NJ Family Legal Blog : New Jersey Divorce and Family Lawyer & Attorney : Fox Rothschild Law Firm : Domestic Violence, Prenuptial Agreements, Child Custody

As seen in Affluent Magazine.

Divorce for those of substantial wealth relative to those of limited wealth is an oxymoron – aspects of divorce between the two classifications are both similar and yet quite different. In final analysis, it is a question of degree – that is, the number of zeros behind the dollar signs. This summary discussion will deal with certain procedures and aspects of divorce which are similar to both. The distinctions lie in the availability and desirability of various procedural vehicles to the two groups.

Privacy and Confidentiality

Nearest to the hearts of you -- the rich and famous (next to, of course, your money) -- is privacy and confidentiality. None of you in your right mind wants to spread your dirty laundry in public – least of all those of you blessed with substantial wealth. With divorces of such persons being instant grist for media dissemination, generally, it is better for all concerned (especially their children on a whole host of levels) to have disposition of your matter not a matter of public spectacle. All too often, the perceived lesser-advantaged spouse may play the publicity card (or threaten to do so) in order to opt out a financial advantage – or in simple parlance – vie for “hush” money. Perception by the lesser-advantaged spouse that the financially-advantaged spouse will deal with her or him fairly (whatever that may mean) will usually go a long way toward negotiations where calmer minds prevail. Another method of seeking to assure a divorce far from the public eye is for a pre-marital agreement to address issues of confidentiality and mediation and/or arbitration out of the public limelight.

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The big news this morning was Madonna and Guy Ritchie's $92 million divorce settlement.  With such a large payout, it makes you wonder whether there was a prenuptial agreement in place (if you type that question into Google, you get differing responses), and if there was, if it was disregarded throughout the marriage. 

In any event, prenups are not just for celebrities.  A common type of prenuptial agreement is one where there is a family business, trust or generally a lot of money and property on one side that the parents do not want to get into the hands of the new spouse, no matter what.  In fact, I blogged yesterday on a new reported case where that was the issue.  To see that post, click here.  Sometimes those types of prenups are difficult to negotiate because the spouse with the family money may want to be more generous to the new spouse than his/her family is willing to be.   I have seen this cause great distress on the eve of a wedding. 

Another common theme for a prenuptial agreement is when people get remarried later in life (due to divorce or death of a prior spouse) and they have children who they want to pass their assets to.  Sometimes, both prospective spouses are in this situation.  These are typically easier to negotiate.  The bigger issues in these cases are how will bills be paid, whether there will ever be any joint assets created, and sometimes medical issues - does the spouse or the children make decisions. 

I was recently involved in one of these later in life pre-nups where a big issue was whether the children of an incapacitated spouse could bring a suit for divorce on behalf of their parent.  This was an issue because the non-monied spouse received something different at the other spouse's death vs. divorce.  Depending on where the parties were in their marriage, a maliciously motivated or more like self interested child could seemingly seek to pursue a divorce.  We had to craft language to protect the parties in this event.

Another circumstance where I have occasionally seen a prenuptial agreement, but questioned from the perspective of why the non-monied spouse would ever sign or go through with the marriage.  These are the cases where the parties are reasonably young, where one has more than the other (but not substantially so) or a premarital business which is not particularly successful and the less advantaged spouse is being asked to waive off on virtually all of the assets derived and/or income earned during the marriage, and perhaps also being to waive alimony too despite a clear disparity or soon to be disparity in income.  In fact, the parties plan to have children and the plan was that the non-monied spouse would be a stay at home parent. In one of these cases, the agreement was so unconscionable in my eyes, that I would not continue the representation.  I believe that the client signed anyway.  If there ever is a divorce, I suspect that she will either be very sorry she signed the agreement or will be in for a very expensive legal battle regarding the enforceability of the agreement.

For more information about prenuptial agreements in these or other circumstances, do not hesitate to contact any of the lawyers in Fox Rothschild's family law group.

