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Divorce Insurance or How to Draft a Prenuptial Agreement in New York

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Divorce Insurance or How to Draft a Prenuptial Agreement in New York

A “how to” guide on drafting prenuptial agreements in New York. The Course will include initial interview questions to ask. A review of the financial statement and what documents to request from your client. A discussion of the major portions of the prenuptial agreement. What to negotiate with opposing counsel. How the clients should execute the agreement. A quick review of prenuptial law.

Transcript

- Hello, this is David Badanes and this is divorce insurance or how to draft a prenuptial agreement in New York. Again, my name is David Badanes and you can get my contact information from the first sheet. So, let's start with it. So, the initial interview and the questions to ask. So typically, someone's going to call you first, saying they want a prenup, or perhaps an attorney will call you, or the second person, the other spouse, the fiancé, who doesn't necessarily want the prenup, they may call you. Either way, you should have a standard questionnaire which contains the following questions, both parties' names, addresses, the marriage date, does the fiancé have an attorney? Of course, if the attorney called you, that's a moot point. What are they trying to protect? You want to get an idea of what their goals are, whether they have a family business, is it retirement, inheritance, some existing asset? Like a home, typically, or a business, as we mentioned. Whether they don't wanna pay alimony, or children, and we'll talk about that in a minute, because with children, you can't do certain things in a prenup, that typically is not allowed, it's against public policy. So, also in your standard questionnaire, you wanna have a list of assets and a list of debts. This will be preliminary. There should be a financial statement, which we will talk about later on. So again, you need to have an initial interview and a questionnaire so that you have a basic idea of why this person is calling you and why they want a prenup. That's the first question. Also, they will probably ask you what your fee is, and we'll go through that later on. So, the financial statement, this is, again, something you'll need, but you don't wanna overwhelm the client in the first part, so typically, I wait a little bit before I give them the financial statement, which is an addition to the questionnaire. And this is a very detailed financial statement, and again, you may wanna wait a bit, you don't wanna overwhelm the client, and this is going to list checking accounts, financial institution, account numbers, approximate current balance, savings accounts, brokerage accounts, stocks, mutual funds, bonds, and 529 accounts, all sorts of retirement accounts that they may get, pensions, IRAs, 401k, and if they have any life insurance. They should return that and this should be probably an exhibit to your prenup. And the other party or the other side, the fiancé, should also be filling out a financial statement as well. So again, this is for your protection and for the client's protection, this way, if they do get divorced later on, they can't say, "Well, I didn't know the other person was a gazillionaire," or whatever, or they didn't have this or that asset. This is a way to list these assets and everybody knows what they're getting into when they're signing the prenup, at least in terms of the assets that both parties say they have. The financial statement continued, again, if they have real estate, what type of real estate? Single family home, co-op, a condo, a townhouse, a full address of the property, the title owners. It may be owned not just by one person but maybe sometimes, it'll be owned by the person who's getting married and their parents or someone else, and you need to know that. You should probably get a copy of the deed 'cause many times, they will say one thing but the deed could say something else. And typically, it's pretty easy and pretty inexpensive to get a copy of the deed if they do not have it. You wanna get the approximate fair market value. Again, this is up to them, you shouldn't be putting that number in there. And that goes for all the financial statements, they should be filling it out, not you. Of course, you may wanna review it or you should review it, but it's up to the client to fill it out, not you. If there's any mortgages or liens on the real estate property, of course, that should also be listed. What kind of cars, automobiles they have. Again, year, make, and model. Again, remember, if it's a leased, they really don't own it but it probably should be put in there, if they have a loan on it, they should put that in there, and if it's something that's completely paid off, they should put that as well. If they have any boats, or other toys, as I like to call it, jet skis, etc, anything, motorcycles, anything that really is going to be worth some type of real value, that should be placed in on the financial statement. Jewelry, this is very important because again, if there is going to be a divorce, you don't wanna have to fight, "Well, that was my piece of jewelry before the marriage and it wasn't a gift" or "it was a gift." You may want to tell