How Much Pre In a Pre-Nup?

hl-admin Blog, Family law procedure, General divorce information, Property division 0 Comments

Sandra and Thomas were each doing pretty well in life. Sandra had been married to the founder of MTV. She received $20 million in a divorce settlement from him in 1997. Her work experience included being an editor of Mademoiselle and Brides magazines, and authoring articles for Vogue, Allure, Traveler, Conde Nast Publications, USA Today, and NBC News. In addition, she had her own television production company; was president of “In Fashion,” a division of RJR Nabisco; was  the spokesperson for DuPont Lycra; and was a published author. All of these were high-pressure jobs which required that deadlines be met and contracts reviewed, edited, and signed. In sum, Hill is, by any measure, an accomplished business person who achieved enormous professional and economic success. Thomas was also pretty successful. He was founder and principle of Refco, a major independent commodities trading company.

The two started dating, and were engaged to be married in 2001. Before the wedding Thomas insisted on a pre-nuptial agreement to preserve what was his as his, and what was hers as hers. The agreement was prepared, with each party being represented by counsel. The drafting process was lengthy. The final agreement stated that Thomas had “an approximate net worth of $40,000,000” and Sandra had an “approximate net worth of $10,000,000.” The final draft of the agreement was forwarded to Thomas’s attorney on April 11. Thomas and Sandra executed the final Agreement three days later, just prior to their wedding ceremony.

Unfortunately the marriage went sour, and the parties filed for divorce. $10 Million Dollars being less than $40 Million Dollars Sandra automatically tried to get the pre-nup thrown out of court. She argued that she had been the victim of fraud during the pre-nup negotiations because Thomas was actually worth more than $40 Million in 2001; had she known he was worth more she would have never signed a pre-nup; that because she was misled her signing of the pre-nup was not voluntary; and because or all of that, the pre-nup should be declared invalid.

Sandra losses.

The circumstances surrounding the execution of the premarital Agreement provide substantial evidence that [Sandra] entered into the Agreement voluntarily. She had the advice of two attorneys specializing in family law and estate planning during the nine months the Agreement was being discussed and negotiated. [Sandra]’s lawyer drafted the Agreement and revised drafts of the Agreement in consultation with Thomas and his attorney. These facts, coupled with [Sandra]’s professional background and evident skills are strong evidence that she entered into the Agreement voluntarily.

 

There is no evidence that [Sandra] took any steps to obtain financial disclosures from Thomas during the negotiation period, although she was invited to do so by Thomas’s attorney. Thomas’s attorney sent a memorandum to [Sandra’s attorney] in this regard as follows: “Article IV (perhaps in Section 4.4) should acknowledge that the financial information provided by Tom includes his Trust and that ‘Tom has provided Sandy’s legal counsel and representatives with full and complete access to the books and records of Tom and his Trust, with the opportunity to consult with him, and any of his accountants, agents and representatives as to the nature, value and cash flow from any of his assets and the nature and extent of his liabilities.” This provision was contained, in substance, in the Agreement. (Appendix, supra, ¶ 2, pp. 1 & 2.)

 

In In re Marriage of Pendleton and Fireman (2000) 24 Cal.4th 39, the wife, who held a master’s degree and was an aspiring writer, challenged the validity of a waiver of spousal support contained in a premarital agreement. Our Supreme Court upheld the validity of the waiver stating: “The agreement acknowledged that each party had been represented by independent counsel in the negotiation and preparation of the agreement, that counsel had advised each of the meaning and legal consequences of the agreement, and that each party had read and understood the agreement and its legal consequences. Their respective counsel certified that this had been done and that their clients understood the meaning and legal consequences of the agreement and executed it freely and voluntarily.” (Id. at p. 41.)

 

[Sandra]’s additional argument, that she did not see the final draft of the Agreement until the date of the wedding and that the agreement she signed was incomplete, is not persuasive. As the trial court found, the record shows that the provisions upon which [Sandra] bases her claims of invalidity had been in prior drafts of the Agreement. [Sandra]’s assertions that she was too busy with wedding preparations to read or understand the Agreement ring hollow in light of her education and her extensive business experience. In this regard, the trial court said: “The Court further finds that the prenuptial agreement signed by [Sandra] was full and complete and contained page 14. Even if the version that [Sandra] signed was missing that page, the Court finds that the failure to include it was a clerical error by [Sandra’s] attorney and not a surprise to [Sandra] and was included in prior drafts of the prenuptial agreement provided to [Sandra]. It was a provision that had been agreed to by the parties prior to the execution of the agreement.” Moreover, any failure on her part in this regard is not a sufficient basis for invalidating a contract. (See, e.g., Wal-Noon Corp. v. Hill (1975) 45 Cal.App.3d 605, 615 [“[f]ailure to make reasonable inquiry to ascertain or effort to understand the meaning and content of the contract .  .  . constitutes neglect of a legal duty such as will preclude recovery for unilateral mistake of fact”].)

The question I have to ask are these: Didn’t a woman of Sandra’s scoial standing know that Thomas was worth a bundle before that ever went out for the first time? Would Sandra really not have signed the pre-nup, or not said “I do” if she thought Thomas was worth more money? I doubt it.

Please click here to read the original Hill v. Detmer opinion.

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