Something is bothering me here.
Let’s say I own a company and have 1000 shares of stock worth $100,000. We all agree that that stock is mine and does not have to be split with a future wife. I marry the new Mrs. Cad and over the years, that stock climbs to $200,000 in value. Why do I have to split that $100,000 gain with her? The asset is still 1000 shares of stock but by having to give her $50,000 earned solely through holding that stock, it is in effect giving her 250 shares.
In community property states, the general rule is that an increase in the value of separate property which results solely from market forces remains separate property.
On the other hand, the increase in value of property which appreciates due to non-market forces, particularly the work of one or both spouses, is community property. This is called the Cockrill Rule (and the property interest is called a Cockrill lien) after the Arizona case which codified it in most respects.
The rationale is fairly simple: any work you do during your marriage represents time and effort in which your spouse has an interest. Thus, your spouse has an interest in the fruits of that labor. Alternatively, perhaps your spouse’s effort contributed to the success of the company/increase in value of your rental property/higher auction price of your original Goya/whatever.
On the other hand, appreciation of an asset that isn’t the result of your work represents no sacrifice on your spouse’s part. Thus, your spouse has no interest in it.
In the case you describe, the critical inquiry is whether you actually do anything with your company (say, run its day to day operations), and whether your spouse is adequately compensated for whatever it is you’re doing. Let’s say you do run the company, and you pay yourself a pittance for years in order to reinvest your profits. Without the Cockrill rule, you would in effect be sheltering some of your income that would otherwise be community property- after all, if you paid yourself a market salary, all of it would be community property.
Why was Michael Strahan’s pre-nup which awarded 2/3 of his money to his ex-wife not overturned?
That makes sense and goes along with my concept of what is “fair”. Thanks!
Did he contest it?
Hard to find any detail on this, all the news stories seem to be re-writes of the same thing, but…
It looks like he sprung a prenup on her just before the wedding.
In it, she would get 20% of his paycheque each year, while they were married.
She also would get 50% if they divorced.
She never actually got the 20% while they were married.
Presumably, that meant that each year, while married, he should have put $X in her separate personal bank account.
He says “she never asked for it at the time.” Therefore, she should not get it now.
The judge said no, a deal is a deal.
Plus interest.
Stupidity is not a defence either.
The moral of the story is - hire a lawyer who has more brains than a football player.
Why would it be? It was drafted by his attorneys at his request. Can you think of any case where a contract would not be enforced against the party with more bargaining power, and which drafted the agreement? I can’t.
No problem. I started family law this week, but I had to do a lot of work on Cockrill for work a few years ago so it’s still familiar.
Something to consider about pre-nups. A lot of times it’s not about restricting what the spouse will get. It can be about protecting the children so that if the spouse leaves the person that he or she takes up with will not get the inheritance that is intended for the grandchildren.
The press only covers the celebrities but there are much more practical issues in play.
Say you get married to the love of your life. Together you do well and there is community property. You have children. Those children grow up, get married and have their own children. Before your child gets married you may insist that they have a pre-nup with their future wife/husband or you will cut them out of the inheritance.
Why?
You want a portion of your inheritance to go to your grandchildren and want to insure that. You die before the grandchildren are born. If your child marries a whack-job that is looking for a payday they may have a kid or two, leave your child, take whatever they can get under community property laws and run off with some total asshole who is mining them for the money. At that point the money you passed on is totally under the control of the whack-job son/daughter in law and the asshole they ran off with.
Without the pre-nup the grandchild ends up with little or nothing while the total asshole blows whatever you earned that was intended to be passed on to your grandchildren.
With the fantasy of marriage being all about love and romance the fact of the matter is that pre-nups can serve a very useful purpose. Again, there has to be full disclosure and all parties have to be competently represented. No surprises or it can all fall apart.
Hope I explained this properly.
Pre-ups can serve a very usefull purpose
Some states (not California) still have the old fault-based grounds for divorce on the books. They’re very rarely pursued because it’s expensive and time consuming for the petitioner to prove his/her claims in court, but can have the advantage of eliminating the respondant’s entitlement to alimony.
Can you imagine it.
Mrs Zuckerburg) You were out all night playing cards I want a divorce
Mark) Honey, I just lost two BILLION dollars gambling. But you can half half.
Mrs Zuckersburg) Oh great now I only get half of what’s left? How do you expect a fully qualified physician to get by on 7 BILLION?
I don’t think anyone could be that stupid.
I imagine that the intention was that she get 20% of the paycheck for her living expenses while they were married. As a practical matter he never explicitly designated specific cash for living expenses, but she did incur expenses and he paid for them.
I would have thought the contract would be interpreted in a way that made some sense, especially in light of the comments to this thread about how much leeway judges have in pre-nup situations.
Lawyers are just like real people. Of course they can be that stupid. Especially the type that have football players for friends, I bet…
Or, she may have been too scared to ask for her share. Or he may have blown her off and said “Here’s $1000, go buy yourself a pretty dress.” Why was this clause in there in the first place? Was she being upset at being held on a tight budget while her boyfriend blew the rest like a drunken sailor? We just don’t know.
I too would have thought that a certain amount of their married living expenses would be deducted from the total amount owing; at least say, half the cost of the house, cars, vacations, etc. should be considered as money spent on marital property 50-50. Maybe he or his lawyer pissed off the judge. Maybe the judge wanted to show the lawyer how stupid the contract was. Maybe the point was “you couldn’t keep your word when you were married, we’ll make sure you understand a contract is a contract.”
I too would like to see a bit more detail; all the articles I found were basically rewrites of the exact same thing, a short summary of the judgement.