Is the Tiger Woods’ Pre Nuptial Agreement Protected Against Multiple Mistresses?
Dec. 9, 2009
Tiger Woods. We are reading press reports that Tiger Woods may pay an additional $5 million and up to $80 million to his wife, Elin Nordegren, the mother of their two children, to stay with him after revelations of multiple mistresses. Under the reported original pre nuptial agreement, Tiger Woods agreed to pay Elin $20 million if she agreed to stay with him for ten years. The additional sums are payments to her to be the dutiful wife even though he has reportedly had multiple affairs.
A PreNup. A pre nuptial agreement is a legal agreement entered into prior to marriage waiving the normal legal rights of a spouse. In general, in the event of a divorce, each spouse often receives one half of all of the property acquired during the marriage. This could include any increase in the value of a business owned by a spouse, or real estate or a stock portfolio even though the business, real estate and stock portfolio was owned by the spouse prior to the marriage. If the wife is a stay at home mom, she may receive part of the pension fund of her husband, child support and alimony for a time period until she is able to re enter the work force.
Celebrities. You often hear about celebrities such as Tiger Woods, Paul McCartney, or Michael Jackson entering into pre nuptial agreements to protect against losing half of their multi millions in the event of a later divorce.
Business Owners Too. We have done pre nuptial agreements for stock brokers, owners of contracting companies, professionals and real estate developers who have wealth to protect, but are not celebrities. Usually, the man requests the pre nuptial agreement because he believes he “was taken to the cleaners”-i.e. lost half of his wealth in his last divorce. Sometimes the successful business woman or heiress of a substantial estate also is motivated to obtain a prenuptial agreement. We have represented the less wealthy spouse as well in many cases.
What it Says. Usually, both sides agree to give up their rights to take half of the property bought into the marriage and any growth in value of that property. They also agree not to make any claims against the retirement funds or separate investments of the other spouse made during the marriage. They waive any rights to alimony or to receive an inheritance from the spouse. For the spouse who is not as well off, often there is a promise of a minimum income or a life insurance policy in the event of the death of the wealthier spouse during the marriage. A pre nuptial agreement can be combined with an estate plan so that if there is divorce during the marriage, there is no inheritance, but if the wealthier spouse dies during the marriage, the surviving spouse will have enough funds to continue their life style and raise their children.
What it Should Say: To be enforceable, the pre nuptial should have the following:
*Full disclosure of all of the assets and income of each person.
*Separate legal representation by both spouse.
*Full understanding of what each spouse is giving up.
*How the ownership of the residence will be handled.
*Equal division of marital property upon divorce.
*Financial support for the stay at home mom who removes herself from the workforce and the ability save for retirement while taking care of the children.
What Not to Do: Preparing for a marriage and a prenup causes enormous stress, but in the long run the marriage will be stronger if you are fair and sensitive to the other person:
*Do not hide any assets from the other spouse. This will be strong grounds to set aside the agreement.
*Do not have one attorney draw up the agreement with no review by an independent attorney representing the less wealthy spouse.
*Failure to determine how money will be handled in the marriage.
*Failure to understand that the less wealthy spouse will feel that she is not being trusted by her new husband; she has to understand it is not about her, but about the emotional scars of her husband.
*Finalizing the prenup two days before the wedding after the family is in town and no one knows whether the wedding will take place. I have seen this happen a couple times and when I am one of the lawyers, it reminds me why I am not a divorce lawyer.
*Failure to integrate the prenup into the financial and business plans of the new family.
After the marriage. If you don’t follow your marriage vows, don’t expect the prenup to have much meaning or legal effectiveness. The courts often do not favor prenuptial agreements and will look for loopholes not to enforce them. But, a faithful spouse with an effective pre nuptial agreement will be protected in the event his spouse runs off with the pool boy or an errant husband with a cocktail waitress.