Many people look at the bitter Uma Thurman/Arpad Busson separation in New York, and think that there must be a better way. In many cases, that “better way” is a premarital agreement.

During their protracted custody trial, the two sides trading outlandish allegations almost literally in front of their 4-year-old daughter. During his testimony, Mr. Busson denied that he was “addicted to prostitutes” and that he had threatened ex-fiance Elle Macpherson so badly that she eventually wore a wire to record her conversations. Earlier, when Ms. Thurman took the stand, lawyers accused her of mixing alcohol with prescription medications. In the end, during a closed-door mediation session, the couple resolved most of their issues.

A premarital agreement probably could have short-circuited most or all of the court case, leaving the parties firmly in control of their own destinies.

Making Premarital Agreements

Under the old piecemeal laws, only wealthy couples who could afford expensive attorneys bothered with premarital agreements, because the results were so inconsistent from state to state. Now, California and almost all other states follow the Uniform Premarital and Marital Agreements Act. Under this law, premarital agreements may cover almost any subject other than child custody and child support. As a result, many people use these contracts to:

  • Classify property as either community or separate property,
  • Limit or eliminate spousal support payments, and
  • Make provisions regarding succession and inheritance matters.

So, in addition to clarifying issues in the unlikely event of a divorce and thus conserving both financial resources and emotional capital, premarital agreements help put relationships on solid footing. Money is one of the leading causes of marital stress, and because they enable parties to make financial decisions well in advance, premarital agreements completely remove this destabilizing element from the marriage. The same can be said for stepchildren, since by making provisions for inheritance and succession, premarital agreements help avoid expensive and time-consuming fights in probate court that no one truly wants.

There is a strong legal preference in California and elsewhere to uphold spousal agreements, and so premarital contracts are usually deemed valid unless there is evidence of:

  • Involuntariness: Agreements are voluntary if both spouses laid all their financial cards on the table and there was no excessive coercion, as “sign or else” ultimatums may even be okay in some circumstances.
  • Unconscionable: There is a difference between “uneven” and “unconscionable,” and the precise definition of these terms is case specific. Additionally, the pact must be unconscionable when it was made and not unconscionable at the time it is challenged, a difference that’s illustrated below.

Typically, spousal agreements contain general severability clauses, so if certain parts are invalidated, the remainder of the agreement is still in force.

How Premarital Agreements Work

Another celebrity breakup, this one from Los Angeles, illustrates how premarital agreements work in family court.

When Frank and Jamie McCourt bought the Los Angeles Dodgers from Fox in 2004, the baseball team had perennially underachieved for over a decade, driving down fan interest and the team’s monetary value. In 2011, the team declared bankruptcy; reportedly, the McCourts would have been unable to make payroll without emergency assistance. At the same time, the McCourts were divorcing, and Ms. McCourt gave up her half of the team in exchange for about $180 million in property and cash, since the franchise was basically worthless. About a year later, after the team had rebounded both athletically and financially, Mr. McCourt sold the Dodgers to the Guggenheim Group for $2.15 billion.

Ms. McCourt sued to overturn the property agreement,claiming that Mr. McCourt concealed important financial information and that the pact left her about $900 million away from a 50-50 division. Eventually, an appeals court ruled that the agreement was not involuntary, since Mr. McCourt had furnished tens of thousands of pages of documents and as a former co-owner, Ms. McCourt could have easily verified the numbers elsewhere. Moreover, according to the court, the agreement was not unconscionable when it was made, because “Jamie simply chose the security of a guaranteed $131 million payment, plus more than $50 million in real and personal property, over the uncertainty and risk presented by the valuation and sale of the Dodger assets.”
The court also ordered Ms. McCourt to pay her ex-husband’s $1.9 million legal bill.

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