Sunday, September 28, 2008

Why Professional Athletes Have Prenuptial Agreements

After a brief flurry of news reports about the impending break-up of superstar baseball player Alex Rodriguez's marriage, a few recent stories came out announcing that an agreement had been reached and that there would be no further information released. It turned out to be a relatively quiet divorce for several important reasons.

  • First, there had been a prenuptial agreement completed about a month before the wedding. That agreement apparently settled many or most of the issues. It helped avoid a lot of litigation and undoubtedly saved a great deal of attorneys' fees for both sides. While prenuptial agreements may seem very expensive when they are negotiated and drawn up, they usually turn out to be a great investment because they minimize the costs of a divorce or they might even help preserve a marriage (when divorce options are limited). Prenuptial agreements may seem "unromantic", and they are, but for a second or third marriage, the odds of going through a divorce are going to be a little higher. Besides, doing a prenuptial agreement does provide more disclosure between the bride and groom than occurs in many relationships, and they force the parties to think more about the future, good or bad.

  • Second, there was not a lot of negotiating happening in the press. In celebrity divorces, there's often a lot of damage done because of what gets published, televised or discussed. Either the parties recognized that they both had something to lose by going public or the prenuptial agreement may have included penalties or incentives for privacy.

  • Third, the parties obviously had attorneys who recognized that hanging out the couple's dirty laundry would end up soiling both of them. They were able to protect the interests of both parties by working quickly and quietly. Sometimes less is more, and that was the case here. Both parties end up losing when they start slinging mud. Professional athletes need to keep a good image for marketing purposes. Unfavorable press can result in loss of endorsements and lost opportunities for outside projects and income.

Professional athletes, whether they play in the NBA, WNBA, NFL, NHL or MLB, would all be well advised to seek a prenuptial agreement if they are getting married. It can save them a lot of money later on and make their lives more peaceful and productive. A prenuptial agreement will probably save substantial attorney fees in case of divorce and will limit the financial exposure in that situation. It can also help the athlete and the spouse address and decide financial issues for the future.

Why use Collaborative Law? Basically, preparing a good prenuptial agreement requires long-range planning by the athlete and his/her spouse, with a financial advisor as well as an attorney. Instead of just living for today, professional athletes should take the time to look to the future and preparing a prenup is a great way to get started. The best practice is for each side to have their own attorney. That helps balance the power in the relationship and makes sure that both sides are heard and understood. Collaborative Law is a very effective way to negotiate a prenuptial agreement. There is disclosure, representation of both parties and other professionals can be used as needed. No agreement is established unless both parties voluntarily agree to it.

One final point: Don't wait until the last minute! A complex agreement takes time to prepare. You want it done right and you want both parties to be comfortable with it. To create a custom agreement, information must be gathered and analyzed, a plan must be put together and an agreement must be negotiated. If it's not done right, you are just wasting money because a court can find it to be invalid. It takes time to get all the work done. In addition, waiting until the last minute will only multiply the stress related to getting married, probably resulting in two very unhappy people. Start early.

Thanks to the My Family Law Celebrity Divorce Blog for their post on this case.