Prenups are a great way to protect assets in a divorce, but they need to be drafted with care
The Second District just issued a ruling that continues the sputtering stream of appellate California cases upholding prenuptial agreements.
Sandra Hill, Appellant, v. Thomas Dittmer, Respondent. 2012 DJDAR 688
In Hill v. Dittmer, two relatively wealthy individuals, both represented by attorneys, allegedly did not fully explain their financial affairs to each other prior to signing their deal.
Most, if not all prenuptial agreements include disclosures of assets, debts, income and expenses as attachments to the agreement. This disclosure of the parties balance sheet and profit and loss position, allows an intelligent understanding of what the parties entering into the agreement might be giving up.
The case reads like the lifestyles of the rich and shameless. Hill had divorced the founder of MTV. In that divorce she walked with 20 Million. Hill also had quite a history in the print and television industries as an author, editor, spokesperson, and/or owner of numerous companies (Mademoiselle, Brides, Vogue, Allure, Traveler, Code Nast, USA Today, NBC, Nabisco, DuPont) . Dittmer was just as or perhaps more successful, starting up a trading company called Refco.
Dittmer’s attorney, not even a California attorney, probably saved the day. Marshall Eisenberg made Hill and her attorney sign a clause saying that they had been given an offer to have full and complete access to Dittmer’s finances and Trust. This was to include essentially any accountant or representative for Dittmer, on any issue. Also in the agreement was a specific waiver of the relevant Family and Probate Code sections on the right to disclosure.
Then Dittmer made a disclosure that his net worth was 40 Million, one fourth of Hill. Hill had a mere 10 Million. This is apparantly all that was left of the 20 million she siphoned from the last (presumably unwilling) participant in her serial monogamy soap opera.
The law in California states that a contract of this kind shall be found not only unfair, but unconscionable, if the parties to it did not have actual or constructive knowledge of the assets and obligations of the other party and did not voluntarily waive them. The law in California also mandates a waiting period between the signature of the document and the first reciept of the document of a minimum of seven days.
It helped in this case that the trial court could not say that 40 Million was inaccurate. The ruling does not make it clear why Hill was upset, but it appears likely in reading between the lines that he had more money tucked away in some kind of trust. Sadly, the otherwise brilliant representation of Mr. Eisenberg is marred by the allegation of Hill that somehow Eisenberg failed to get Hill’s attorney to agree to put off the wedding for seven days until Hill had read and/or initialed all pages of a full copy of the last of many drafts. Hill then tried to say that she was missing the key page. Surprise Surprise.
Needless to say, at this point, Hill’s credibility starts to be a little in question. A cynic might at this point start to wonder if Hill’s first divorce or other affairs contained any issues of honesty or accountability.
The court of appeal then made some interesting legal rulings about things like retroactivity of 2002 statutory changes, and the probability that if you have an attorney (and probably if there were multiple drafts) that the seven day rule does not apply. None of which are really new or surprising. The surprising thing is that this appeal was not sanctionable.
Moral of the story…. Start planning the prenuptial agreement before you set the date for the wedding. If that simply will not do, get two lawyers sending drafts back and forth. If you need a prenup, maybe the wedding is a mistake. If the wedding is a mistake you just cannot avoid making, you definitely need a prenup. Last, she probably will serve you the same as she served the last guy. She will serve you with papers. Papers constituting a lawsuit. Because 10 Million just isn’t enough.
