trouble. She notes that some couples have trouble discussing these issues with each other or even with a marriage counselor.
When problems are brought up with a family law attorney with the goal of establishing a postnuptial agreement, there is greater opportunity for resolution of financial issues. The opportunity for expression of frustration with a party’s spending habits and concerns about debt are presented in the context of resolving the issues with a written document.
The agreement confirms the marriage is an “economic partnership,” and codifies the “obligations and responsibilities of each partner.” The attorney lists the following suggestions for discussion in order to ultimately prepare a legally sound postnuptial agreement:
When the couple understands the importance of all these issues, are able to talk about their own needs and desires, and are able to listen to their partner’s needs and desires, then putting the postnuptial agreement together can be a cathartic exercise.
When the agreement is signed, and both parties are satisfied with its contents, they can set aside their disagreements and move forward. In many instances, this is all it takes for the marriage to become viable once again and for the parties to move forward.
If the marriage does end in divorce, all the “sticky” issues have been resolved and the emotional stress generally associated with divorce is lessened. They made the decisions at a time when they were both still committed to the marriage, and the dissolution will be smoother.
Other issues that need to be addressed when preparing a postnuptial agreement include, but are not limited to, some of the following situations:
When a properly prepared postnuptial agreement is completed, the couple can then live their lives knowing what will happen if their marriage does end in divorce. It reduces stress and allows the couple to focus on their marriage, not on the “what ifs” that might be hanging unspoken if there is no postnuptial agreement.
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