Tag: prenups and postnups

Prenups and Remarriage

Posted by Ron Kauffman on

Thinking of remarrying? If so, there are a few precautions your must take to make sure your next marriage is successful, and that your finances and children are protected. This can include financial counseling, reviewing important documents and preparing prenuptial and postnuptial agreements.

prenup for remarriage

First Steps

You have concerns before you get remarried, and those concerns can grow into relationship problems unless you sit down with your spouse or future spouse and talk about finances.

As U.S. News and World Report writes, you should start with a simple discussion about your assets and liabilities. Couples also need to discuss their financial goals.

Do we have separate accounts, or do we co-mingle?

Do we get a new home, or do I keep the home I have, and you keep the home you have?”

There are a lot of personal and financial decisions that need to be discussed before the wedding party.

Florida Prenuptial Agreements

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

Any couple who brings any personal or business assets to the union can benefit from one. They are also important to have in place before a couple starts investing in businesses, properties and other investments.

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.

Without a prenup, if your spouse dies, you will have statutory rights under state law to a share of your deceased spouse’s estate and may also have a right to lump sum death benefits, or a survivor annuity under a retirement plan.

That’s where prenups come in. Prospective spouses may limit or expand these rights 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 very worthwhile provided they’re done right.”

The most basic of prenups should list an inventory of premarital assets that would stay with the original owner in case of a divorce. Florida has both case law and a statute to help lawyers, judges and the parties determine if a prenuptial agreement is enforceable.

Final Plans

U.S. News and World Report makes several other suggestions which make sense.

Make sure your estate plan is up to date. You need to be extra cautious if you have children from a previous marriage. You want things to work out with your current spouse and also make sure your kids are not disinherited.

Update your will. Your will and beneficiary designations need to be updated for many major life events, including the birth of a child, death of a family member, marriage, divorce and remarriage.

Review all your documentation. If you are entering your second or third marriage, you may need to make significant changes to your estate plan, beneficiary designations and even your emergency contacts.

Make sure that all the documents you leave behind clearly spell out your wishes. Take the time to do proper estate planning, because a prenup may say one thing and the estate plan may say something different.

If they don’t realize it, at death there could be a problem if [the estate plan and the prenup] are not consistent in their goals.

The U.S. News and World Report article is here.

 

Prenuptial Agreements: Can you bust a prenup?

Posted by Ron Kauffman on

Prenuptial and postnuptial agreements protect your wealth by setting out what property stays yours, what property does not, and ensuring that your assets stay in your family line. Prenups can even be used to limit your exposure to paying alimony. But can you get out of a prenuptial agreement?

What are Prenups?

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.

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.

Without a prenup, if your spouse dies, you will have statutory rights under state law to a share of your deceased spouse’s estate, and may also have a right to lump sum death benefits, or a survivor annuity under a retirement plan.

That’s where prenups come in. Prospective spouses may limit or expand these rights 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 very worthwhile provided they’re done right.”

When Prenups are done wrong

It is important to realize that the courts will not likely enforce prenuptial agreements (prenups) in certain cases. Forbes magazine recently ran an interesting article listing some of the common problems with do-it-yourself, cheap, or downloaded prenups:

  • It is not a formal legal document. Only well-drafted agreements can override states that have community property laws or equitable distribution requirements.
  • It is a “shotgun” agreement. If there is any form of coercing a person to sign the agreement, it can turn out to be unenforceable.
  • One person failed to read the agreement. When there is proof that one or both of the spouses did not read the prenup, it might not be enforceable.
  • One party is hiding or just not sharing knowledge of all assets and liabilities. Full transparency between the prospective partners is mandatory.
  • It includes invalid provisions. These are terms that are illegal or against public policy. For example, the courts will not enforce prenups if they stray into areas such as waiving child support.
  • Each partner does not have separate legal counsel.Both parties should – and in some states, it is a requirement – have their own legal counsel so that their separate interests are promoted.
  • The agreement is unconscionable. If the prenup is so completely unfair that it puts one partner in a horrible financial situation and sets up things so the other partner is solidly financially positioned, the courts will very likely not enforce it. Unconscionable agreements are “extreme.”

Florida Prenuptial Agreements

I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just resolving uncertainty in a marriage. Any couple who brings any personal or business assets to the union can benefit from one. They are also important to have in place before a couple starts investing in businesses, properties and other investments.

The most basic of prenups should list an inventory of premarital assets that would stay with the original owner in case of a divorce. 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 courts must consider things such as fraud, duress, coercion, in addition to the unfairness of the agreement, and whether there was any financial disclosure.