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On December 12, 2008, the Appellate Division released a reported decision in the case of Rogers v. Gordon which addressed the enforceability of a pre-statute prenuptial agreement.  To review the full text of the case, click here.  The case is interesting because it addresses again the standards to be applied to an agreement signed before the enactment of the Uniform Premarital Agreement Act in NJ.

In this case, the parties entered into a prenuptial agreement as a young couple.  The wife was a graduate of the Wharton School of Business and came from a wealthy family.  The husband was a high school graduate working for the Postal Service.

The parties married in 1981, had four children and were married for more than 24 years before the wife sought a divorce.  During the marriage, the wife went to work for her father's business, which she eventually purchased from him during the marriage.  In 1990, the husband left the Postal Service to work as a machine operator for the business.  In 2002, he was promoted to plant supervisor.  Not surprisingly, when the divorce commenced, he was demoted to a machine operator again.  The trial court made a finding that at the end of the divorce, there was not a "snowball's chance" that he was going to keep the job given the wife's intense animosity for him evidence during the trial.  In fact, the judge found her to be totally incredible regarding this topic.

At the time of the divorce, the husband's income was $63,000 - the wife's was more the $600,000.

The Uniform Premarital Agreement Act was enacted in NJ in 1998 and applies to all agreements entered into after its enactment.  As such, because the agreement in this case was entered into prior to the Act, the Court had to apply the case law from prior to the act.

In citing the Marschall case, the court noted that there was a three prong test for enforceability, as follows:  1) there was full financial disclosure; 2) that the party sought to be bound knew and understood the terms and conditions and 3) that the agreement, be fair and not unconscionable, ie. that it not leave a spouse a public charge or close to it, or with a lifestyle far below what was enjoyed before or during the marriage.

The court also cited the D'Onofrio case which said that the alimony provisions in the agreement need not cover all contingencies because the Lepis or change of circumstances standard would apply.

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Previously I blogged about child support in cases where the combined net income exceeds the upper levels of the Child Support Guidelines.  To see that post, click here.

That issue was prominent in the Appellate Division's decision in the Strahan case which was released on August 26, 2008 as a reported decision (meaning that the case has precedential effect). To see the full text of the case, click here.

This case involved the divorce of Michael Strahan, formerly of the New York Giants and his former wife, Jean.  At issue as to child support was support for their three year old twin daughters.

The trial court found that the basic child support amount under the guidelines was $35,984 a year but then found that the children had a supplemental need of $200,000 a year, for a total
of $235,984 a year.  Mr. Strahan was ordered to pay 91% of this.

The Appellate Division found several errors in the amount and allocation of child support. First, the trial court took as both accurate and reasonable Jean's budget, which included $27,000 per year in clothes, $30,000 per year in landscaping, gifts of diamonds for grandparents, a vacation for the nanny, etc.  The Appellate Division found that there was duplication between the children's needs and Jean's needs, that certain items should have been eliminated and that others were not reasonable. Further, the court held that while Mr. Strahan expressed  at trial his desire not "to spoil" the children and to teach them the value of money, the trial court  failed to address
plaintiff's "legitimate right . . . to determine the appropriate lifestyle of [his] child[ren]."

The Appellate Division also found that it was error not to impute income to Jean, who had earned $70,000 per year previously.  Interestingly, they commented that "employment opportunities were, in all likelihood, enhanced by her celebrity marriage. There is no question that as a healthy, educated, 41-year-old, (she) is capable of earning her own income."

The Appellate Division also reversed the requirement that Mr. Strahan maintain $7.5 million in disability insurance, in part because he had retired, and in part because it exceeded the life insurance that he was required to maintain.  The Court noted that if he became disabled, he would be entitled to file the same change of circumstances motion as any other litigant. 

However, Mr. Strahan's request to have the matter remanded to a new judge was denied.  The Appellate Division noted, once again, that an adverse ruling does not equate to bias. 

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