Tag Archive for: division of assets

Reasons why a prenuptial agreement may not be enforced

Divorce attorneys in Wisconsin and around the nation are taking note of a recent court case in which the judge threw out a prenuptial agreement that a woman had signed prior to marrying her multimillionaire husband. Previously regarded as difficult to void, prenuptial agreements have become increasingly common, especially for people with high net worth or those entering second marriages. How enforceable are they in light of the recent court case?

A prenuptial agreement is a legal document signed prior to marriage documenting the future spouses’ understanding regarding which of their assets will become marital property and how property division will be handled in the event of divorce. There are several circumstances under which a court may refuse to enforce a prenuptial agreement. If one party undervalued or failed to disclose assets at the time the prenuptial agreement was signed, the court may refuse to enforce it on the grounds of fraud. Accordingly, full disclosure of all assets and liabilities is important to the future enforceability of the agreement.

A prenuptial agreement also is subject to revocation if it was coerced or executed under duress. The agreement should be negotiated and finalized well in advance of the wedding, not presented for the first time shortly before the bride is to walk down the aisle. It should be signed by both parties in the presence of a notary public or other witnesses who can confirm that it was executed voluntarily and without coercion.

Poorly drafted agreements and those containing a number of errors also are susceptible to being thrown out. Agreements that contain unconscionable provisions, such as a stipulation that no child support will be owed under any circumstance, also are subject to challenge. The best way to ensure the effectiveness of a prenuptial agreement is for both parties to have their own legal representation in the negotiation and drafting of the agreement.

Source: Forbes, “Five Reasons Your Prenup Might Be Invalid,” Jeff Landers, April 2, 2013

Why you need to know about your spouse’s business

Income is a key consideration in any divorce. Under Wisconsin law, both spouses’ incomes are factored into determining how much spousal maintenance or child support one spouse may be required to pay as it is a community property state wherein assets are divided equally. Substantial changes in income may warrant a post-divorce modification in alimony or child support. Given the key role income plays in family law considerations, it is important that anyone going through divorce has a good handle on what his or her spouse earns.

In most cases, a spouse’s income may be ascertained and easily determined by looking at W-2s and pay stubs. Determining income becomes trickier if the spouse is self-employed. When a spouse runs a home cleaning or maintenance business, a lawn service company, or even a bar or restaurant, much of the income will come in the form of cash, which is easily hidden and can be used to purchase a new luxury vehicle, a golf-course condo and other high-end items that significantly increase one’s net worth without ever making its way onto an income statement.

When a spouse runs a cash-based business, questions are likely to arise during divorce about how accurately the income has been reported. If one spouse knows the other spouse had underreported income in the past, there may be a presumption that current income also is being understated. If the other spouse does not have an adequate understanding of how the business operates and where to find the cash flows, the missing income may be hard to track. Options to locate income discrepancies during divorce include a lifestyle analysis tool and a forensic accountant.

An experienced family law attorney can help ensure that all income be accounted for during a divorce, and he or she may also assist in assembling a team of financial experts to track down hidden cash.

Source: Forbes, “What A Divorcing Woman Needs To Know About Her Husband’s Cash-Based Business,” Jeff Landers, Jan. 30, 2013