RONALD KAUFFMAN > BLOG > Agreements

Category: Agreements

Prenups and Millennials

Posted by Ron Kauffman on

Millennials are delaying marriage until later in life than previous generations. They are more likely to have careers, businesses and property. The Washington Post reports they are also much more likely to have prenuptial agreements too.

Amanda Farris works in accounting and likes to “play things safe” when it comes to her savings and investments. Her boyfriend, Andy Salmons, owns a coffee shop and is a serial entrepreneur not afraid to take risks.

The two have been together for nearly four years and are talking about marriage. But before they vow to stay together for better or worse, they’ve agreed to come up with a plan for how they would protect their finances on the — slim, they hope — chance that their relationship should head south.

“I wanted to find some middle ground,” said Farris, 31, adding that a prenuptial agreement would separate her retirement savings from Salmons’s business and the debt he took on to launch that and other ventures.

“It’s important for us to keep things separate,” Salmons, 32, said. “I don’t ever want my decisions to put her in jeopardy.” Hence the rise of prenuptial agreements with millennials.

Florida Prenuptial Agreements

Prenuptial agreements are important for couples planning to marry. Many people believe prenuptial agreements are only for the rich and famous. However, prenuptial agreements help all couples. I have written extensively on prenuptial agreements.

Prenuptial agreements help keep your non-marital property yours. The property you brought into the marriage is yours – mostly. But over time it is common for people to start mixing things up. Inheritance funds get deposited into joint accounts; properties get transferred into joint names…and all for good reason.

Unfortunately, tracing commingled property is expensive, and hard to prove. But, if you put it in writing at the beginning, you might be able to avoid this task, and save some money down the road.

Prenuptial agreements also help you to change the law. For example, right now in Florida, there has been an ongoing debate about alimony. When you go to court, a judge has to follow state law regarding alimony.

However, through prenuptial agreements you can modify Florida’s legal standards for awarding alimony, in addition to modifying what the current law says about the amount of support and the duration of the alimony period.

The Prenup Millennial Challenge

For generations, prenuptial agreements have proven a sticking point for couples who deemed them unromantic. In some relationships, the contracts can signal a lack of trust or suggest that one person is foreseeing an end to the union.

But over time, the equation for when and why two people should marry has changed. In the 1970s, about 8 in 10 people had married by age 30, according to a U.S. census report. In 2016, that same percentage wasn’t reached until age 45.

Millennials are also less inclined to get married while they’re young and broke. More than half of people in their 20s and 30s say it is important for them to be financially secure before they get married, according to a 2015 survey by Allstate and the National Journal.

That increases the chance that when two people tie the knot, each will have a career or business that they want to protect with prenuptial agreements, financial advisers say.

In 1975, about 43 percent of women were stay-at-home moms or homemakers, according to the census report. In 2016, only 14 percent of women were home full time.

Prenuptial agreements are a relatively modern concept. It was only within the past 25 years or so that the contracts became widely accepted in most states, coinciding with the rise of divorce.

Prenups also have evolved as relationships have changed. In the ’70s, when couples generally married younger, prenuptial agreements were mainly used for estate-planning purposes.

They’re also emerging as a tool for dividing debt loads. About 41 percent of couples had student loan debt in 2013, compared with 17 percent in 1989, according to the census report. The size of that debt burden is growing as college becomes more expensive.

The Washington Post article is here.

 

Florida Cohabitation Agreements

Posted by Ron Kauffman on

There has been a very sharp increase in the number of cohabiting couples over the past 15 years or so. This rise in cohabitating – and not marrying – has led to a rise in complex and often costly legal disputes which could be avoided with a cohabitation agreement.

As the Guardian reports, despite what many believe – and around one in four people living together think they have the same legal protection as married couples  – there is no status in Florida law as a common-law spouse or partner.

The number of unmarried couples has doubled since the mid-1990s to nearly three million, while the number of children living with unmarried parents has risen from 0.9 million in 1996 to 1.8 million in 2012. In addition, there are an estimated 6,000 same-sex couples, not in a civil partnership, who have children.

Basically, the law does not recognize in any meaningful way a living-together relationship outside marriage or civil partnership.