According to the Forbes article:

It’s not all that uncommon for mistakes to be made when putting a prenup in place. . . high-quality legal work is based in expertise and precision, which is why we diligently do everything possible to make sure our clients’ prenups do not get ‘busted.’

The Forbes article is here.

 

Celebrity Prenuptial Agreements

Posted by Ron Kauffman on

Prince Harry said he knew Meghan Markle was the one the first time they met. Now he’s showing his confidence in their union by rejecting a prenuptial agreement, reports the Daily Mail. What are prenuptial agreements and why does Meghan Markle want one?

The Royal Prenup

According to the article:

“There was never any question in Harry’s mind that he would sign a prenup,” one of his friends said. “He’s determined that his marriage will be a lasting one, so there’s no need for him to sign anything.”

Okay, but real talk: For one, prenups aren’t legally enforceable in the UK, although they are taken under consideration in divorce cases.

And, Harry isn’t the only royal who has shunned prenuptial agreements. Prince William and Kate Middleton reportedly didn’t sign one before their wedding, and neither did their mother, Princess Diana.

Florida Prenups

I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just uncertainty in a marriage. Any couple who brings any personal or business assets to the union can benefit from one.

The most basic of these prenups lists an inventory of premarital assets that would stay with the original owner in case of a divorce.

The agreement can also include monetary support during and after a marriage, child support, and how future income or additional assets like inheritance will be shared (or not shared) if the couple splits.

Many think prenuptial agreements are for the wealthy or famous, like Prince Harry. But, you don’t always enter a marriage with riches, or guarantees that the bliss will last. It might not be a bad idea to have a plan in place – in case of intrigue at the palace.

Prenuptial agreements, typically resolve things like alimony, ownership of businesses, title of properties, in addition to the lifestyle clauses of celebrities.

There are many other, more mundane, concerns that can be addressed in the prenup:

  • Caring for a parent
  • Going back to school;
  • Shopping habits
  • Credit card debt;
  • Tax liabilities;
  • Alimony and child support from previous relationships; and
  • Death or disability.

Celebrity Prenups

Many celebrities have prenuptial agreements which can have unique clauses too. For example:

Jay-Z and Beyoncé

If this couple ever find themselves not-so “crazy in love,” the couple reportedly signed a prenuptial agreement that gives Beyoncé $5 million for each child they have together, and that Beyoncé would earn $10 million if the marriage ended before two years, and $1 million each year that they remained married, up to 15 years.

Michael Douglas and Catherine Zeta-Jones

The couple has been married since 2000, but if they divorce, Catherine would reportedly receive $2.8 million for each year of marriage, according to New York Daily News. (So, if they split today, that would add up to over $50 million.) And if Michael cheated, she would also get a $5 million bonus.

Mark Zuckerberg and Priscilla Chan

There’s no word on if the couple signed an official prenuptial agreement, but the book Once You’re Lucky, Twice You’re Good reportedly revealed that Priscilla had Mark sign a relationship agreement when she moved in with him after graduating from Harvard.

Their purported agreement required the couple to have a date night once a week and spend 100 minutes of alone time together weekly outside of the office or their home.

The Women’s Health Magazine article is here.

 

A Royal Prenup

Posted by Ron Kauffman on

When Prince Harry asked Meghan Markle to marry, many dreamed of her fairytale wedding. Grizzled divorce attorneys thought of something else: what kind of royal prenup would his Highness make her sign. Surprisingly, some think none.

That’s right. Some people in Great Britain are speculating that Ms. Markle and Prince Harry may not sign a pre-nuptial agreement before their royal wedding next Spring. Why not?

According to the Britain’s Daily Express, for instance, the 33-year-old prince would not take the steps to protect his £30 million fortune after his engagement to the US actress was announced by making her sign a royal prenup.

History of Royal Prenups

Many would have said anyone in their position should be advised to have royal prenup. And the reason being is so they can resolve financial matters between themselves without it being in the spotlight.

There is precedent among the Royals too. For instance, when Crown Princess Victoria of Sweden married her former fitness instructor, agreements were drawn up to define how the wealth would be divided should they separate.

Lawyers acting for the princess ensured that all property, inheritance and gifts belonging to the royal household remained in her name alone. A royal prenup may be required to do that.

After Prince William’s engagement to Kate Middleton was announced, many urged the couple to sign a prenuptial agreement, saying it was important to be practical and ensure that every future eventuality was considered.

Florida Prenuptial Agreements

I’ve written on the topic of prenuptial agreements before. A prenuptial agreement is called many things: sometimes “antenuptial agreement”, other times “premarital agreement”, or most often “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. So, why have one?

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.