them to take photographs, pictures of the jewelry, and include that in your file or in their file. But at a minimum, they should be listing what type of jewelry it is, a gold necklace that looked like this, etc, etc, whatever the case may be. Of course, if they have a business or a corporation that they're trying to protect, that would be important to put in the financial statement, and the name and the corporation, what type of corporation, in other words, is it a LLC, S-corp, etc? The address, net worth, the percent that this person owns. In other words, if it's a family business, they may only own 5, 10, 15, whatever, 25%. And also, you should probably list the other owners of the corporation as well. And continuing on with the financial statement, you wanna list any liabilities or debts that the party has, credit cards, the account, account number, the approximate amount owed, again, any mortgages or home equity loans or credit. It's also important that they list any student loans, personal loans that they have existing right now, so this way, again, everybody knows if there's any debt of the other party, so if there is a divorce, most likely, many prenups will say that each party's individual debt going in is their debt on the way out, so to speak. Documents to request, now this I don't always do, and actually, many times, I don't do it, but I put it in here 'cause some people, some attorneys do wanna have the actual documentation. This is a CYA, and again, it also helps, it's sort of a belt and suspenders, so this way, again, if there is an issue with the prenup going on, going forward, if it ever gets challenged, that they didn't list all their assets, fraud or whatever, you actually have the actual statements to back up what the people are putting in there. So again, the listing here is pretty extensive and you can certainly read it, but tax returns, bank statements, retirement statements, investment statements, partnership statements, if there's a partnership or a corporation, if there's anything like that, employment agreements, any list of licenses or any list of degrees and how long should you... For what time period? I would say at least for the last year on any of these, for tax returns, probably two years, bank statements, etc, retirement statements, you probably wanna lease a year's worth of statements or at least at a minimum, the last two or three months. And again, you can get most everything online these days and you should be able to get PDF copies of this. Also, sometimes you will need to consult with other professionals when you are dealing with the client in terms of drafting the prenup, and this would be their financial advisor who sometimes has all the financial information of their account. Again, the account may have the tax returns, more financial information. Many times, unfortunately, the clients are very busy and they're like, "Just talk to my accountant, just talk to my financial advisor." They don't want to be bothered, and again, you may want to just go to the third party, it may be a lot easier than chasing down your client for these types of documents. And then, you may need to get an appraiser. If you have a real estate property, then you're gonna need that as well. So, now drafting the agreement. To boil a plate, or to boil a plate? Meaning the parts of the prenup that are basically very standard that probably do not have to change or have to change in a very, very minimal way. Pretty much at least, most attorneys probably have a boiler plate or standard prenup that they work on or work off of, and I have as well. And you know what parts of your prenups will be boiler plate, but you always wanna double check that it really is something standard, it doesn't have anything that is specific to your client or case, but again, you are going to have some boiler plate portions and standard portions of your prenup. So, of course, you're gonna have some preamble, recitals, the names and addresses of the two parties getting married, that they intend to get married, and you wanna have something like I have in quotes, they would not enter into the contemplated marriage except for the execution of this agreement. One thing I forgot to mention which I really should have said right up front is before I take a client in, in the initial interview, one of the first questions I ask is "When are you getting married?" Unfortunately, many people call you at the last second. "I'm getting married tomorrow," which of course, is crazy, or I'm getting married in a week, two weeks. I always tell the potential client that I want my prenups, or the prenups for the clients, to be signed at least one month in advance. And this way, if it ever does get challenged, a court can't say that there was the proverbial gun to the head and that they signed the prenup because the marriage was the next day or the week after. Again, the more time you can have between the prenup executed and signed and the marriage date, the better. Again, my comfort level is at least a month, that doesn't mean, 'cause I have done it where it's been two weeks before, a week before, and even just recently, because the client insisted on it and they called me pretty much at the last second, I had one that was only executed three days before the actual marriage date, and if that's going to be the case, you wanna