Friday, June 21, 2013

Can Mediation Help with Prenuptial Agreements?

Prominent Michigan family law attorney Carole L. Chiamp, who is of counsel to our firm, is a family law court-approved mediator. She is among the first attorneys in Michigan to obtain this designation. She currently authors a monthly article in the Michigan Family Law Journal entitled "Mediation Matters." 

“We must stop thinking of the individual and start thinking what is best for society.”  - Hilary Clinton

I dislike prenuptial agreements so much that I refer clients who want them to other attorneys.  My opinion stems from my observations of the effects of prenuptial agreements during my years of practice.  I’ve never given much serious thought as to why I am not a big proponent of them – until now.  I recently read two articles by Laurie Israel, a certified mediator.  The information in the articles is illuminating 1, 2. 

Talking about prenuptial agreements (a contract between two parties intending to marry detailing their financial agreements) is awkward especially in first marriage situations.  However, if done properly, the agreement need not harm the marriage.

There have been many articles written about prenuptial agreements on the internet:  Huff Post, Peace Talks, and elsewhere all tout their favorability.  I don’t necessarily agree as sharing money in a marriage is an important component of that relationship.  Most of the agreements are written by an attorney for the monied spouse, usually but not always, the man.  The less monied spouse, usually the woman, often hears about her need to execute the prenup very late and often close to the wedding date.

Most prenuptial agreements overdo it and are overreaching, some are even coercive.  The agreements are often complex and expansive.  Her rights are frequently written so as to be severely restricted.  The toxic form agreement turned to by too many drafters often blocks access to everything her future husband brings into the marriage, everything he earns during the marriage, spousal support and attorney fees in the event of a divorce.  She is encouraged to see an attorney who should be outraged.  The negotiations start with hurt feelings once the woman understands what is being proposed.  This starts the adversarial relationship.  The attorney for the groom won’t budge.  She eventually agrees so as not to upset the groom, perhaps with a few minor changes or none at all.  The “business deal” is done.  It may one day have a devastating effect on the financially weaker of the two.

In a first marriage, often the parties to the agreement have little or no notion of what marriage is.  They don’t understand how finances play a part in the marriage.  She does not know what her “rights” in a marriage are.  She will find out when it is too late.  Often there are parents in the picture.  They did well during their marriage and provided wealth to their children.  They had a traditional marriage without a prenuptial agreement but now want their child to have one.  This, of course, may poison the marriage before it even begins.

Attorneys drafting prenuptial agreements almost always discuss “reducing risk” to the monied spouse.  However those same attorneys probably don’t have one of their own.  Many prenups include waiver of most, if not all, inheritance rights.  So the 25 year married spouse who thought she was giving up some rights in the event of divorce may end up giving up inheritance rights in the event of her husband’s death.

Prenuptial agreements are usually unfair to the person who cares for the home and children.  If the parties agreed that the wife should do these tasks, shouldn’t she be compensated in some way after long years of marriage?  The prenup ignores the law which has been developed over scores of years;  ignores it to the detriment of one of the parties.  Family law is there for good reason.  Changing it with the stroke of a pen doesn’t seem fair.

This having been said, in second marriages there may be good reasons for a prenup especially when there are children of first marriages.  The parties may want their children of former relationships to have some of their money in the event of death.  In either the first or second marriage, there are reasons to mediate.  Israel writes that there is a better alternative, the mediated prenup.  She claims that:

“In mediation, the couple formulates the terms of the prenup, face-to-face, with the assistance of the mediator.  Unlike “lawyering up”, they are modeling communication, collaboration, and mutual understanding and respect in coming to the terms of the prenup.  This action at the outset of their marriage is an achievement that reflects the connecting process of a good marriage.”

She believes that divorce attorneys should be the mediators of prenups as they fit the bill best because they know why marriages fail and see it first hand.  Since most of what happens is in the divorce setting they can help with workable provisions.  Also they should have experience in drafting prenups and the law.  Mediation levels the playing field and leaves the parties in control of the process.  Once the prenup is complete they can always be reviewed by attorneys.

Mediation takes both prospective spouses’ needs into account so that the agreement, if there is one,  is balanced and fair.  It may also improve communication on important issues like finances, family planning and respect for each other3.   

1.   Laurie Israel, Prenups – Don’t Lawyer Up, Mediate! Part I: “The Problem”, The Huffington Post, (Aug. 31, 2011, 4:06 AM),

2.  Laurie Israel, Prenups – Don’t Lawyer Up, Mediate! Part II: “The Solution”, The Huffington Post, (Sept. 2, 2011, 1:37 PM),

3.  See also, Barbara A. Atwood & Brian H, A New Uniform Law for Premarital and Marital Agreements, 46 Fam. L.Q. 313, (2012); Unif. Premarital & Marital Agreement Act, 46 Fam. L.Q. 345, (2012); Thomas J. Oldham, World Enactment of the Uniform Premarital and Marital Agreement Act in All Fifty States Change U.S. Law Regarding Premarital Agreements?, 46 Fam. L.Q. 367, (2012).

