We can’t tell you how often we’ve been at a party or event and someone is talking about a pending legal matter. At some point during the conversation, someone will often say that the person should work with us; more often than not, we are either already their attorney or we have connected them with their attorney. We cannot confirm or deny whether we work with someone unless they volunteer the information. That said, we will disclose with some reasonable comfort that we are not working with Bill & Melinda Gates on their divorce but we do potentially know something about their situation.
Rumor has it that the Gates’ do not have a Prenuptial Agreement. Knowing nothing about the validity of that statement or the law in the State of Washington, we wonder if they didn’t sign a Prenuptial figuring that it would be deemed unreasonable at the time of divorce anyways. In Massachusetts, Prenuptial Agreements are scrutinized in two steps:
1. Was the Agreement reasonable at the time that it was signed by the parties?
The court will determine if the terms were reasonable at the time that the Agreement was made. If the terms of the Agreement are objectively unfair and without reason, any specific term could be overturned.
2. Are the terms of the Agreement still reasonable and fair at the time of the divorce?
Even if the terms of the Agreement were fair at the time of signing, they may still be objectively unfair at the time of divorce. For instance, if one party had agreed to provide health insurance to the family but the other has been providing it for most of the marriage OR alimony was agreed to by the parties but is no longer needed, it may not be reasonable or fair to uphold a term of the Agreement . To the contrary, one party may have become ill during the marriage and has a greater financial need than expected, making alimony necessary where it was waived prior.
If the State of Washington applies same two step analysis, the Gates’ may have figured that any terms that they signed 20+ years ago may not be reasonable now given the expectation that Microsoft would continue to skyrocket in value.* At the time of the marriage, Bill Gates had approximately ten billion dollars. Imagine that the parties had agreed that Belinda Gates would get four billion dollars at the time of a potential divorce. Was that fair then? Sure. Would that be fair now? Probably not (keeping in mind that four billion dollars is still a LOT of money) because his current estimated net worth is 130 billion dollars. While these numbers are insane to think about for the average person, it is their reality and the same rule would apply to the more typical family also.
As always, please let us know if we can help you in any way.
John & Faye
* They could have also agreed to terms that accounted for massive growth, whether in dollar value or percentage.
We are going on a limb with this one: Tom Brady and Gisele Bundchen likely have a prenuptial agreement. We haven’t seen it, but hopefully, he made provisions for him to retain all of his Super Bowl rings and his MVP trophies if their marriage ends.
If at the time of the marriage, Brady disclosed that he owns three Super Bowl rings and a couple of trophies, but didn’t make provisions for the future? In that case, his wife may have a claim for rings and trophies for the fourth and fifth as marital assets. OUCH (especially for number five).
We love prenuptials for average couples because they create an opportunity for them to have uncomfortable conversations about their priorities and financial future. Have you been married before? Do you have children? Do you have some savings or a home? If the answer to any of those questions is “yes,” then a prenuptial is an important legal protection for you.
Protections typically include division of property, alimony, debt, life insurance, health insurance, and what financial support children from a prior relationship might get during the marriage or when the parent dies. In order for a prenuptial to be valid, the following conditions must be met:
- Both parties must make full disclosure of all assets and liabilities;
- The agreement must be fair and reasonable at the time entered into by the parties;
- Both parties must be represented by counsel;
- Both parties must sign the document prior to the wedding;
- Both parties must sign the document of their own free will;
- Both parties must have the capacity or ability to sign the document; and
- The agreement must also be fair and reasonable at the time of divorce.
Given the second look at the time of divorce, it would be unlikely that our GOAT would lose his fourth and fifth rings if they were not protected in a prenuptial. That would just be unfair and unreasonable, wouldn’t it?
On to SIX!