make sure that you put that in some type of writing to the clients or in the prenup, that they recognize that this is being executed only three days or whatever it is before the actual marriage date. So, going back to drafting the agreement, that was a little sidebar there, you wanna put that the recitals in the preamble are binding so that the facts are that you've put in there for whatever it's worth, it's sort of belts and suspenders. And then, the way... Again, everybody has different styles, my style is to first list what is going to be the separate property of each party, and I typically have that in different either paragraphs, or in the same article but in different paragraphs, sometimes in different articles, but I make it very clear and I spell it out. I don't just say, "The real property owned by such and such," I say, "The real property at 123 Main Street, Northport, New York, is the separate property of Jim Jones" or "Jane Jones," whatever the case may be. Again, it's always better to be specific than to be ambiguous. And I don't like to have just a catchall, except at the end, which we can... Again, you could say after you list, let's say specific real property, if you want, I don't do this, if you wanna say, "Any other real property owned by Jim Jones" or "Jane Smith," you could do that, but then you may be ending up in a fight. Again, separate property, you want to put the retirement accounts, again, you wanna list them very specifically. Chase account or whatever, with the account numbers, more information is better. Bank accounts, corporation names, again, be very specific on which separate property is. And again, also, the other thing you wanna do is that any increase in value of these separate property remains the separate property of that party, and that even if there's contributions by the non-owning, the other party in other words, that does not convert the separate property to marital property, that no matter what, basically, the separate property remains separate property regardless of any type of improvements, monies paid towards mortgages, or any monies placed in the account by the other party, it does not change the characteristic of the separate property. That's very important to have that type of language in there, otherwise there could be an argument that yes, the separate property is there, but the other party may get some type of credit because they improved the property, or they paid the mortgage, or they did whatever they did. In terms of other separate property lists, cars and boats, again, jewelry, we mentioned that earlier, some people have collections, whether they're sports collections or other type of memorabilia, again, if that is the case, you wanna be very specific. Also, you want to, again, you should always go over all of this with your client to say, "Well, is this something you want in the first place?" They may not care, just going back for a second, they may not care that their bank account is a separate property. They say, "Oh, I know I have my separate bank account, but I don't care. I'm gonna keep it, but we're gonna have a joint account for the most part, and it doesn't really matter to me whether my bank account that I have now remains separate property." So again, these are just ideas and thoughts on what most people want to keep as separate property. It doesn't mean that you have to have it, it's just something you should have on a checklist to make sure you do talk about it with your client to say, "Hey, most people put these type of things as separate property, but it is entirely up to you, it's not required." Everything is... Really, except for the boiler plate, it should be customized to that party and what they want. So, going back to other separate property, other bank accounts or new bank accounts that are opened after the marriage, if they're opened with a third party or even if they're opened just by themselves, you could say that any new bank account, if it's in their name only, or the third party, remains the separate property of your client. Same with stock accounts, mutual funds, and brokerage accounts. Again, whether it's opened, probably those things can't be opened necessarily with a third party, but if they have a new one after the marriage date, they may want to keep that as their separate property. And otherwise, in most instances of course, any new accounts would almost definitely be marital property unless it was excluded in the prenup. So again, you do wanna make sure you talk about this with your client. Same with any 401k accounts or IRA accounts, same thing applies, any new accounts opened after the marriage, they may want to keep that their separate property. But again, as I said before, all of this is customized to the client and whether they want that for themselves. As we said, also, I have... This is actually, a little bit, is a boiler plate, I have a language in my prenup that basically says that doing these type of activities, or events, or actions, does not change the characteristic of any separate property. And here it is a little bit more general, I say the filing of any joint tax returns, they may file a joint tax return and that may list some other property somehow, or take a tax advantage of a home that is separate property, but by doing that, they're not changing the separate property of