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May 21, 2015

WISCONSIN PRENUPTIAL AGREEMENTS: PROVISIONS REGARDING SPOUSAL SUPPORT (MAINTENANCE, ALIMONY) AT DIVORCE.

Last year, in the context of divorce, we blogged about enforcement of and challenges to the property division provisions of a marital property agreement, or prenup. Under Wisconsin law, courts must presume that these provisions are valid and enforceable unless the prenup is shown to be inequitable. Caselaw, beginning with Button v. Button, has interpreted the meaning of "inequitable" under these circumstances.

But the analysis is different for prenup provisions regarding maintenance (alimony) at divorce. While property division provisions are governed by Wis. Stat. § 767.61, maintenance provisions are governed by Wis. Stat. § 767.56(1c)(h). That statute provides that an agreement "concerning any arrangement for the financial support of the parties" is a factor the trial court must consider in making a maintenance decision. A prenup thus is just one factor regarding maintenance to be considered by the trial court, along with other factors such as the length of the marriage, the parties' earning capacity, etc. The factors are listed at Wis. Stat. § 767.56(1c), along with the catch-all "such other factors as the court may in each individual case determine to be relevant."

The difference is significant. Regarding property division, the burden is on the spouse who is challenging the prenup to show that it is inequitable; if the spouse cannot make such a showing, the inquiry ends and the terms of the prenup are enforced. Regarding maintenance, there is no presumption, no shifting of the burden between spouses; rather, the trial court weighs the evidence and exercises its discretion in determining maintenance. The focus is not on the prenup itself, but on the prenup in the context of the statutory maintenance factors and the twin maintenance objectives, support and fairness. See, e.g., Hefty v. Hefty.

September 19, 2012

CONCEALING INCOME

About once a year here at Wessel, Lehker & Fumelle we encounter an opposing party who is intent on hiding income. A party's income, of course, is highly relevant information for purposes of setting maintenance (alimony), establishing child support, or changing the amount of maintenance or child support. Some support payers are working on perfecting the art of hiding or disguising income or assets, treating the support recipient much like they probably treat the IRS.

The signs are often fairly obvious. A party may report an income that barely covers expenses, yet take lavish vacations or acquire expensive toys. Or a party, often self-employed, may report an income that is substantially lower than it was before the parties split. Sometimes a party reports the former partner's penchant for half-truths and misrepresentation. A party's exhaustive or creative opposition to reasonable financial disclosure may signal interesting records.

Fortunately, the statutes authorizing access to information are broad in Wisconsin. Wisconsin Statutes Chapter 804 authorizes discovery of all "relevant" information, whether or not it is actually admissible at trial. And courts have little tolerance for parties who play loose with the facts. Once we can show some manipulation or lack of candor, courts are often willing to authorize a deeper investigation or impute income. We have also found that when the opposing party realizes that we are not simply going to accept the represented income as the whole truth, a reasonable settlement suddenly becomes more attractive.

Conversely, we sometimes have clients or potential clients who try to enlist us in their efforts to hide income or assets. We always push for full, accurate disclosure - not only because it's the right thing to do, but also because any other course exposes a party to significant risk. In Marriage of Lellman, for example, the trial court estimated Lellman's net income at $100,000, rather than the $11,000 Lellman claimed. The court of appeals affirmed: "Because Lellman did not produce the necessary financial records and because he intentionally misrepresented both his income and expenses, the trial court was left to determine a reasonable figure attributable to Lellman as a net annual income. . . . [N]ot only may Lellman's conduct be punishable as contempt or perjury, but [] it was Lellman's misconduct that placed the court in the position of being required to make reasonable approximations. Lellman cannot be heard to complain that this approximation was excessive when the precise information available to make that determination was in his exclusive control." Lellman also was ordered to pay his former wife's attorney fees.

If necessary, we will withdraw from a case rather than ignore a client's unethical behavior.