So, if a cohabiting relationship breaks down there is very little protection for the weaker partner. As a result, some cohabiting families can find themselves facing real difficulties should they split up, particularly when children are involved.

Florida Law on Cohabitation Agreements

I have written about agreements, and especially cohabitation agreements before. Florida law recognizes that unmarried cohabitants may agree to enter into an enforceable contract that establishes rights and responsibilities towards each other: “as long as it is clear there is valid, lawful consideration separate and apart from any express or implied agreement regarding sexual relations.”

One of the reasons Florida allows for cohabitation agreements is because the right to contract is one of the most sacrosanct rights guaranteed by our fundamental law.

Should your cohabitation agreement be in writing? While it may be literally true that nothing in Florida’s statute of frauds specifically requires that a cohabitation agreement be in writing, it absolutely should be.

Florida is actually unique in the writing requirement. Among the other states that also recognize contracts between unmarried cohabitants, only three—Minnesota, New Jersey, and Texas — have held that such agreements must be in writing, and all three of those jurisdictions have enacted statutes specifically containing this requirement.

However, given that one of the primary purposes of an agreement is to reduce the risks of protracted litigation and excessive attorney’s fees, failing to have a solid, written cohabitation agreement is counterproductive.

Cohabitation v. Marriage

In Florida, as in many common law countries like England and Wales, when married couples divorce, both parties have a legal right to maintenance and their share of assets, including property and inherited property. Judges have complete discretion under family law to take all the circumstances and history of the relationship into account and decide on a fair division.

However, cohabiting couples have no such rights, regardless of the number of years they have been together and whether they have children.

So, for example, partner A moves into partner B’s property (partner B, whose name is on the deeds, is the sole owner), they live together and maybe have children. If they separate, whether after five, 10 or even 30 years, partner A has no right to personal maintenance from partner B even if she has always been supported financially.

‘No Nups’ What’s in a Cohabitation Agreement?

As the law stands, the only solution for cohabiting couples who want legal protection should they split up is either to marry or to draw up a cohabitation agreement, otherwise known as a “no nup”.

So what is a cohabitation agreement?

Generally, No Nups set out who owns what, and in what proportion, and lets you document how you will split your property, its contents, personal belongings, savings and other assets should the relationship break down.

No Nups can also cover how you will support your children, over and above any legal requirements to maintain them, as well as how you would deal with bank accounts, debts, and joint purchases such as a car.

The agreement can also be used to set out how you and your partner will manage your day-to-day finances while you live together, such as how much each contributes to rent or mortgage and bills, and whether you will take out life insurance on each other.

The Guardian article is here.

 

Marital Settlement Agreements

Posted by Ron Kauffman on

“Shahs of Sunset” star Golnesa “GG” Gharachedaghi is having an interesting divorce problem. Her pending divorce from her husband, Shalom Yeroushalmi, has run into a serious roadblock: her husband refuses to sign the divorce papers.

According to a Page Six report:

“There are no issues about spousal support, assets or those typical divorce things at all,” the source said. “He is not asking for anything. What he’s basically doing is tormenting her. He’s not signing just to give her a hard time.”

“He just keeps saying he’s going to sign, then he doesn’t sign,” the source added. “He’s trying to drag it out and prevent her from moving on.”

Marital Settlement Agreements

Most family law cases are resolved by agreement, not by trial. A Marital Settlement Agreement is the method to resolving all of the issues, and is the final product of the negotiations.

A marital settlement agreement puts in writing all the aspects of the divorcing parties’ settlement. Topics covered in the Marital Settlement Agreement include the parenting plan and timesharing schedule, the division of the parties’ assets and liabilities (called “equitable distribution”), alimony, child support, payment of attorney’s fees and costs, and any other items to which the parties have agreed.

A marital settlement agreement entered into by the parties and ratified by a final judgment is a contract, subject to the laws of contract. The enforceability of contracts in Florida is a matter of importance in Florida public policy.

Accordingly, because a marital settlement agreement is treated like any other contract, and is subject to interpretation like any other contract, they can be enforced by the court.