the home. Again, taking any other property by joint tenancy, just because they own 123 Main Street, or that property is a separate property, if they take 567 First Street in joint tenancy or joint ownership, that doesn't mean that the first property automatically also becomes joint property. Placing any money, other monies, in a joint bank account. Again, if they have one bank account that's only in their name but then they place money in the joint bank account, that doesn't mean that the separate bank account also becomes a joint property. All right, so other parts of the agreement you want to be able to draft, which is the alimony section or spousal maintenance, as we call it here in New York State. Again, some people are gonna want this, some people are not gonna want this. And again, you want to tailor it to your client's needs, but you do wanna at least discuss it with your client and have it in your notes, whether or not they want this. So again, do they want a complete waiver of alimony? Meaning that no matter how long they are married, that there will be no alimony or spousal maintenance to either party. Some people want that, again, some people don't. A partial waiver, this seems to be a little bit more... People like this better than a complete waiver, which is again, well, how it goes is, if the parties are married less than five years, well, there would be no spousal maintenance, or any type of number that you want to pick, it could be married less than 10 years, less than 3 years, it's really whatever you want to put. Most people like the less than five year number. They figure if they're gonna get divorced, it's probably gonna happen if it's less than five years. And again, when we're measuring the time, it's not the time between marriage and the actual judgment of divorce, it's the time between the date of marriage and the date that somebody files for divorce or a separation. You wanna make sure you have that completely defined in the prenup, what constitutes, quote unquote, the end of the marriage, which typically, is not the date of the judgment of divorce, but again, is the date that somebody files for a divorce, or files for annulment, or files for a separation, so you wanna make that very clear. Also, another way to do a partial waiver, example number two, again, is let's say they're married more than 5 years but less than 10 years, you could say that they only get a certain dollar amount or they only get a certain percentage which could be less than what it is based on the New York State maintenance guidelines law. Again, it's pretty open ended in terms of whatever numbers or whatever formula you want to use, you wanna just make sure it's very clear what they're waiving and what they're signing onto. And again, you could put more than five years but less than 20 years, more than 10 years. Again, these are just examples. In New York State, and probably if they're doing this in another state, you wanna make sure you reference the New York State maintenance guidelines law, put that in there, and maybe even put the whole... Not the whole statute in there, but make sure that the clients get that, there's a handout given by the New York State Bar Association, or even include it as an exhibit to your prenup. So, also, another optional item is attorney fees. There is some controversy whether a court would uphold attorney fees, so you wanna make sure that even if you include that, you inform the client that even if they waive attorney fees or say that attorney fees will not be paid, that a court could override it. But again, if you do include that there will be no attorney fees paid to the, at least what we call in New York State, the non-money spouse, that the court will not uphold it. If you do include it, make sure you include temporary or pendente lite attorney fees so that you're waving all types of attorney fees. And make sure again, that you're very clear what is being waived. And again, some clients will want this, some clients won't. Again, I'm just putting this in here as things that you may want to discuss with your client. Other items to add, here is... I apologize, no title here, but whether each party pays their own debts. And again, that can include, mostly, typically, it's credit card debt that people want to opt out of, saying that any credit card debt where I am the primary obligor or the primary person on the credit card would be my debt and that the other party's debt is their debt regardless of a divorce or marriage. That is, a lot of people do want that in their prenups, so again, you wanna discuss that with them. And of course, in addition to credit card debt, you wanna make clear that, if there is student loans, to put that in there, or any other... Again, you could put any type of loans or debts that you want, whether it's car loans, mortgages, especially if the house is a separate property, the mortgage should definitely be a separate debt. So again, you wanna be clear, and again, have this in a separate article or a separate part of the prenup so everybody knows, again... Clarity is king in these kind of things. And the other part you may want to add is inheritances or gifts. Again, although by law they are separate property, that if you get an inheritance, it's yours, however, I think it's a good idea to include it there, it's kind of belts and