A recent decision of the Connecticut Appellate Court in the case of Felicia Pierot Brody vs. Cary Brody illustrates what can happen when the focus of a divorce case shifts from the issues in the marriage to the credibility, or lack thereof, of one of the parties to the case. In the Brody case, one thing that happened was that a lot of personal information became public – e.g., the husband’s awkward excuse for stashing condoms in his travel bag. Another consequence: Brody was ordered to pay $2.5 million in lump sum alimony even though his prenuptial agreement was meant to prevent that and even though the court was unable to ascertain his income. The trial took place in 2010. Recently the Appellate Court has ruled against Brody on all six issues he raised in his appeal.
For all most of us know, Mr. Brody might have told the truth from start to finish. However, the judge found him not to be credible which, as the finder of fact in a civil case, she was privileged to do.
Any judge will tell you that the best way to appear to be truthful is simply to tell the truth. Still, any divorce lawyer who’s practiced as long as I have, has encountered more than one client who is shocked to learn that their lawyer expects them to be honest.
What kind of lawyer wouldn’t help you hide your assets, understate your income or cover up your extramarital affairs? The answer: any good one. Yet, despite our best efforts, there are plenty of folks who remain unconvinced that honesty is the best policy even when the truth isn’t pretty.
The fact is, there isn’t much that happens in a marriage that the judge hasn’t heard before. Also, there can be two very different sides to every story even when the story is told by honest people. Your secret spending or infidelity might have led to enormous drama in your household, but in divorce court, might barely cause a ripple. Unless, that is, you deny the deed and the judge isn’t buying it.
Brody was not a divorce between members of the 99% although the basic issues were fairly universal. There was an issue of irresponsible spending — in this case buying one too many Ferrari automobiles , a wine cellar, and an airplane. There was an issue of suspected infidelity with no proof other than a few unused condoms. There was a business purportedly in decline — in this case the Defendant’s hedge fund. There were some “he-said-she-said” claims of verbal abuse. All matters divorce judges deal with day in and day out.
No case in Connecticut goes to trial without first going through at least one formal attempt at settlement usually with the assistance of a judge or court-appointed Special Master. Most cases settle before trial. Of the small percentage that do not, only a handful are appealed and those few find little success in overturning the decision of the trial judge.
In this case, the Defendant raised a number of issues that might have served him well during settlement negotiations. His business really had been embroiled in litigation with the SEC, for example, and the prenuptial agreement arguably offered him protection from a lump sum alimony award that would have to be funded by liquidating personal assets.
At trial, however, the judge found him not to be a credible witness. For one thing, he had admitted testifying falsely under oath in an earlier divorce proceeding that his wife had commenced but later dropped. Back then he had denied removing his wife’s jewelery from a safe, but had later come clean. Added to that was the finding that the Defendant had stonewalled during the discovery phase of the trial pretending that certain documents sought by the Plaintiff didn’t exist. With those two strikes against him, the case was pretty much over. The Plaintiff, whose personal net worth at the time of the marriage had been 29 million, and whose dividend income from her separate property was approximately $100,000 annually was awarded alimony and, tacitly, the designation of honest litigant.
According to a recent article published in USA Today, a study of over 7000 individuals conducted by researchers at the Ohio State University found that 79% of marital separations end in divorce.
The study found that the average length of separations that resulted in reconciliation was two years, while the average of those ending in divorce was three years. Surprisingly, the chances of reconciliation virtually disappeared among this group beyond the three-year mark. While many couples who lived apart for three or more years eventually divorced, others simply continued the separation indefinitely.
The study found that women with children under 5 years old were more likely to separate from their husbands rather than to divorce immediately.
All of this means that a great number of couples either delay or forego altogether the protection of laws designed to shield them financially in the event their marriage comes apart. These include laws governing the division of marital assets as well as laws regarding spousal and child support.
In a relatively new trend, some couples seriously contemplating trial separation begin the experiment by negotiating a formal post-marital agreement that sets out their respective financial obligations while still legally married and also in the event of an eventual divorce. In this way, they are able to enter into a trial separation — or in some cases even continue living under the same roof — with the security of an agreed-upon set of rules. This provides each of them with a degree of certainty about their financial future that would not otherwise be possible absent divorce litigation. With financial issues resolved, they are better able to understand the choices they face and to focus on other issues in their relationship.