There are times when a prenup is a “must-have”. For example, when one person enters the marriage with significantly more money or assets than the other, or you want to keep parts of your finances separate.

Arguments about money are a known predictor of divorce. In order to avoid that, it is better to discuss with each other the terms of a prenuptial agreement when times are good.

Prenups can also have extreme clauses. 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.

Future Royal Prenup?

With the British Supreme Court having recognized the validity of prenups, a debate has begun in British legal circles as to whether it would have been prudent for the royal couple to have taken advantage by having a royal prenup, just in case.

Prenuptial agreements have been popular across the pond in the U.S. for many years, but were never part of British law. That is changing in the U.K. due to a relatively new case.

After a 2010 ground-breaking case in Britain, prenuptial agreements are now afforded heavy weight within the UK Family Court, unless considered to be unfair.

The British prenup case involved a German heiress and French investment banker. To help protect her £106 million fortune, the couple signed a prenup, which stated neither party would benefit financially if the marriage ended.

When the Judges found in favor of the Wife’s prenup, the case marked the first time that prenuptial agreements were recognized as enforceable under British divorce law.

Prenuptial agreements are not simply about money either. Kings, Queens, Princes and Princesses can also use prenups to ensure confidentiality is maintained after any unseemly split.

The U.K. Express article is here.

 

Prenups are Nothing New

Posted by Ron Kauffman on

A 2,480-year-old Egyptian scroll was recently found. But the scroll is not some royal decree from the ruling Pharaoh, or an ancient poem written on the shores of the Nile. Egyptologists report that the scroll is a prenuptial agreement.

Ancient Prenups

Written in demotic script — demotic being derived from the hieratic writing system, a kind of shorthand for hieroglyphs — the prenup was made to ensure that if the union between the signers didn’t work out, the wife would be adequately provided for.

Her compensation would include “1.2 pieces of silver and 36 bags of grain every year for the rest of her life.”

Most people have no idea that women in ancient Egypt had the same legal rights as men. Egyptian women, no matter their marital status, could enter into contracts, sue and be sued, and serve on juries and as witnesses.

In ancient Egypt, women used to be able to acquire and own property, and fairly often, they did: a fragment of papyrus from 1147 B.C., denoting thousands of land holdings names women as the owners of about 10 percent of the properties listed.

Back then, married women could file for divorce, and they were even ensured alimony — provided they had a document like a prenup, which they could write up any time before or during the relationship — at which point it would be more accurately described as a postnup.

Florida Prenups

Prenuptial agreements aren’t just for ancient pyramid dwellers, they are important for any couple planning to marry. I have written extensively on prenuptial agreements.

A prenup can 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.

Nile Negotiations

This ancient Egyptian prenup was signed in 365 BCE. Such contracts were extremely advantageous to the wife. The prenups were purely economic, promising not eternal faithfulness or mutual responsibility – but cold, hard cash.

The ancient Egyptian prenup ensured the wife could survive with or without her husband, although she had to pay for the privilege, giving him 30 pieces of silver upfront in exchange.

The prenup process was simple in ancient Egypt. The marrying couple would get together, and bring along a scribe and some witnesses. The person proposing the agreement would speak it aloud, and the scribe would write the terms down, translating them into legal language along the way.

Then the second person would either accept or refuse to sign the prenup. If he or she accepted, the contract was considered binding. If one of the signatories broke the terms, he or she would appear before a court.

The Atlas Obscura article is available here.

 

Is “Prenup” a Four-Letter Word?

Posted by Ron Kauffman on

Interesting view on prenuptial agreements: He traded his passion for stability, whereas I followed my passion at the expense of stability. Should I be entitled to his money?

The New York Times is running an article which deals heavily with the personal feelings involved in discussing, negotiating and signing a prenuptial agreement. The article has some great moments.

On the corner of my lawyer’s desk was a red button marked “No.” It was the type you might find in a display of gag gifts, next to the Whoopee cushions and boxing nun action figures.

I wanted to get married then, but Matt held back. Marriage scared him more than having a child together, and a big part of his fear was financial. He said he wanted us to sign a prenup.

I cringed but ultimately agreed, believing it was the only way forward.

He said he would pay all of the lawyers’ fees and make it as easy as possible. It sounded simple. The reality, however — especially having to confess every detail of my sketchy financial history to this lawyer — was nothing short of awful.

Florida Prenups

They may sound “awful” to some, but the reality is different. Prenuptial agreements are a subject I’ve written about before. Prenuptial agreements can be extremely important if you are thinking of marrying again, and they are not just for the ultra-rich.

You can limit what’s in a prenup. Some prenups can simply state what assets each party has brought into the marriage, and what assets each party will take away if the marriage ends.