suspenders, it reminds the client that if they do get an inheritance or they do get a gift, it's their separate property, but it gives you an opportunity to tell them, well, but if you put that inheritance or gift in a joint bank account, then you've converted it and there's no way you really can get around that, even in a prenup, but this way, if you have the section in the prenup, again, it's a good reminder to the client, and hopefully, if they do want to keep an inheritance or a gift as separate property, that they will remember to keep it in their own separate bank account and not co-mingle it. So again, is it necessary to have it in there? I wouldn't say necessary, but a really good idea to include a paragraph or an article about inheritances and gifts, especially if they think they're gonna gain a very large inheritance or gifts from their relatives, it's very important to have that in there, I believe. The financial disclosure, we talked about that earlier. So, in the financial disclosure statement you wanna have a separate financial disclosure article, or certainly a paragraph. You see what I have in bold, I make sure that that's in my prenups, of course, instead of Mr. Moneybags, you put the actual party's names on how you denote them, same with Mrs. Wife To Be. Also be careful... Again, if you do have a standard language or a boiler plate, if it's going to be a lesbian or a gay couple, you wanna make very careful to make sure you have your pronouns correctly, his and hers, and make sure that's correct throughout the prenup and make sure the names obviously, are correct also throughout the prenup, typically, pretty easy to do with Word, Global Replace, etc. I'm not going to read the bolded language, but again, it's important to have that in there so that the clients know that they had a right to demand a statement of net worth or a similar document, they had a right to get financial documents from the other party. And again, you'd have this on both sides, that one party, they would have the right, and of course, you'd have the similar paragraph saying the other party had the right for Mr. Moneybags. So, this bolded language is actually gonna be twice, but from party A to party B, and party B to party A, so very important, I believe, to have something in there, bolded, to make it very clear to the clients and to any court that would be reviewing this, that this was a full acknowledgement and a full waiver, that they had a right to get these type of documents. Other type of clauses, I don't always have these in here, but these are... You may wanna discuss this with your client or have them in your prenups. A sunset clause. This is pretty rare where basically, after a number of years, typically, 10 seems to be the magic number, but it could be 15 years, 20 years, that after so many years, that the prenup itself becomes null and void, so it's as it didn't even exist. Again, pretty rare that people want that, there's a reason they wanna prenup, but sometimes they say, "Well, if I'm married for 10, 20 years, it's good enough and we can throw this away," so to speak. Of course, it should have a no contest to this agreement clause saying that if the agreement is... That they're not going to contest the agreement, of course, they still can, but it's a standard thing to have in there. Legal representation. Were they represented by an attorney? Of course, I try to insist that the other party does have an attorney. In terms of that other party getting an attorney, sometimes they say, "Well, I don't know anybody. Can you find me somebody?" They have to pick the attorney and you should not. If you're going to recommend an attorney to the other party, party B, so to speak, you should give them at least three choices saying, "Hey, these are three attorneys, but you pick them, you interview them. It should be your choice on what attorney you pick." Also, in terms of who pays for the attorney, whether it's who pays your fee or who pays party B's fee, one party can pay both attorney's fees, that is perfectly legitimate and happens many, many times, that should not have any effect on the validity of the prenup. And I usually don't even put it in there, but if you wanna put in that says, party A paid for both party A and party B's prenup, you can do that. I usually don't, I don't think it's necessary and may even raise questions, but again, who pays doesn't matter. But again, both parties have to have their independent attorneys, one attorney should not, and this is a big no-no, one attorney should not be representing both party A and party B. You can recommend, as said before, three or four more attorneys for that party B, but they're the ones who pick the attorney, but party A could pay for party B's attorney fees. Of course, choice of law. Many people, of course, they will be moving from New York State to whatever, or they'll have property in another state, and most likely, you're gonna say choice of law is New York State, choice of venue, I didn't put it in there, but the venue, you probably wanna put New York State. Now, sometimes, clients will tell me, "Yeah, we definitely know we're moving to Florida," "We definitely know we're moving to North Carolina," or wherever, "in a couple years," and then you'd have to have that conversation, "Well, do you still wanna have New York State as the