Tag: Mahr agreement

Can a Prenuptial Agreement Make You Smile More

Posted by Ron Kauffman on

Something to make you smile more or less, Amazon founder, Jeff Bezos, did not have a prenuptial agreement when he divorced his first wife, MacKenzie Scott. While his divorce cost him $38 billion, some argue his net worth would hover around $288 billion today. If celebrity net worth lists don’t interest you, the importance of having a prenuptial agreement should.

Amazon prenup

Prenup Prime

At the time of his separation with Scott, Bezos was the wealthiest individual globally, with a net worth of $150 billion, primarily due to his 16 percent ownership in Amazon. Bezos’s divorce is considered a significant shift in the distribution of wealth at the pinnacle of global affluence. That’s because the distribution of the Bezos fortune at the time of the divorce was practically unprecedented in size.

As of February, Jeff Bezos’ wealth is estimated at $191 billion, positioning him near the top of the list of the world’s richest people. Embarrassingly, Bezos is rumored to rank behind Tesla Inc. CEO Elon Musk, whose net worth is $199 billion.

The Musk ranking comes with a caveat. A recent legal decision invalidated $56 billion in options Tesla awarded Musk in 2018, potentially affecting his net worth and standing.

Despite this, Musk’s financial status remains unchanged because of the possibility of an appeal. Both men trail behind Bernard Arnault and his family, who oversee LVMH, with a net worth of $217.6 billion.

Florida Prenuptial Agreements

I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just resolving uncertainty in a marriage.

When a spouse is a major shareholder of company, their wealth can be subject to wide price swings. For example, when the head of Continental Resources was getting divorced, shares of his company dropped 2.9%. Conversely, when Rupert Murdoch announced his divorce, shares of News Corp gained 1.4%. Why? Because in Rupert Murdoch’s case, the divorce announcement stressed his prenuptial agreement, and a divorce would have “zero impact” on the company

A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce. This can be especially important in second marriages.

If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.

That’s where prenups come in. Prospective spouses may limit or expand state laws by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce. Prenups can be a reliable guide down rough rivers if they’re done right.

Prime Deals

According to Yahoo! Finance, an intriguing “what if” regarding Bezos’s billionaire ranking develops had he not divorced without a prenup. Before their divorce, Bezos’s 16 percent stake in Amazon was valued at $150 billion.

Following the divorce and subsequent financial decisions, including significant sales of Amazon stock to fund his Blue Origin space venture, Bezos’s share in the company decreased to approximately 10%. These transactions, coupled with the divorce settlement that transferred a 4% stake in Amazon to Scott, have substantially altered Bezos’s potential net worth.

Despite all of that, had Bezos maintained his full share in Amazon, without the divorce, and without liquidating portions of his stock, and without funding Blue Origin, his wealth might have been higher. Given that Amazon’s market cap is now around $1.8 trillion, a 16 percent stake would equate to $288 billion.

Now imagine how much different – and better – his life would have been if he’d only had a prenup?

The Yahoo! Finance imaginary calculation of the Bezos fortune surpasses the wealth of other billionaires, including Musk, Zuckerberg, Gates, and Arnault. Although purely hypothetical, the Yahoo! Finance analysis highlights the importance of having a prenuptial agreement.

The Yahoo! Finance article is here.

When a Prenuptial Agreement Fails

Posted by Ron Kauffman on

If marriage is a business relationship, a prenuptial agreement is like the incorporation documents. But what happens if during your marriage you find out the prenuptial agreement you paid for fails? For one woman, the results of a prenup fail could mean the loss of her entire inheritance.

Prenup Fails

Protecting Your Assets

After you and your spouse get married, ‘what’s theirs is yours, and what’s yours is now theirs.’ Unless you get a prenup. A prenuptial agreement is a written document between prospective spouses thinking about marriage. A prenup becomes effective upon marriage.

What can you put in a prenup? There are few limitations, but you can agree on your rights to any property either you or your spouse have or will have, who can manage and control the property, and what happens to property in the event of death or divorce. You can also agree to alimony, or to waive alimony,  and many other issues that do not violate some public policy or criminal law.

There are two things she advises before getting married: (1) buy separate comforters for your bed, and (2) get a prenuptial agreement that fully protects you – even if you don’t think your assets are worth much. Without a prenup, you might learn you’re not be protected the hard way.

In the article, the reporter got married right out of graduate school and had no job. Her assets consisted of a used car, a cat, and an inheritance she kept in a trust fund. Her future husband had no assets, but was planning to go to dental school which had a hefty price tag. The Wife’s prenup ensured that her trust fund could not be used to pay for his graduate school tuition.

Notwithstanding her prenup though, during the marriage, the wife used her trust fund monies on their living expenses. Then she decided to ignore the prenup entirely. She used all of her premarital inheritance as a down payment on a marital home. Then she titled the house in both names. Then she also agreed her husband’s salary would pay the mortgage and most other bills related to “their” home.

