Prenups on the increase

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Nicole Kidman reportedly asked for a clause in her prenuptial agreement stating that if husband Keith Urban uses illegal drugs, he will not receive a cent of her millions.

And Denise Richards and Charlie Sheen allegedly put a clause in their prenup providing that if either one strayed, he or she would owe the other $4 million.

The first celebrity union is still intact. The second ended with an ugly custody battle, but the tabloids were silent as to whether the “no-cheating” clause was ever enforced.

These high-profile prenups certainly offer entertainment value. But they don’t reflect the reality of most family law practices, according to a pair of Wisconsin attorneys who together have been drafting prenuptial agreements here for well over four decades.

However, there is one thing celebrity family law and Wisconsin family law do have in common — prenups are on the rise.

“I do a lot prenups, and I’m seeing more than I ever have before,” said family lawyer Patricia K. Ballman, of Quarles & Brady LLP in Milwaukee.

Ballman does not see prenups “that cover things like pets or chores. But I do find that they are getting more specific on matters such as long-term health insurance and health-care decisions for when the parties are older, and contributing to certain funds, etc. People are planning for getting old more than they ever used to.”

One good reason to forgo provisions outlining who will bear the responsibility for trivial matters like taking out the trash — judges don’t want to see them.

In the rare instance when a client is adamant about such things, Ballman puts it in a separate agreement that’s not meant to see the inside of a courtroom.

Drafting tips

Ruth J. Irvings, of Nelson, Irvings and Waeffler SC (http://www.niwlaw.com/alixwaeffler.php) in Wauwatosa, says prenups became a part of her practice in 1986, with the issuance of Button v. Button, 131 Wis. 2d 84, 388 N.W. 546 2d (1986).

That was the same year the Wisconsin Marital Property Act took effect, causing a pronounced bump in the popularity of prenups.

Since then, Irvings has had a “regular, steady stream” of clients seeking them —although it’s by no means what she does everyday, all day long.

Despite the well-known statistic of 50 percent of marriages ending in divorce, national estimates suggest that just 5 to 10 percent of engaged couples seek prenuptial agreements — although that’s hard to quantify, given that these documents aren’t filed publicly, except for parties litigating their divorces. So wrote Heather Mahar in her 2003 article, “Why Are There So Few Prenuptial Agreements?” published by Harvard’s John M. Olin Center for Law, Economics and Business.

Irvings said prenups tend to be drafted far more often in second marriages than in first marriages. For first marriage prenups, the parties tend to be either a bit older than the average age for a first marriage and/or a bit wealthier. In addition, when someone owns a business, an attorney will often recommend a prenup.

The agreements have become much more sophisticated over the past 20 years, said Ballman, and courts are much more likely to enforce them than ever before.

When they are challenged successfully, it’s usually due to “substantive unfairness,” such as when one party, typically the dependent spouse, waives all rights to maintenance under any circumstance, or agrees to accept a fraction of a sizeable marital estate as property division no matter how long the marriage lasts.

Button set forth rules for enforceable prenups, and it’s still good law, according to Ballman. It provides:

• The drafter must be clear as to whom he or she represents: only one party but not both.
• The party who is not represented by the drafter must have the opportunity to review the agreement with his or her own attorney.
• Each party should make a fair and reasonable disclosure to the other of his or her financial status.
• Each party must enter into the agreement voluntarily and freely, with complete understanding of the terms of the agreement, as well as what rights they are giving up by signing the agreement.

No one-size-fits-all

Drafting enforceable prenuptial agreements requires “individualized drafting and attention,” cautioned Irvings.

Forms on the Internet won’t give a client an accurate assessment of what’s “standard,” she noted. They tend to include either “total opt-out” or “total opt-in” clauses. But in her practice, couples generally want something tailored to their unique circumstances.

Some clauses are more troublesome than others.

“The most challenging provisions in terms of drafting are often how day-to-day expenses are going to be divided up,” said Irvings, noting that it’s not uncommon for the couple to have neglected to have that discussion.

There can also be difficulties when the agreement involves a young couple planning on having a family, Irvings added, because so many aspects of a relationship change when children enter the picture. Default scenarios, or perhaps a new agreement entirely, might be a wise decision in those circumstances.

Irvings says that to the best of her knowledge, a prenup she drafted hasn’t resulted in a wedding cancellation — but some have caused delays.

Which leads to her final practice pointer: Be wary of the client who wants a prenup the week or day before the wedding.

A poorly-timed prenup isn’t unenforceable, per se, Irvings said. But it doesn’t reflect favorably on the person seeking its enforcement, either.