venue? Which means, if you did get divorced, you'd have to come back here in New York, or do you want to have that new state to be the venue?" Completely up to them. Of course, you'd have to tell 'em you have no idea what that other state's laws are, you only know New York State law and whether the prenup would be valid here in New York State, make that very clear, but you do wanna make sure that you have a choice of law and choice of venue clause in there so that we know that New York State is going to apply, and hopefully they pick New York State as the venue as well. I also have a confidentiality clause in there saying that the prenup will be confidential to all third parties, except of course, if they go into a court proceeding, that would be an exception, but that they will keep the prenup confidential. Most clients like that. Of course, if they show it to their friends, family, or whatever, that's their business, and their problem, quite honestly. All right, we talked about this before, that certain events do not change the property interest, filing joint tax returns, taking of other title, services in relation to these separate property. What do I mean by that? Just because someone's a homemaker, cleaning the house, taking care of the children, it does not change the separate property that is listed. Whether somebody contributes to paying the mortgage or any other separate property, it does not change the characteristic of the separate property. Oh, children, so again, in most states, and certainly, I know in New York, definitely, if you put that any children born of the marriage, that we will have joint custody or anything to do with custody, child support, pretty much almost anything, would probably be against public policy. You can draft it, you can put it in there, but it would probably be a waste of your time. And even if the clients insist on it, you wanna make sure that you tell them that the court has the ultimate right to decide how the children are going to be divided and how custody and support is going to be adjudicated. So, if you're gonna have something in there, you can put it in there, I'd try to make it as short and sweet as possible, and then make sure also, you have something in there saying that the parties recognize that the court has the ultimate determination when it deals with children. So, if you did put it in there, I've seen it in other parties' prenups and if they're getting divorced, the court will really ignore it. They say, "Well, that's very nice, that's what they put 10 years ago, but that means nothing now." So typically, you won't have anything about children in your prenup, but if you do, you wanna make sure the clients understand that it's not binding in any way, shape, or form. Existing debts. Again, this would be listed in the financial statement part of the agreement, in the exhibit we talked about, but you may wanna, again, make sure that you talk about it with your clients. Taxes. Most people are going to file joint tax returns. I typically don't have anything about taxes in there, but what you do... Oh, I shouldn't say that, I do have something about it, saying that if one party is filing fraudulent information, that that becomes their problem and they have to pay for any fraudulent information even if it's a joint tax return. If the parties intend to file individual tax returns, even post-marriage, you may want to put that in there, but again, they may not want to be locked into filing individual tax returns or joint returns, so you could say that whatever works out economically or financially better for the clients, that they'll file the joint or separate taxes based on which option gets you to most, in terms of taxes, back. But again, if you wanna have that conversation, you can do it. That's not something I typically have, really, in my agreements, except for perhaps, something about fraudulent information in your tax return. You may wanna talk about medical expenses and medical insurance. It's not in many of my prenups, but again, if you want to at least mention it so you can check it off on your checklist, that the medical expenses of one party remains the medical expenses of that party. And medical insurance, who's gonna get the medical insurance? But again, things can change, so you don't really wanna lock-in that party A is always gonna get the insurance, 'cause maybe their insurance will be not as good as party B's in the future, so that's why very few people lock it in. But again, you wanna at least maybe have that conversation about it so people aware are of it. Something I do pretty much have in every agreement is that if a party files for a divorce, or a separation, or an annulment, that immediately, they are waiving the right of election that we have here in New York State, which basically says that a married couple essentially have about one third... One third of your state goes to your other spouse. But you can waive that and you can put that directly in the prenup, and you could do that and make sure it's automatic. And also, you can make it that even if there isn't a divorce, that you're waiving this right of election. You wanna make sure you explain it to the client saying that again, while people are married, automatically party B gets one third, you may wanna tell them, "Well, in case of death, they'd still get one