The Texas Rangers may soon move into a new $1 billion retractable-roof stadium, completing a remarkable transformation for a franchise that was in bankruptcy just a few years ago. The Los Angeles Dodgers have gone through a similar process in that same time period, but that team’s journey also involved a high-profile divorce.

When California power couple Frank and Jamie McCourt bought the Dodgers in 2004, the once-storied franchise had fallen on hard times. After winning the World Series in 1988, the 1990s and 2000s teams consistently underachieved, dragging down attendance and the franchise’s value. In 2011, while the team was in bankruptcy, Ms. McCourt signed a marital property agreement that awarded team ownership to her husband; in exchange, she received almost $200 million in cash and property.

Only about a year later, Mr. McCourt sold the team, which had rebounded nicely, for a record $2.15 billion. Ms. McCourt asked a judge for half the sale price, but the judge refused to overturn the property agreement, as it was not unfair at the time. The judge ruled that Ms. McCourt chose the “security” of a guaranteed payment “over the uncertainty and risk presented by the valuation and sale of the Dodger assets.”

Premarital Agreements

Legally, Texas and California have a lot in common when it comes to family law. They are both community property states, and they have both adopted the Uniform Premarital and Marital Agreements Act. As the name implies, the UPMAA applies to spousal agreements made before and during the marriage.

These contracts are increasingly common, especially in second and subsequent marriages, even if the spouses are not millionaires. A martial agreement may make provisions for:

• Property Division: As demonstrated by the McCourt divorce, many courts will uphold agreements that seem horribly one-sided, at least under certain circumstances.
• Inheritance and Succession Rights: These contracts can clear up these questions in advance, which is particularly advantageous when a family business is involved.
• Spousal Support: These agreements may limit spousal support or even eliminate it altogether, in some situations.

Child support and other items that are prohibited by public policy are the only off-limits topic areas.

Challenging a Premarital Agreement

Duress is generally not a defense. In fact, even a “sign-or-else” ultimatum does not constitute duress, under most interpretations. But premarital agreements are not ironclad. They can be overturned based on:

• Unequal Bargaining Power: If one spouse had an attorney but the other did not, or there was some other inequality, the door may be open for a successful legal challenge.
• Unconscionable: It is difficult to win these challenges, because this word is not synonymous with “unequal.”
• When Made: Any deal that seems reasonable at the time will be subsequently upheld regardless of intervening circumstances. Just ask Jamie McCourt.

Most marital agreements have severability clauses, so if one part is overturned, the remainder is still valid.

A pre/post-nuptial agreement reduces the conflict level in a future divorce. They can also protect one spouse’s business from the other spouse’s business creditors if both spouses own their own businesses.  For a free consultation with an experienced family law attorney in McKinney, contact the Law Office of Bryan D. Perkins. After-hours appointments are available.