Florida Prenuptial Agreements

I’ve written about prenuptial agreements before. Prenuptial agreements are not just for the rich and famous. Anyone who brings assets, or a large inheritance, into their marriage can benefit from a prenuptial agreement.

Prenups are important to have in place before a married couple starts investing in businesses, properties, and other investments.

But there can be ‘prenup fails’ too. In addition to being completely ignored, prenups can also be challenged in court. Florida has both case law and a statute to help lawyers, judges, and the parties determine if a prenuptial agreement is enforceable. For example, Florida adopted the Uniform Premarital Agreement Act.

The UPAA is a statute that requires that all premarital agreements be in writing and signed by both parties. It is enforceable without consideration other than the marriage itself.

Couples wanting to sign a prenup can enter into an agreement with respect to their rights and obligations in any of their property. Whenever and wherever property was acquired or where it is located; couples can control their right to buy, sell, use, transfer, or otherwise manage and control their property if they separate, divorce, or die.

When ruling on the validity of a prenup, Florida courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure. While prenuptial agreements may be challenged in court, we will have to wait and see if the court will invalidate Costner’s prenuptial agreement.

A Messed-up Prenup?

After seven years, the husband informed his wife that he wanted a divorce. He also wanted to sell their jointly owned house and split the profits equally. Without a house though, the wife couldn’t qualify for a mortgage on a new home, and all of her premarital inheritance money was now tied up in a marital home she had to split with her soon to be ex.

When the wife contacted her lawyer to enforce her prenuptial agreement, and get back the deposit she alone paid for in their joint home, she learned the hard way her prenup would not help her. Why? Because she’d spent her inheritance on a marital home titled in both of their names. Her prenup only protected her trust fund money from being spent on paying off her husband’s student loans.

The couple came to an agreement, which was fleshed out over the next few weeks by their lawyers. They sold the house, and the wife got enough money from the sale of her marital home to pay for rent – with the help of alimony.

She was officially divorced by the end of the year, but she found out the hard way her prenup failed to protect her because she ignored it. The wife could have protected her inheritance in several ways: not putting the home in joint names, or amending her prenuptial agreement to decide how her down payment would be treated in a divorce.

Instead, she learned a few lessons. Her advice now is: “Get a prenup.”

The Business Insider article is here.

Marital Settlement Agreements and Vital Organs

Posted by Ron Kauffman on

Negotiating for your vital organs is not a part of any martial settlement agreement. However, for one Israeli woman, donating her kidney to save the life of her children’s father, her ex-husband, was a choice she made above and beyond her contractual responsibilities.

Marital Settlement Agreement Kidney

Eilat of Love

Although the ex-wife, Adel, has been divorced for nearly ten years, her divorce and the terms of her marital settlement agreement, did not stop her from donating a kidney to her former husband when she found out his health condition had worsened.

The 41-year-old Rosh Pina resident said in an interview with fashion magazine, Laisha, that she and her spouse have been divorced for nine years, but she did not hesitate to answer the call for help – not least because of the children, of whom the two share custody.

“When I woke up after the surgery, there was some manageable pain. A week later I still feel it, yet anxious to go back to being the Mitzpe Shalom resort manager in the Golan Heights.”

She was aware of her ex-husband’s kidney problems when they met. She states she was 24 at the time and he was 29. He was an accountant and had already been donated one kidney from his mother. He told me right away, but I didn’t care. When I was pregnant with our second child, his father donated another kidney. Seven years later we got divorced. The second kidney held up for 11 years, up until six months ago.

After their divorce their relationship was complicated. But in the last few years things improved:

 We’re both involved with other people now. His girlfriend is wonderful and so is my boyfriend. His name is Eitan, and I told him when we met that if there was a time my ex would need my kidney, he’ll have it. Eitan accepted it right away.

Her ex-husband tested positive for COVID eight months ago and required dialysis and a new kidney. The woman told her ex-mother-in-law, that it was her turn to step up for him. It was very emotional.

Without informing him, she began moving things along. When it was clear she was a match, they informed the kids and then her ex-husband. “He thanked me, but was also concerned about who will attend to the kids while we’re both in surgery.”

Florida Marital Settlement Agreement

I have written about people donating vital organs to their ex spouses before. Erica Arsenault, of Massachusetts, volunteered to donate a kidney to her former mother-in-law years after her divorce. But donations of vital organs are not terms you see in a marital settlement agreement. Donations go beyond the requirements of an agreement.

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.

New Heights

According to Adel, there was no hesitation:

It was clear to me I would do this. He’s the great father to my children, and they need an involved parental figure in their lives to be happy. In my opinion, when you get divorced, the children should always be top priority.

Interestingly she did not consult with anyone. Some family members and friends raised an eyebrow, but they realized how determined she was. Her ex-husband and she had some heart-to-heart conversations about this, and there were people who helped move the process along from an operational perspective.