Conclusion

If Yeroushalmi signs the marital settlement agreement, the divorce petition can make its way through the system, allowing the former couple to sever all formal ties. However, if he doesn’t, a judge may grant GG a default divorce after a considerable amount of time of inactivity on Yeroushalmi’s behalf.

GG and Yeroushalmi had a whirlwind romance. They secretly tied the knot at the end of January 2017, though GG realized within days she had made a terrible mistake.

“I wanted to throw up, “she said. “I was just thinking, ‘My dad’s going to kill me right now. And my mom is going to wake me up and then kill me again.’”

She filed for a divorce after one month of marriage.

The Page Six article is here.

Silicon Valley Prenups

Posted by Ron Kauffman on

The billionaire founder of Farmville has found himself in Divorceville. If divorces are tough, Silicon Valley divorces – with sophisticated spouses, high value assets, and hard-to-value assets – can be tougher. There is a reason more people insist on prenuptial agreements.

What are Prenups

I’ve written about prenuptial agreements before. Prenuptial agreements, or “prenups,” are contracts entered into before marriage that outline the division of assets in case of divorce or death.

Prenups, and Post-nups (agreements entered after a marriage) resolve things like alimony, ownership of businesses, title of properties, and even each spouse’s financial responsibilities during the marriage. As the UK Guardian reports, in Silicon Valley, divorces and prenup agreements go hand in hand.

Voiding Prenuptial Agreements

Farmville founder Mark Pincus, who was an early investor in Facebook and Twitter, is worth around $1.28b. Mark is separated from his wife, Alison Gelb Pincus, the co-founder of home decor business One Kings Lane. She also may be trying to get out of her prenup.

The couple married in 2008, a year after his company grew into a $1b company. Mark has a prenup. Unfortunately for him, in filing for divorce, his wife Alison has asked the court to set aside the agreement. Why? Because the value of his company increased so much after the marriage.

Prenuptial agreements are often used in high tech industries, and in Silicon Valley in particular, to protect ideas and future income – not just current salaries and property. This makes perfect sense in an age when intellectual property is so highly valued.

Because of Florida’s policy of enforcing agreements, prenups can be difficult to void – but not impossible. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement, for example, is enforceable.

In Florida, to test the validity of a prenuptial agreement, courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.

The Farmville case is a tough one. The spouse challenging the agreement, Alison, is herself very well off. She is the co-founder of One King’s Lane, which she sold to Bed Bath and Beyond for $30m. She is not exactly a stay-at-home mother who cannot work or lacks assets of her own.

Difficult to Value Assets

In divorce, determining the value of certain assets – businesses, stock options and restricted stock – is more complicated than it seems. As the shareholders of Snap Inc. have learned, startups may see their values skyrocket for their IPO, but later fizzle once earning reports become public.

Generally, anything you own before marriage counts as your separate or non-marital property. However, asset or debts acquired after the marriage is generally considered as marital or community property. In the event of a divorce, the law requires it to be distributed equitably, which usually presumes and equal split between partners.

A couple of weeks ago, tech analysts were hailing the IPO of Snap Inc. as a triumph. But a day after Snap posted a $2.2bn loss and decelerating user growth in its first earnings report as a public company, the stock’s value crashed.

Messy divorces don’t come cheap. When Elon Musk divorced his first wife Justine the two sides racked up $4m in legal and accounting bills in two years – around $170,000 per month. A prenuptial agreement can limit the costs of a divorce.

The Guardian article is here.

 

International Prenups

Posted by Ron Kauffman on

Welsh actress, Catherine Zeta-Jones married American actor, Michael Douglas. They reportedly have a prenuptial agreement that states she gets $2.8 million for each year of marriage, and a $5 million bonus if Michael has an affair.

While there are many benefits to prenuptial agreements in American marriages, the benefits of international prenups are multiplied when the spouses are from different countries, or hold foreign assets, or who contemplate living in other countries.

Prenuptial Agreements

A prenuptial agreement, sometimes called an “antenuptial agreement”, and/or “premarital agreement”, are commonly called “prenups.”  A prenup is a legal contract, much like any other legal contract, and it is entered into before a marriage by the couple intending to marry.