Just like prenuptial agreements, post-marital agreements must meet certain standards in order to be enforceable. These standards are governed by the laws of individual states, but certain features are universal. First, they must be accompanied by full mutual disclosure of financial information. Second, they must be entered into voluntarily and both parties must have had at least the opportunity to have the agreement reviewed by independent counsel. All courts reserve the right to review both prenuptial agreements and post-marital agreements for fairness, but, provided there are no egregious flaws in the contract, courts generally support and enforce them as a matter of public policy.
Impending separation is not the only reason to consider a post-marital agreement. Events such as the birth of a child, a return to school, or the launch of a business can be good reason for couples to consider adding a post-marital agreement to their financial plan.
Yesterday, Forbes.com published an excellent article outlining 21 common red flags of financial hanky-panky leading up to divorce.
While a few of the signs of trouble apply only to high-asset families — e.g., frequent trips to countries with soft banking laws — others signal shady maneuvers that are common at all income levels.
If you notice that your spouse’s behavior has changed when it comes to earning, spending or borrowing money and, at the same time, all is not blissful on the home front, make some notes and do a reality check of your own. Even if you find nothing amiss, the clues you record might come in handy to your divorce lawyer further down the road.
And if your spouse suddenly decides it would be a good idea to re-mortgage the house to pay off cars or business and credit card debt, by all means take the temperature of your marriage before signing on the dotted line. The bigger the hurry, the more reason to slow things down.
Because our last post highlighted a recent Wall Street Journal report about the skyrocketing divorce rate among baby boomers — especially those who have been divorced at least once before — we decided offer a quick primer on Connecticut’s Premarital Agreement Act.
Many people worry that premarital agreements — also know as prenuptial agreements and ante-nuptial agreements — send the wrong message about commitment and generate conflict and an atmosphere of pessimism from the start of a marriage.
Regardless of your beliefs about the wisdom or morality of entering into prenuptial agreements at the beginning of a first marriage, the stakes are often quite different when we choose to marry for a second time. By then, both parties are likely to have amassed some assets of their own and, importantly, may have children whose future welfare could be jeopardized in the absence of a prenuptial agreement.
If you do decide a prenuptial agreement is for you, it is important to do everything possible to assure that it is both fair and enforceable. According to a comprehensive overview on the history and development of the law on prenuptial agreements published in 2007 in the William and Mary Journal of Women and the Law, rules regarding the enforceability of prenuptial or premarital agreements vary considerably from state-to-state. According to the authors, prenups are not enforceable in England and in parts of Canada but instead simply serve as evidence of what the parties thought would be fair at the time the agreement was signed.
Connecticut’s Premarital Agreement Act goes a long way toward assuring that a carefully crafted agreement will ultimately be enforced by the court, but it also provides a number of requirements that must be met in order for a prenup to survive a challenge at the time of a divorce.
The agreement must have been entered into voluntarily.
The agreement must not appear to the court to have been unconscionable when it was executed or when it is sought to be enforced
Before signing the agreement, both parties must have been given a fair and reasonable disclosure of the amount, character and value of property, financial obligations and income of the other party
The party opposing enforcement must have been given a reasonable opportunity to consult with independent counsel
The terms of the agreement must not make it necessary for one of the parties to seek public assistance
In order for agreements to be honored at the time of a divorce it is not enough simply to recite that all of these requirements have been met. For example, if one party can provide credible evidence that he or she was under duress at the time the agreement was signed, it will not be enough that the agreement, itself, provided that he or she was not.
The degree of specificity and complexity of premarital or prenuptial agreements varies enormously.
Agreements may cover pre-marital property only or may deal, as well, with property acquired during the marriage. Parties can pre-determine spousal support rights, allocation of debts, and much more. It is also typical for couples to agree that their premarital agreement will expire after a period of time or that rights to such things as spousal support and retirement benefits will increase in accordance with a pre-arranged schedule as the years pass.
