Saturday, August 12, 2006

Preventing Financial Suicide Through Prenuptial Agreements

"Ours is a sick profession marked by incompetence, lack of training, misconduct and bad manners. Ineptness, bungling, malpractice, and bad ethics can be observed in court houses all over this country every day. (...these incompetents have) a seeming unawareness of the fundamental ethics of the profession. ... the harsh truth is that ... we may well be on our way to a society overrun by hordes of lawyers, hungry as locusts, and brigades of judges in numbers never before contemplated."
--Chief Justice of the United States, Warren Burger

Each year, thousands of spouses will encounter “financial suicide” as a result of divorce. After a lot of research and after giving this matter a lot of thought, I have come to the conclusion and firmly believe that the problem of lifetime alimony and many other divorce related problems can be mitigated if not eliminated with prenuptial agreements.

In fact, this might be one of the best viable solutions to a major problem plaguing this country and giving “closure” to what can be one of the traumatic occurrences in your life. With the divorce rate hovering around 50%, conceivably, it affects a greater portion of our population and there has been no easy answer up to now.

Legal costs associated with a divorce can run into many thousands, and even hundreds, of dollars. IMHO, the whole aspect of the alimony statutes and the wide area of discretion allowed the judges to split up the spoils of the divorce are centered around creating job security for the legal profession. It is to their benefit to create and maintain the adversarial nature of the divorce process. The more adversarial, the more fees generated.

Ask any spouse, paying alimony, if they think they received a fair treatment in return for the money they paid their attorney. You will hear many horror stories of how they paid huge amounts of money only to be taken to the cleaners or received less than competent representation.

Remember an attorney’s relationship with a judge. You are only one client among many. He is in front of the same judges day after day. Do you think he will alienate the judge just for your sake??? And, in doing so, jeopardize his future (and attendant income?)

Recall the statue of the blindfolded lady holding the scales of justice. Picture the judge on one scale and you on the other. Guess who carries the greater weight. Now you get the picture of your place in the justice system. All people are supposed to be created equal, but there are those in this society who feel they are created more equal than others.

Now, you can see there is a need for some sort of predictability in the present alimony system, which is currently not present. This can be accomplished with the prenuptial agreement contract (civil contract).

In the legal sense, marriage is a “civil contract” created by the States which establishes certain duties and confers certain benefits. Validly entering the contract creates the marital status; the duties and benefits attached by a State are incidents of that status. As they could not have been celebrated in the recognizing State

Since marriages are considered as a “civil contract” between two people, and the courts are now looking at that contract the same as they do the ones in the business world and falling under the law of contracts. They are infinitely simpler to regulate than a conventional dissolution. To be a valid contract, they have to comply with the Statute of Frauds

Like any good business contract, not only are the obligations or intents of the parties to the contract spelled out in the agreement, but the terms under which a break-up of the parties is delineated and spelled out as to how everything owned by the parties will be divided. If there are children at dissolution time, provisions, complying with state regulations need to be included.

In setting up a prenuptial agreement it is best done at least 6 months prior to any wedding plans so as to eliminate the aspect of signing under “duress” and, very importantly, to be handled by an attorney that specializes in this area. Doing it in this manner will minimize the hassles attendant to a dissolution of marriage as the courts will recognize the validity of the marriage as complying with the Statute of Frauds and enforce it accordingly.

Reflecting on all this, you can readily see where, with a well-prepared prenuptial agreement, uncertain financial outcomes are almost eliminated come divorce time.

No longer will there be a necessity of attorney involvement on the back end of a marriage to extract large legal sums from what remaining assets are owned by the parties. No longer will there be an imposition of unwarranted “lifetime alimony” for one of the spouses since the division of possessions has already been agreed upon prior to the marriage and any division so spelled out is considered as being satisfactory to both parties.

Attorney’s will benefit because they will be involved in the front end of all marriages instead of the back end of 50% of the marriages ending in divorce. Since the adversarial nature of divorces will be reduced or eliminated, less incompetence will prevail and simplify their involvement since most of the documents could be boiler-plated and handled with ease thereby relieving a lot of stress on both parties.

No longer will one of the spouses be able to return to court to say that they weren’t aware of what would happen in the future and that the agreement is void because one of the spouses got a “bad deal.” The courts now agree that that is no longer a valid reason for returning to court. They say that both parties willingly and knowingly entered the agreement and that each party had a right to enter a “bad deal” as well as a “good deal” and that that is not sufficient reason to invalidate the contract to the detriment of one of the parties.

For a dissertation on the history and present day status of prenuptials go here and read the article on Prenuptial Agreements and Contract law.

The financial suicide aspect of any divorce comes from (1) the expenditure of attorney fees and quite frequently, depending upon the financial assets of each party, one spouse could end up paying for both parties attorneys; and (2) the unknown impact of the alimony imposed by the courts on one of the parties. Frequently, the burden of the alimony payments requires a substantial reduction in the lifestyle of one of them. Many times, it forces one to even live below the poverty level.

Some of the positive aspects of prenuptial agreements include those of:
  1. Reduction in the number of cases clogging the courts necessitated by an adversarial based divorces and contempt hearings.
  2. Predictable financial outcome of divorce.
  3. Elimination of exorbitant attorney fees of an indeterminate amount.
  4. Elimination of a lot of the adversarial relationships, antagonisms, controversies normally associated with conventional divorces.
  5. Elimination of the lifetime aspect of alimony.
  6. Reduction in father’s role of involvement with children subsequent to divorce due to court intervention in conventional divorces.
  7. Reduction in one spouse’s reliance on alimony as a reason not to be a productive member of society.
  8. Reduction of number of people incarcerated for contempt of court for inability to comply with conventional divorce settlement agreements imposed by the courts.
  9. For spouses not complying with the terms of the prenuptial agreement, they could still be brought into court to have the terms enforced under the law of contracts.
One of the major benefits of doing this will be to remove the financial incentives that one spouse receives in knowing that, with divorce, they will have a "lifetime" mealticket with no accountability for the alimony or child support payments. In removing this incentive, it will go a long way towards preserving the family and give the parties more reason to work things out and stay together. As it is now, the incentives are the leading reason why the divorce rate is so high.

All said and done, unless a better solution is presented, I cannot see how this simplified system will not solve the dilemma facing married couples in this day and age. I feel it is a solution whose time has come. If nothing else the problems it solves overcomes the problems created by the present day methods.

If you agree with this, it is imperative that you try to convince your legislators, who are responsible for the laws that are created, to make the necessary changes to implement it. However, keep in mind that you are facing the inertia created by a system that has provided a multi-billion dollar income for the family law legal system.

But you are the voter who controls who gets elected. Use that power!! Electing or keeping attorney’s in office as legislators will only perpetuate the inequitable system that has supported them for years unless they run on a platform to bring a suitable reform to the present system.

If you don’t think that alimony payors don’t consider payments as a living slavery, just ask any of them. So you can do your part to end present day slavery….elect abolitionists oriented legislators.

* Women's studies

* Two Judges Resign Prior To Misconduct Hearings

* Judge Protects Mexican Migrant

* Prenuptial and Postnuptial Argreements and Contract Law in the USA
* NH Senate Candidate Snider’s comments on how the legal profession is contributing to the destruction of the breakup of the family for financial gain. Here is his letter to the editor of the Bedford Journal

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