The contents of prenuptial agreements can vary widely. However, prenups commonly include clauses that spell out how to divide property accumulated before and after the marriage, and support or alimony in the event of divorce or death.

I’ve written on some of the more extreme clauses people insist be put in the prenups before. For example, prenups can include provisions to cover you in the event your spouse engages in excessive drug use, has extra-marital affairs, becomes an excessive spender, or begins a gambling habit.

International Prenuptial Agreements

A prenuptial agreement for international couples is generally a good idea, but international prenups have their own set of unique problems. For example, a prenup that is valid in Florida, may not be valid in another American state, let alone a different country.

When people live in different countries, hold foreign assets, or are planning to either marry overseas, or live in other countries, they should try to consider the law of all jurisdictions where they contemplate living.

There are many advantages and disadvantages to having an international prenup which states that the law of one country governs your divorce.

Issues with International Prenups

International prenups can involve couples from different countries, or couples from one country who live in different countries, or couples who have assets located overseas.

Since the law of each country can be very different, the choice of law clause in international prenups can take on great importance. Additionally, the language used in prenups can be extremely important for two reasons.

First, legal terms in the United States may have different legal meanings in other countries, or may not be terms recognized under foreign law.

Second, the enforceability of international prenups may just depend on whether it was understood by the signors, and they may not speak the language the agreement was written in sufficiently.

Whether in the United States, or in another county, make the effort to disclose all of the finances, even if financial disclosure may be waived in your country.

Additionally, any prenup should be signed well in advance of the wedding. In an ideal situation, the agreement should be fully signed before the wedding invitations even go out.

The Suggest article on the Zeta-Jones prenup is here.

 

Against All Odds: Voiding Prenups

Posted by Ron Kauffman on

What do prenups, and singer Phil Collins have in common? We will soon find out. Phil may be a witness in a divorce trial where Phil’s ex-wife is testing the validity of an agreement she signed with her new husband.

As the Miami Herald reports, the five-day trial on the validity of an agreement is scheduled to start April 24. The trial is a part of Phil Collins’ ex-wife, Orianne Mejjati’s, current divorce from Miami developer Charles Fouad Mejjati.

This part of the trial is designed only to validate, or declare null and void, a prenup or postnup agreement that Orianne and Charles signed in May 2015 – about the time Collins moved to be near Orianne.

Under the agreement in question, Orianne would be forced to turn over her $10 million Miami Beach mansion to Charles, in addition to giving him half the value of her property near Geneva, Switzerland. It has been on the market for $62 million.

Easy Lover: Prenups and Postnups

I’ve written about prenups and postnups in the past. Prenuptial agreements, or “prenups,” are contracts entered into before marriage that outline the division of assets in case of divorce or death. Postnuptial agreements are contracts entered into after the marriage.

Both prenups and postnups help try to resolve things like alimony, ownership of businesses, title of properties, and even each spouse’s financial responsibilities during the marriage.

True Colors: Voiding Agreements

Because of Florida’s policy of enforcing agreements, prenups and postnups can be difficult to void – but not impossible. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement, for example, is enforceable.

In Florida, to test the validity of a prenuptial agreement, courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.

Under Florida’s Uniform Premarital Agreement Act, a prenup may not be enforceable if a party can prove, in part, that it was not signed voluntarily; or was the product of fraud, duress, coercion, or overreaching; or it was unconscionable.

Some of these defenses may also require a party to show they were not given a fair and reasonable disclosure of property, and did not voluntarily and expressly waive that right, and did not have adequate knowledge of the property or financial obligations of the other party.

That’s Just the Way It Is

In Orianne’s case, she stands to lose a large portion of her fortune, so Phil Collins has been cooperating with the court system. He was grilled by lawyers for several hours in January on what he knew about Orianne’s mental state when she signed the post-nuptial agreement.

According to media reports, Orianne now believes her condition at the time she signed the agreement made her legally incompetent to sign anything and says she was ‘coerced’ and ‘bullied.’ Charles’ side claims Orianne was properly represented by a lawyer, and he has been playing hard ball.

‘The husband threatened that he would disclose and make public allegations about the wife,’ Orianne’s original divorce petition reads.

