You don’t have to be in the shoes of Tiger Woods to be wondering about that prenup you signed years ago.
If life is messy, divorce is probably messier.
So the question is: do prenups hold up when it really counts?
“It’s better to do them right or not do them at all,” says Michael Whitty, a certified financial planner and estate planning attorney with Vedder Price PC in Chicago. “You can end up wasting money on the front-end and back end, through the legal fees of creating it and the cost of fighting it later on. If it’s not done well, you may be worse off.”
Indeed, the record is filled with examples of socialites and celebrities who had the courts rule in favor of the non-wealthy spouse despite a prenup agreement.
Steven Spielberg’s first wife, actress Amy Irving, for example, successfully contested the validity of their prenup during their 1989 divorce and walked away with a reported $100 million.
Ivana Trump, ex-wife of real estate mogul Donald Trump, also challenged their prenuptial agreement in 1991 after her husband's highly publicized affair with beauty queen Marla Maples, landing $20 million, the $14 million family estate, a significant housing allowance and $350,000 a year in alimony, according to reports – far more than the original prenup would have provided.
It’s anyone’s guess how golf pro Woods’ prenup with wife, Elin Nordegren, a former Swedish model, may be altered since publicly he apologized for his extra-marital “transgressions” last month, but it doesn’t bode well for Woods.
The couple reportedly is renegotiating the contract they signed in 2004, which will likely provide added financial incentive for her to remain in the marriage.
Potential Holes
There are countless reasons why prenups are vulnerable to legal challenge and don’t wind up doing what they are generally intended to do—specify the terms for spousal support and the division of property should the marriage terminate by death or divorce, instead of having the case settled in a state court.
Laws governing such contracts vary by state, making generalities difficult, but it’s safe to say that most judges will not uphold the terms of a prenup unless both parties were represented by legal counsel.
No state will honor agreements either that limit future child support, or custody and visitation rights of any children you may have. That’s a matter of public policy.
At the same time, judges in all 50 states will generally disregard a prenup if either spouse fails to disclose all financial assets and liabilities, if one spouse provided fraudulent information about their identity or property, or either party “lacked capacity”—meaning he or she was under the influence of drugs or alcohol, or mentally incompetent at the time they entered into the contract, says Marlene Eskind Moses, a family law attorney in Nashville, Tenn. and president of the American Academy of Matrimonial Lawyers.
That last category can include emotional “duress,” adds Whitty.
“Don’t ask your spouse to sign a prenup just before they walk down the aisle,” he says, noting the courts could consider that spouse to have signed only for fear of embarrassing themselves in front of family and friends.
“I would want to start negotiations for to six months before the wedding date and ideally have everything signed before the invitations even go out. That goes a long way towards avoiding that challenge later on,” he adds.
The most common source of prenup challenges, though, involves spousal support, says Marina Korol, a family law attorney with the Law Offices of Korol & Velen in Los Angeles.
In some cases, the amount provided may have been reasonable at the time the agreement was drafted, but no longer reflects a “fair” dollar figure if the wealthier spouse came into far more money during the course of the marriage.
Prenups that provide no spousal support at all in the event of divorce are particularly hard to uphold, unless both parties have adequate financial resources.