Doctors explained after the operation she would feel no difference in her day-to-day life. It’s like we were born with two kidneys so we would give one away when needed. What Adel did not anticipate is that she would be a match for someone else while waiting for the surgery.

The donation coordinator at Rabin Medical Center called and said there’s a young man who has been waiting for a kidney match for four years and she was ideal for it. She cried, because now there were two people who needed her help to live.

She spoke with both her ex-husband and the other, who said that as far as he’s concerned, the young man’s new kidney would come from her, while her the other person would receive his from another altruistic donor, who is a doctor himself from Soroka Medical Center.

The organ donation department director at Rabin Medical Center, said:

“This a complex multi-donation event. Whenever that happens, we feel very excited to be able to grant someone a new lease on life.”

The Ynet article is here.

Enforcing an Islamic Mahr Prenuptial Agreement

Posted by Ron Kauffman on

The extent of a court enforcing a religious prenuptial agreement, like the Islamic Mahr agreement, is big news. A family judge in Florida recently ruled that an Islamic Mahr agreement was not only enforceable, but waived equitable distribution and temporary support. How did an appellate court view the ruling?

Mahr Prenuptial Agreement

The Mahr from Thar

For many religious couples, in lieu of a secular prenuptial agreement, they sign a religious contract. Catholics have prenuptial agreements and Jews have a ketubah. In this recent Florida divorce, the parties signed an Islamic premarital agreement called a “Mahr” or “Mehr” agreement.

Although the agreement was entered in Bangladesh, neither party claimed it should be interpreted under Bangladeshi or Sharia law.

A Mahr is a contract to pay money – frequently expressed in gold coins – promised by a groom to his bride in the event of death or divorce. The amount is agreed to before the marriage and negotiated between the parents of the couple.

This Mahr agreement was two pages long, and had the explicit promise by Former Husband to pay Former Wife a total of 15 Bangladeshi lac Taka upon marriage. Five lac Taka were to be paid up front on marriage, and ten more in the event of a divorce.

At the time of the trial, 10 lac Taka was worth about $12,000. The Bangladeshi Taka has not been appreciating against the dollar lately.

At trial, the Former Wife argued that the ten lac Taka Mahr agreement was only the minimum amount she could ask the Former Husband for. In the Former Wife’s view, the Mehr did not waive her right to equitable distribution and temporary alimony.

The Former Husband, on the other hand, argued that the ten lac Taka under the Mahr agreement was the maximum she could get. The purpose of the Mahr was to guarantee an agreed sum to her. By agreeing to a guaranteed payment in advance, she waived her rights to ask for anything else.

The family law judge found that the Former Wife had built up some equity in the jointly titled, marital home, but then awarded it to the Former Husband. Then the court ordered Former Wife to vacate the house.

Relying on the Mahr agreement, the judge also denied Former Wife temporary alimony, limiting her to the ten lac Taka lump sum.

The Former Wife appealed.

Florida Prenuptial Agreements

I’ve written about religious prenuptial agreements, such as the Mahr, before. Prenuptial agreements are not just for celebrities. Anyone who brings personal or business assets into their marriage can benefit from a prenuptial agreement.

Prenups are also important to have in place before a couple starts investing in businesses, buying properties, and accumulating mountains of debt.

But just having a prenup is not enough. Prenups are frequently challenged in court. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement is enforceable.

Florida also adopted the Uniform Premarital Agreement Act. The UPAA requires that all premarital agreements be in writing and signed by both parties. It is enforceable without consideration other than the marriage itself.

Because prenuptial agreements may be challenged in court, Florida courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.

Florida the Sunshine Religious State?

Many people don’t realize that religious agreements can be enforceable in Florida. However, there is a limitation, only a religious agreement’s secular terms are enforceable as a contractual obligation. That is true even if the secular terms were agreed to in a religious ceremony.

Here, the parties disputed how the terms of the Mahr agreement should be interpreted. Former Husband argued the Mahr agreement was meant to protect a spouse in the event of a divorce, so the Mahr should be read as the entirety of Former Wife’s recovery.

Former Wife argued the lack of waiver language in the Mahr agreement –stating that the couple intended to waive equitable distribution and alimony – meant she was entitled to ask a Florida court for relief in addition to the Mahr.

The appellate court reversed, holding that parties to a prenuptial agreement — religious or secular — are allowed to contract away their traditional marital rights, but they must do so in a way that comports with Florida law.

To contract away marital rights, a prenuptial agreement’s plain language must unambiguously express a desire to waive equitable distribution. Additionally, any agreement that waives or limits the right to temporary support and attorney’s fees violates Florida public policy.

Because the Mahr did not expressly bar Former Wife from seeking a property division and alimony, it couldn’t overcome Florida’s strong public policy in favor of equitable distribution and temporary alimony.

The opinion is here.