Although divorces in the US have been steadily declining over the past 30 years, up to 41% of first marriages end in separations, with subsequent unions concluding in a similar manner at even higher rates. Despite these facts, less than 5% of couples consider signing a prenuptial agreement to protect their interests in the event of a divorce.
Prenuptial agreements are valuable tools for individuals who have offspring from earlier relationships, for aging couples, high-net-worth public figures or those simply seeking privacy in such matters, and spouses who aim to prevent their life partner from taking on their liabilities or debts. However, many couples fail to consider this option or willfully avoid it, leading to further complications.
The Importance of Prenups
In the lead-up to making their union official, many couples mistakenly avoid broaching the subject of prenuptial agreements, believing it could court an early divorce. While it’s not exactly the most romantic of all conversations, it allows engaged couples to:
- Dish out marital expectations
- Draw a line where personal assets end and marital property begins
- Establish how the estate should be divided
- Ease the separation process
- Prevent taking on spousal debt
- Protect business assets, intellectual rights, and children’s interests
Even the most amiable of divorces can be emotionally and financially taxing, potentially leading to prolonged litigation that can leave both parties with lingering animosities. Establishing a prenuptial agreement can prevent such difficulties, paving the way for a smoother process where both spouses are afforded the assets they’re entitled to and commonly agreed upon in the less confrontational period leading up to the wedding.
Complications can, unfortunately, arise even with the most well-planned-out prenups due to the properties, incomes, and finances both parties acquire during their marriage which were not subject to the original agreement. This is especially true for high-net-worth individuals, whose assets and income number in the millions, increasing the complexity of potential litigations.
Not All Prenups Are Ironclad
Lacking a prenuptial agreement, high-net-worth divorces can become financially devastating for the highest earner in the relationship. This was the case for Terry Bollea (Hulk Hogan), who failed to sign a prenup before his first wedding. Since his wife filed the divorce in Florida, a no-fault state where assets are distributed equitably (but not necessarily equally) between spouses, she was awarded 70% of the couple’s liquidities, 40% ownership of his companies, a property settlement worth $3 million, and several high-end automobiles.
Similar cases include country singer Garth Brooks paying a whopping $125 million to his ex-wife, former #1 golfer Greg Norman reaching a $103 million settlement, and Johnny Depp disbursing $7 million to Amber Heard in 2016.
Even if a prenup is signed, it’s common for the highest earner to provide their former partner with spousal support to help maintain a lifestyle they were accustomed to before the separation. For example, Britney Spears paid $1.3 million to former husband and backup dancer Kevin Federline after their divorce, while Kelly Clarkson still pays $200,000/month to ex-husband and business manager Brandon Blackstock. Dr. Dre agreed to pay his wife $300,000/month after she claimed he “tore up” the agreement as a sign of his commitment earlier in their marriage, entitling her to more substantial support.
On the other hand, a comprehensively planned-out prenup can protect a high-net-worth individual in the event of a divorce. Kaley Cuoco’s prenup with former tennis player Ryan Sweetling delineated how assets and finances were to be divided, maintaining full control over her properties and being protected against potential claims of higher support. After her divorce from Justin Theroux, Jennifer Aniston’s prenup assured her that it would completely protect her $200 million fortune.
Even if prenups are legally binding contracts, their provisions or the circumstances under which they were signed can be deemed inadmissible. Steven Spielberg famously settled for half his $100 million fortune with Amy Irving after the judge discovered that their prenuptial agreement was signed on a napkin, disqualifying it as a legitimate agreement.
Notably, legal and financial expertise always comes in handy. Elin Nordegren’s legal team renegotiated her $20 million prenup with Tiger Woods following claims of infidelity, which reportedly earned her a divorce settlement in the range of $100 million.
Over time, some peculiar requests have been registered regarding prenuptial stipulations that would most likely invalidate the agreement’s legitimacy. Here we could mention Ice-T allegedly claiming ownership over his wife Coco Austin’s implants and asking that she would return them in case of a divorce. Or Tony Romo allegedly including a “lifestyle clause” during prenup discussions with Jessica Simpson that would’ve prevented her from weighing over 135 pounds during the marriage or be liable for $500,000 for every extra pound she’d gain.
Securing a Well-Founded Prenuptial Agreement
Entering into a prenuptial agreement represents a lasting and binding commitment that allows both partners to map out the distribution of assets and financial responsibilities should the marriage reach its conclusion. However, depending on the state where the divorce is filed and other variables, prenups may become subject to renegotiations or annulment. To prevent such occurrences, couples should consider several aspects when drafting their agreement to ensure its legitimacy and equitableness.
- Coupling the prenup with a confidentiality agreement can ensure greater privacy.
- Deciding if earnings or wages gained during the marriage will be considered community or individual property.
- Considering if debts and liabilities are to be handled communally or separately.
- The household’s primary earner can consider designating certain assets to their spouse, ensuring that the partner would be provided for in case of divorce.
Prenuptial agreements have received a bad reputation due to the mistaken belief that they preface divorce. What is commonly overlooked is that prenups include decisions taken together during a period when both partners have each other’s best interest at heart. Most importantly, prenuptial agreements allow couples to decide what elements they want to include in their relationship, introducing strategies and provisions that ultimately set up their marriage for success.
About the Author
Sean M. Cleary, Esq. is the leading attorney, founder, and owner of the Miami, Florida-based The Law Offices of Sean M. Cleary. In addition to representing clients in cases of catastrophic injuries, Mr. Cleary specializes in handling high-net-worth divorces, assisting couples during pre-suit, filing for separation, discovery, mediation, negotiation, and trial representation if required.