Or, if there is a disparity in incomes, as in the New York Times article, you can add to the prenup how much the lower-income spouse will receive. Also, if you have children from previous marriages, you can also provide some protection for an inheritance.

Here are a few reasons why:

Keeps Your Non-Marital Property Non-Marital.

The property you brought into the marriage is yours. 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, which is the main idea for a prenup, you can avoid this task and save some money down the road.

You Can Change the Law.

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 a prenuptial agreement 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.

Avoid Expensive Divorces.

Let’s face it, divorce can be expensive, and the cases don’t end quickly. A prenuptial agreement can simplify things by resolving issues ahead of time, way before the divorce is even filed.

Once you have entered a prenup spelling out what happens in the event of a divorce, the case becomes a lot more cheaper, simpler and faster to resolve.

Protects Your Children’s Inheritance.

A prenuptial agreement, or “prenup” for short, protect property from falling into the hands of the new spouse, often seen by children from earlier marriages as a “gold digger.”

An agreement helps assure your children that any inheritance is protected, and they don’t need to resent the new spouse.

It is important to be aware of all of the consequences of marriage, and do what planning you can to avoid complications and costs in advance by entering into a prenup.

Negotiating the Prenup

Back at the Times article on the prenup: “on paper, I had approximately $3,500 in savings, no retirement account and a four-year-old Toyota Yaris with a Blue Book value of $8,000, on which I still owed $4,000.”

Humbled cannot begin to describe how I felt. More like demoralized, demolished and desperate.

My lawyer asked if I had read the document carefully and understood the terms. I numbly nodded, but I was lying. I hadn’t read it. I didn’t understand the terms.

Money, Matt often said, was what people fought about most and what broke up relationships and marriages. True to form, we had been fighting about money since we started dating, our arguments complicated by the vastly different ways we had chosen to live our lives.

The lawyer looked up, winked and pushed the “No” button, filling his office with mechanized cries: “No way!” “I don’t think so!” “Nope!”

Finally, for several thousand more dollars in fees, my lawyer negotiated with Matt’s lawyer to change language in the prenup that Matt had never asked to be included so that when we sold the house we didn’t yet own, I would get my fair share.

Two years later, I don’t even know where we put our prenuptial agreement, and I hope I never need to know.

The New York Times article is here.

 

A Playboy Prenup

Posted by Ron Kauffman on

An “ironclad” prenuptial agreement could block Hugh Hefner’s wife, Crystal Harris, from inheriting anything from his estimated $43 million fortune. Are prenups only necessary for Playboys, or are they something everyone marrying should consider?

The Playboy Prenup

Playboy founder, Hugh Hefner passed away peacefully in his home, surrounded by loved ones, on Sept. 27. He was 91 years old.

The model and the late media tycoon tied the knot on New Year’s Eve in 2012, and soon after. According to Us Weekly, Harris purportedly signed a prenuptial agreement, and was not added to Hefner’s will.

At the time of the report, Hefner’s fortune was promised to “his children, the University of Southern California film school and a variety of charities,” according to a source, who added that Harris would be “taken care of.”

Florida Prenups

Many think prenuptial agreements are for Playboys like Hugh Hefner. But, you don’t always enter a marriage with the Playboy Mansion, or guarantees that the bliss will last. It might not be a bad idea to have a plan in place.

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

They 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 the prenup:

  • Caring for a parent
  • Going back to school;
  • Shopping habits
  • Credit card debt;
  • Tax liabilities;
  • Alimony and child support from previous relationships; and
  • Death or disability.

I’ve written about the need for prenups before. There are times when a prenup is a “must-have”:

  • When one person enters the marriage with significantly more money or assets than the other;
  • When one or both future spouses have family money or inheritances;
  • When you want to keep parts of your finances separate: such as separate bank accounts, and a joint account for paying household bills.

One of the points of a prenup, is that if money in the bank becomes mixed, accounting for any increase or loss becomes very difficult to trace and unwind if you end up in divorce court.

Back at the Playboy Mansion

According to reports, Crystal broke off the marriage five days before their planned June 2011 wedding, and ahead of their 2012 wedding, she explained why she got cold feet before the first planned nuptials:

Last time it turned into a a big ordeal, and then it all fell apart, she said at the time. This time around is amazing … I’m very happy, and Hef’s very happy and we’re excited.

There is a good reason for the Playboy founder wanting a prenup. Harris is Hefner’s third wife. He was previously married to Mildred Williams in 1949 before divorcing 10 years later; in 1989, he married Playmate Kimberly Conrad, but the two separated in 1998 and divorced in 2010.

The article is available here.

 

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

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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.

 

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.