‘That would cause the wife great personal, professional and social embarrassment, humiliation and upset and would, the husband threatened, also result in the wife losing custody of her child.’

In 2015, Phil Collins bought Jennifer Lopez’s old house for $33 million. Collins then paid Mejjati, a builder by trade, to make substantial alterations to the property where Lopez broke up with longtime love Ben Affleck in 2004. Within months, Orianne had left her husband, and moved in with Collins.

The Miami Herald article is here.

 

Prenups and Your Idea for a Killer App

Posted by admin on

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Agreements on Monday, January 9, 2017.

The New York Times reports that a growing number of people are signing prenuptial agreements to divide their intellectual property: things like iPhone app ideas, songs and restaurant concepts.

Protecting your ideas and future income – rather than on current salaries, real-estate and personal property – makes perfect sense in an age when intellectual property is so highly valued.

Employers increasingly require employees to sign away all future ideas and opportunities to compete with the company and divorcing partners too hope to keep these assets in case of a breakup.

I’ve written about prenuptial agreements before. Prenuptial agreements, or “prenups,” are contracts entered into before marriage that outline the division of assets in case of divorce or death.

Prenupts, and Post-nups (agreements entered after a marriage) resolve things like alimony, ownership of businesses, title of properties, and even each spouse’s financial responsibilities during the marriage.

There are many other concerns that can be addressed in a prenup: Caring for a parent; Going back to school; Shopping habits; Credit card debt; Tax liabilities; and even death or disability.

In the world of intellectual property, interpreting prenups for future intangibles is difficult: What did the parties actually mean to include? How are amorphous ideas and innovations to be valued?

There are dangers with this new prenup trend. Consider the example of a wife holding a steady job while the husband works on his app. They share the risk now, but if they divorce, the husband reaps the rewards of his intellectual property, and the prenup could ensure his ex-wife gets nothing.

Intellectual property – including music, art, literary works, films, scientific and medical developments, technology – is normally protected against third parties by copyrights, trademarks, patents and trade secrets.

But among couples, a need has developed to protect “ideas” conceived by either a bride or groom who see him or herself as the next Mark Zuckerberg. In the event of a divorce, these couples want protection for what may be each person’s most valuable asset – the product of their intellect or invention.

The New York Times article is here.

Mel Gibson & The Passion of the Agreement

Posted by admin on

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Agreements on Friday, August 12, 2016.

An ill-timed Howard Stern interview just saved Mel Gibson half a million dollars he would’ve paid his ex under their mediation settlement agreement.

The California 2nd District Court of Appeal denied Mel Gibson’s former girlfriend, Oksana Grigorieva, the remaining $500,000 of a pre-agreed $750,000 payment for staying silent about their turbulent relationship after she reneged on the deal by talking about Gibson on The Howard Stern Show in 2013.

I’ve written about prenuptial agreements and marital settlement agreements many times before. Agreements are always advisable in resolving relationship disputes as you have control, to a certain extent, over what happens with your future.

In Mel Gibson’s case, keeping his stormy relationship with his ex-girlfriend out of the media was a priority for the world famous actor, already battling bad press from his alcohol related rants.

In Florida, courts will try to enforce your agreements, sometimes even if the agreement has unfair provisions. A bad deal does not provide a legal basis for the court to rewrite the parties’ agreement or to set it aside.

That’s because bad domestic bargains – meaning unfair or unreasonable property and monetary settlement agreements – are still enforceable so long as they are knowing, voluntary and not otherwise against Florida public policy.

Gibson, 60, had already paid Oksana – the mother of his six-year old daughter Lucia – $250,000, but claims he is no longer obligated to pay her the remaining balance due to her forfeiting their agreement by appearing on the Howard Stern show.

The $750,000 had already been significantly reduced from its original figure, a staggering $15 million, to be paid on the condition that she keep secretly recorded audio-tapes out of the public arena.

But after Oksana, 46, released the tapes – in which Gibson can be heard using racist language and threatening to beat his then girlfriend – the amount Gibson had to pay was drastically reduced.

The appeal court’s ruling means the pianist has only received 1/60 of what she could have received from the star.

The article on Gibson’s big court win is here.