One set of issues that cannot be decided in advance by way of a premarital agreement has to do with the care, custody and support of children of the marriage.
As with most areas of contract law, there is no one-size-fits-all document. Instead, engaged couples should make every effort to learn what issues they may face in the event that the marriage ends either by divorce or by death, and to fashion an agreement that recognizes and accommodates each party’s wishes and priorities regarding their own financial future and, in many cases, the financial future of their children and grandchildren.
According to the Wall Street Journal, a paper to be presented by sociologists from Bowling Green State University in April of this year concludes that divorces among the over 50 set have nearly doubled in the last two decades and the divorce rate for that age group is now at its highest level ever.
Among the highlights:
- By 2009 a quarter of divorces were between couples 50 and over, a dramatic increase from percentages less than a decade earlier.
- Among boomers, more women than men initiate the process.
- Infidelity ranks low as a precipitating cause of the breakdown, especially relative to the population in general.
- 53% of people in this age group initiating divorce have been divorced before.
- Having been married before quadruples the risk of another divorce for people over 65 and doubles the risk for younger baby boomers.
- Among those using on-line dating services, the over 50 group is the fastest growing.
The trend is attributed to a number of factors including changing expectations about the roles of men and women in marriage. Read the entire article here.
According to a recent article in USA today, Connecticut groups have joined a growing movement to revamp alimony statutes that some consider out-dated and punitive toward the payors of alimony.
Advocacy groups, such as New Jersey Alimony Reform, cite anecdotal reports of onerous orders under which individuals have been forced to pay lifetime alimony despite job loss, failing health, or improvements in the financial circumstances of the recipient.
Reform proponents want, above all, to limit the duration and to cap the amounts of alimony by creating formulas tied to the income of the parties and the length of the marriage.
Opponents argue that strict formulas are likely to cause more injustice than they cure especially since judges already consider a range of equitable factors when fashioning alimony orders and need to be able to tailor awards to the needs and circumstances of each family.
In September of 2011, Massachusetts Governor, Deval Patrick, signed into law a new act that provides, among other things, specific term limits for alimony. The Massachusetts law also limits the amount of alimony to no more than 30% to 35% of the difference between the parties’ gross incomes at the time the order is issued. Under the statute alimony can be set below these caps especially if the recipient does not establish sufficient need. The new Massachusetts statute also allows the court to terminate, suspend or modify alimony upon a finding that a recipient is cohabiting with another adult — action that has long been permitted under Connecticut law in any case.
In contrast, rather than capping alimony awards, the Connecticut alimony statute mandates a case-by-case analysis of the issue based on a long list of factors including the length of the marriage or civil union, the causes of the breakdown, the age, health, and occupation of the parties, as well as their respective skills and earning capacities. This allows the court to project how the parties are likely to fare in the future, relative to one another, depending on the amount of alimony ordered.
In Connecticut, the group at the vanguard of the movement for alimony reform maintains a web site that is surprisingly non-specific about the ways in which members consider the existing Connecticut statutes to be defective. Instead, the group invites members to post so-called “horror stories” about their own cases.
To the extent that reform groups suggest that non-modifiable lifetime alimony is the norm, at least in Connecticut, they are misleading potential recruits.
Because Connecticut law generally allows for modification of alimony when the financial circumstances of the parties have changed, an agreement or order to the contrary must specifically preclude modification. While non-modifiable alimony orders are not altogether uncommon, they are most often the product of negotiations between the parties through which the recipient of alimony accepts a lower amount in exchange for a promise that the alimony will continue for a specified period of time.
According to the USA Today article, a bill concerning alimony reform is likely to be presented to the Connecticut General Assembly this year.
Because the issues are not simple, any effort at reform must be carefully considered. New legislation, if it is to bring positive change, should be thoughtfully drafted in a way that allows courts to address the legitimate concerns of both parties. Any reforms designed to protect the interests of one group without also safeguarding the rights of another will not satisfy that requirement, nor will changes that merely bring uniformity into the process without balancing the need for certainty with the overriding goal of treating all parties fairly.
As always, we welcome your comments.