third, but you can waive that." Both parties have to waive it, of course. Again, that's something many times, people put in their prenup, but not always. Pets. Well, we're big dog lovers here, and pet lovers, and animal lovers here, in the Badanes office, so if you wanna say that your dog... My dog's name is Piper, and so if I was to get divorced, I'd want Piper, or maybe my wife wants Piper, and you wanna make sure you list the dog's or the animal's name, and what kind of animal it is, would remain with one party. Of course, pets unfortunately, do die eventually. But again, if it's a short-term marriage and the pet is still alive, you wanna make sure that you get to retain that pet. All right... Other parts of the agreement should have, again, we talked about termination of the marriage. You should make it very clear that the termination of the marriage is not the judgment of divorce or the entry of the judgment divorce, but it's the filing for divorce, filing for separation. We talked about legal representation, the party B, the fiancé, should have an attorney. Again, we talked about paying for it. In New York State, there's been a couple cases I think wrongly decided, but that's not up to me, but you have to have the acknowledgement, you must make sure that it's 100% correct, just like in a deed, the prenup has to be notarized. You wanna make sure that you have that right because the Court of Appeals, New York State's highest court, has thrown out prenups where the acknowledgement was incorrect or missing even a couple of words, so you wanna make sure that it is 100% correct. Okay, once you have the agreement drafted, before it gets signed or before you even give it to the other party or attorney, you wanna make sure you review it with the client. Of course, this is obvious, but it must be done. You wanna make sure you do this so that the prenup will be valid. You wanna put this in your notes, document that you did review it with your client, and make sure the client understands everything that's in there. It's gonna be a fairly long document probably, it's gonna be a fairly long meeting, prepare your client for it. And again, there's another reason why you don't wanna wait till the last minute to do a prenup, because if it's a week or two before the wedding, they're gonna be too busy with wedding stuff, wedding planning, and they're not gonna want to meet with you. Of course, you can nowadays, review the agreement through Zoom, or I guess another alternative, to do it through phone, not optimal, but again, I have done it. Then of course, once your client approves it, you then send the prenup to the other party. Hopefully, the fiancé, party B, is not pro se. Obviously, you can't give a pro se party any legal advice. Another reason why they should have an attorney. Again, in the back and forth of the prenup prior to the signature, there may be several versions, even if there's somewhat slight changes, it's important to keep track of the changes, keep them on your computer, in your file. Again, if there's a question about the validity of the document or was it, "Here, take the prenup and sign it or else..." You could talk to the judge, "Wait a minute. No, it wasn't a take it or leave it proposition. We did negotiate. They changed X, Y, and Z." So it shows that there was a true bargaining here and true negotiation. So again, obviously, people wanna get a prenup, but there is gonna probably be some negotiation, so if the other party doesn't want part of your... Whatever you've drafted, you have to go back to your client and say, "Wait." For example, let's say they didn't want the alimony section, you have to determine what is a red line or a bright line that the other party won't cross, what does your party want, what is your party willing to give, so to speak. Typically, this is not the major issue, I mean, both parties want to get a prenup, they want to get married, and there may be some slight changes and negotiation and hopefully, the parties can work it out, and they should not be taking a ticket or leave its stance, that would be doing your client a real disservice, so you don't want to do that, but you may have to negotiate. How do you... In terms of executing a signing agreement. Of course, the best practice is in your office or the other party's office with everybody present with their respective attorneys. Good idea to make sure you've double checked that they've read the agreement and understand the agreement. I have an allocution part in every prenup which basically says as part of the prenup, that they've read the agreement page to page, they understand it, that they're not on the influence of drugs or alcohol, those kind of clauses. Of course, the second best is to have one party sign it first and then either have your client sign it, again, with all attorneys present not just with a notary, a bank notary or whatever. I like, if everybody can't be in the same room, maybe there can at least be a Zoom meeting, with party A is with their attorney and party B's with their attorney, in separate locations, but everybody's meeting electronically through Zoom. I've only done this once actually, and the other party did it where they had a court reporter that took down the notes saying that yes, party A agrees to this prenup, and party B agrees to it, swears them in, etc. Look, it