Divorce Mediation to Keep Costs Down

Posted by admin on

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Agreements on Wednesday, August 10, 2016.

Mediation is a great way to resolve your divorce without paying for a full trial. Choosing a mediator is the first step, and may be the most important decision you can reach in your divorce.

I’ve written about mediation several times before. Under Florida law, the parties to a divorce must attempt to resolve their difference through mediation before their case can proceed to trial. In many cases, mediation can be used earlier in the process to resolve all outstanding disputes before either party has filed for divorce.

In divorce mediation, the parties and their attorneys meet with a neutral mediator – sometimes together, sometimes separately – to try to negotiate a settlement agreement.

Ideally, both the mediator and the attorneys should have enough experience to anticipate what will happen if the case goes to trial. Drawing on that experience, they can help the parties negotiate an agreement without any need to have a judge decide the issues for them.

At mediation, you will discuss issues that are highly personal and emotional. Accordingly, there are many factors to think about when choosing the right family mediator. Below are a few to think about:

Trust is the most important consideration in choosing a family law mediator. Your mediator should be someone you feel comfortable with as a person and as a professional.

Specialization is another important criterion. Ask your attorney if the mediator in your case has a practice area dedicated to divorce and family mediation. Family is not an area to dabble in. To be effective in family mediations requires patience as well as skills. Ideally, you want the percentage to be 100%.

Cost is always an important consideration. While it can be expensive to spend the day in mediation, if you’re successful, you are likely to save thousands on your total legal fees. When comparing mediation fees, base your decision on selecting a mediator with a high success rate for settlements. $200 per hour sounds better than $400 per hour, but not if your $200 mediator spends 8 hours without a resolution, you have not saved anything.

To recap, when searching for a mediator in your divorce, don’t just hire the cheapest mediator you can find, look for:

1. Trust,

2. Specialization in family and divorce matters,

3. Cost.

Cohabitation Agreements: Prenups for the Unmarried

Posted by admin on

By The Law Offices of Ronald H. Kauffman of Ronald H. Kauffman, P.A. posted in Agreements on Wednesday, August 3, 2016.

Increasingly, couples are living together without marrying. Legally, that’s more complicated than marriage, because you don’t have as much legal protection. Fortunately, there is an agreement for that.

According a recent survey of the American Academy of Matrimonial Lawyers (AAML), 45% of the members find that legal disputes between unmarried couples who had previously lived together have been on the rise during the past three years. In all, 26% have cited an increase in cohabitation agreement requests from unmarried couples.

I’ve written about the need for cohabitation agreements before. It is important to remember that not being married does not prevent a partner from attempting to make a claim on your assets once a live-in relationships ends.

Some of the protections that cohabitating couples lose out on are the protections provided by divorce laws: the presumption that the father is the father, inheritance laws, survivor’s benefits and many others.

A cohabitating couple that decided to split up may encounter the same conflicts about dividing the house, splitting the joint bank accounts, paying off the joint loans timesharing and child support that married couples have. However, the laws are not the same.

As the Huffington Post reports, if cohabiting partners do not have a mutual understanding of their financial, the legal consequences may lead to financial devastation for one of the partners. It could also produce significantly complex property disputes that cause both sides to incur substantial legal fees to address.

Cohabitation Agreements are designed primarily to protect financial interests. Before moving in with a partner, a previously signed cohabitation agreement can serve as an effective tool to ensure that your finances and assets are adequately protected.

Many times, unmarried cohabitants put their labor and own money into a live-in relationship, many of which are long in duration, because they ultimately expect that they will receive benefits from the other party arising from the commitment to be in a long term relationship. In many cases, those expectations are dashed when the relationship ends without the benefit of a cohabitation agreement.

In order to minimize doubts, and to ensure that both parties understand each other’s expectations, a legal cohabitation agreement may help. Some general tips for an agreement can include:

– Support payments

– Selling or keeping the jointly owned home

– What to do with jointly owned property if someone dies

– Medical decisions

– Who pays household bills and taxes

Agreements are useful in resolving a big oversight in the law. This is especially important as more and more couples choose to live together rather than marry.

The Huffington Post article is here.