Tuesday, June 18, 2013

Dirty Tricks and Divorce Mediation

Prominent Michigan family law attorney Carole L. Chiamp, who is of counsel to our firm, is a family law court-approved mediator. She is among the first attorneys in Michigan to obtain this designation. She currently authors a monthly article in the Michigan Family Law Journal entitled "Mediation Matters." 

“Trickery and treachery are the practices of fools that have not the wits to be honest.”- Benjamin Franklin

Most clients who decide to enter into mediation do so in good faith with the intent to make full disclosures.  So what can you do when you believe mediation would be best but the other party decides they are not going to play by the rules and are instead going to engage in behavior not conducive to resolving disputes?  Recognizing a dirty trick will get you started.  For example:

Conflicting Out Top Divorce Attorneys

Spouses who know a divorce is coming make appointments with top divorce attorneys in the area with no intention of hiring those attorneys.  They tell the attorney just enough of their situation, and often pay for the attorney’s time to keep the attorney from representing their spouse.  They may spend a few thousand dollars but get what they want.  And yes this does happen in high asset divorces.  Only the attorneys can prevent this. Some attorneys may tell prospective clients to be careful before spilling their stories as the attorney does not intend to be unable to represent their spouse should the prospective client hire someone else.

Firing an Attorney Just Before Mediation

Some litigants who receive a good interim status quo order may rather prolong the matter to keep the present lifestyle.  Firing an attorney will often be grounds for an adjournment of mediation and trial or an extension of time for discovery.  Since withdrawal is allowed only by court order (MCR 2.117), most judges will limit the number of substitutions, especially close to a trial date.

Financial Dirty Tricks Before and During Mediation

1)    Liquidating Accounts

One of the most common ploys used to reduce the marital estate is to liquidate joint accounts and move the money to another account.  Wealthy people hide it in offshore accounts.  Others simply put it in a relative’s account. 

2)    Arranging for Mortgages Just Before Divorce

Spouses who know they will soon file for divorce induce their spouse to take out a new mortgage in order to “help the business” which may or may not be in trouble.  The divorce is then filed.  It is claimed that the money is in the business which is not worth much.

3)    Using a Power Imbalance to Manipulate the Settlement

Power imbalances occur when one spouse has a level of understanding that the other does not.  That can lead to an offer being made which, on its face, appears fair.  In reality it fails to account for something such as tax ramifications making the offer unfair to the person with little or no tax acumen.

4)    Using Credit Reports

Credit reports are good tools to be sure that any accounts recently opened by either spouse are readily available.  Many surprising auto loans and credit cards have been opened without the knowledge of the other spouse.  These loans and debts have to be investigated and included in the judgment.

5)    Hiring an Accountant

The accountant should have provided to him/her three years of joint tax returns with all of the schedules.  There are all kinds of things that can be in those returns.  Both spouses signed them and ignorance will not be excused if they are wrong.  If it is suspected that a party has not been entirely truthful on the returns, the possible negative ramifications should be an issue for the mediator.  The accountant can also help with the division of assets so that neither or both receive a tax advantage.

6)    No Mediation Summary

One side prepares a mediation summary while the other side does not.  This can be done for reasons other than incompetency of counsel.  Perhaps they see mediation as a discovery proceeding and are there to learn only what you know.  It may also happen that what they do bring is “recently discovered” – meaning unsubstantiated – debts, hoping to add them into the deliberations.  Too frequently, the financially weaker party forges ahead to a mediated resolution because an adjournment when you are paying your attorney and half of the mediator’s hourly rate is too much to bear.

7)    Budgets Can Show Hidden Assets

If Couple A shows $90,000 on their joint income tax but spends $150,000, there should be significant credit card balances.  If there is not, then there is another income stream.  Someone, perhaps an accountant, needs to look for it.  Even if it turns out to be from credit card debt, that too must be negotiated.

No one can ever know too much about their assets.  The more knowledge about the identification and valuation of assets, the better position both spouses will be in to obtain a fair division of those assets.

My Favorite “Dirty Trick”

This won’t get anyone in trouble and may actually help in the settlement of some issues.  This comes from Diana Mercer1, an attorney.  Here is what she told her friend, who was having trouble getting her husband to pay half of their child’s extra-curricular sports and book rentals.  Take a photo or two.  In fact, assemble a lot of photos of the child doing all of these extra-curricular activities.  Be sure to show the child engaging in all of the activities such as prom, sports, choir.  Include an art project.  In fact, maybe it should be a photo album.  Maybe, if the child cooks, you and he/she could make some cookies for dad.  Offer them to dad at mediation with no strings attached.  Copies of college brochures?  Or the child’s application to colleges?  Why not?  You get the drift...a quiet package.  Give one album to your attorney to show dad’s attorney.  Give the other to dad as a gift.  Then let dad say he doesn’t want to pay.  If so, the judge should be impressed with the evidence.  It will be difficult for the dad’s attorney to argue dad shouldn’t pay his fair share.  Mercer likes this approach because it’s dramatic, effective and a little evil without appearing so.

1.    Diana Mercer, Lawyer’s Favorite Dirty Trick, Huff Post Divorce, (October 22, 2012),, accessed April 30, 2013