can't hurt. Of course, it's an extra cost. It's certainly a decent idea, I just haven't done it. But again, the other party once did it, they wanted it. Video recording. Very similar to maybe having a court reporter where you've recorded yourself, but you're not having a court reporter swear them in or anything of that nature, but at least you have a video recording of what happened. So, pretty much getting to the end here. The fee, do you wanna have a flat fee? Which in my opinion, is the best option. This way, everybody knows what's it gonna cost. It's very clear. Sometimes you'll make out, sometimes you won't, but it's pretty easy to figure out what your flat fee should be, especially if you're doing this for a while. This way, the client knows exactly how much it's gonna cost. In terms of collecting the fee, I usually get everything up front 100%. Sometimes, clients are like, well, I don't have that, whatever, so you could do 50% on retaining the client, 50% on delivery of the first drift, not at execution. I don't charge for typical office expenses, mailing, etc, it's built into my fee. However, if there's third parties, appraisals or otherwise, of course, there should be an extra fee for that. Of course, if you wanna do an hourly fee, which again, I think is a pain in the butt and I don't personally like it, you can certainly do that. I usually say it takes about four to five hours to do a prenup. Okay, so we'll go through a couple of case laws here. This is the case that the Court of Appeals talked about acknowledgements. So, they separately signed the prenup, the wife wasn't represented by an attorney, there was no dispute, the signatures were authentic, there was no claim of fraud or duress. The certificate of acknowledgement for the wife was okay, but for the husband, it was missing the key phrase, "did not say that the notary public confirmed his identity." So, you see what it has to say in here? I mean, this was the language that the Court of Appeals looked at and said, well, since that key phrase was missing, they threw out the prenup. And I think it was a little drastic, but that's what they did. And that filed is a case called Metasoft, that says no exception must be executed. The prenup must be executed in the same manner as a recorded deed, the person signing the document must orally acknowledge that they signed it, the notary must know by satisfactory evidence that they knew the person, and the notary must execute a certificate stating the signer knew the identity. Again, the husband was missing "to me known and known to me" clause. Case in 2008 about foreign prenups, Van Kipnis, foreign prenups are valid as long as it's complete, clear, and unambiguous. 2001, Bloomfield, case is strong and there's a strong public policy of allowing parties to decide their own interests through prenups or premarital contracts. It's well established that the prenup is valid, there's a presumption of validity of a dually executed prenup, and if that prenup does have some ambiguity and if it's construed, it should be construed in favor of its legality. Here are some cases I think mostly, well... Mostly in the Court of Appeals, but that you can point out this is certainly not complete, many, many cases, point to a table of authorities. So again, prenups are great, clients love them, it's a good part of your business, or could be a nice extra part. I just wanna make sure you file what's in the CLE. And again, I call prenups basically, divorce insurance, just like car insurance or life insurance. You buy life insurance but you certainly don't wanna die tomorrow, and you buy car insurance, you don't wanna have an accident, but we all know accidents happen, and the same with prenups, we know that divorce, whatever the number is, 30%, 40, 50, whatever the number is, it's fairly high and a prenup does protect people. Many people who enter a prenup, it's their second marriage, so they know the benefit of a prenup so you don't really have to sell 'em on it. But if you're in a networking event or you're meeting people and you say, "Hey, I do prenups," a lot of times, they'll laugh, but for people, it's not just for rich people or people who have retirement assets. Let's say government workers like teachers or police officers, they typically have very significant retirement assets and they wanna make sure they're protected, so even though they may not be a millionaire, their retirement is worth a lot and it's very simple to have a prenup that even just protects one thing, whether it's a house, whether it's just a retirement asset, it doesn't have to be as complicated as it seems through what we went through today. Again, I was just trying to be covering all the bases, so to speak, but you could have just one or two things being protected in a prenup. Sometimes, again with corporations, family owned corporations, that is something people want, so there's a lot of use for prenups. And again, I call it divorce insurance or marriage insurance, and hopefully, you'll find it something that's relatively easy to do and could be a good part of your business. My name again, is David Badanes, I'm here in Northport. You have my phone number and email if you have any questions. Take care and goodbye.

Presenter(s)

David Badanes
Owner
Badanes Law Office

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