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Outsmart Your Prenup
Browse: 11326       Date:04-06-2015     

According to the American Academy of Matrimonial Lawyers, only about three percent of Americans have pre-nuptial agreements, but the overall number increased by 73 percent between 2006 and 2011.

Prenuptial agreements have been much in the news lately. Sue Ann Arnall, ex-wife of Harold Hamm, the CEO of Continental Resources in Oklahoma, rejected her ex-husband’s handwritten check for $975 million, saying it was far below what she was owed after 26 years of marriage. Then there's the story of Ken and Anne Dias Griffin. After Ken Griffin, the CEO of Citadel hedge fund with an estimated worth of $5.5 billion, filed for divorce, Anne Dias Griffin, a wealthy businesswoman worth about $50 million, has been trying to get her prenuptial agreement thrown out.

These stories highlight an issue: when can prenups be broken? Here are the circumstances where you may be allowed to revisit history:

Breach of Contract
In other words, you established a set of conditions in the Agreement and someone didn't abide by them. For example, your wife promised to have children and didn't, or she promised to have a certain number of children. Or vice versa, you have agreed not to have any children in the prenup but now all of a sudden she wants children.

A divorce judge will first look at whether the prenuptial agreement is unfair as compared to what the court would do without the agreement. For example, has one of the spouses given up property or alimony rights that would have been available during a divorce without the existence of a prenuptial agreement? If there is a significant difference in what the court would do with and without the existence of the agreement, then the court can determine that the agreement is unfair.

The next question in determining whether to set aside the agreement involves fraud. What exactly constitutes fraud in the prenuptial contract? Lying about your finances. In other words: your mate said he was worth $1 million at signing, and he was worth $10 million. However, because many people are trying to negotiate their finances while making their wedding plans, they often waive their rights to full disclosure out of love and/or trust. In this case: enjoy your prenup, because you're probably stuck with it.

Yet another variation of fraud: when it is impossible for one party to understand what he/she is signing. We had cases where one spouse only spoke Chinese and the agreement was in English and no Chinese transition (verbal or written) of the agreement was ever presented to him/her. In that situation, the court will most like set aside the prenuptial agreement on the ground of fraud.

We had clients walk into our office and claim "duress" as their reason for breaking a prenup. The argument goes like this: At the last minute he was waving legal papers in my face. The wedding was planned; everyone booked their tickets and sent presents, so I would have signed any paper just to go on with the wedding.

That's not duress. Even if you are walking down the aisle with Bridal Chorus playing in the background, you have a choice about whether to get married or not.

A prenup, in fact, halted the 2008 Palm Beach wedding of Wall Street trader Jason Bailer and Alexandra Fisher, an attorney and daughter of billionaire real estate magnate Jeff Fisher. According to press reports, the prenuptial had been signed but the bride's father made additional demands on the wedding day, including the stipulation that in case of divorce the groom would still have to pay alimony to the bride. The groom, who had his own money, but not Fisher-level money, was demanding that he be paid alimony for life if the marriage ended. The million-dollar wedding was called off.

In order for "duress" to have any legal standing, there has to be the threat of real violence. This was part of Anne Dias Griffin's argument for breaking her prenup. Days before her 2003 wedding to Ken Griffin, Dias Griffin had not signed their agreement, and her fiancé allegedly intimidated her by destroying a piece of furniture. There was also the emotional threat. Dias Griffin claims that two days before the ceremony she was bullied into visiting a therapist to settle their arguments. The judge later struck down Dias Griffin's claims of emotional duress.

There is recent precedent for a pre-nuptial agreement being thrown out for being both signed under duress and unconscionable. In 2013 Elizabeth Petrakis, wife of Long Island millionaire Peter Petrakis, worth at least $20 million, had her prenup dissolved when a court agreed that the document she signed four days before the wedding was "fraudulently induced." She signed away the rights to all marital assets, excepting $25,000 for each year they were married. The husband gave her a verbal promise that he would rip up the document when they had children. He didn't.

If you are facing a divorce and the prenuptial agreement is going to result in your getting less than you would get without the agreement, it is time to talk to a lawyer about how to get the agreement set aside.