Law in the Marketplace: Prenuptials – a special kind of business contract

  • FILE - In this Feb. 1, 2019, file photo, Bill and Melinda Gates smile at each other during an interview in Kirkland, Wash. The couple announced Monday, May 3, 2021, that they are divorcing. The Microsoft co-founder and his wife, with whom he launched the world's largest charitable foundation, said they would continue to work together at The Bill & Melinda Gates Foundation. (AP Photo/Elaine Thompson, File) Elaine Thompson

For the Monitor
Published: 5/9/2021 11:30:04 AM

Bill Gates is among the most successful businesspersons in American history and certainly among the most socially committed and philanthropic. He founded Microsoft in 1975. According to Forbes, his personal fortune is now $130.5 billion. He has contributed $50 billion to global health causes and early-childhood education, and he has stated his intent to contribute to charity most of the rest of his fortune upon his death. In addition, in the world of climate change, he has just published a highly praised book entitled How to Avoid a Climate Disaster.

Bill Gates’s wife Melinda, whom he married in 1994 and with whom he has had three children, aged 18 through 25, has always been an equal partner with him, not only in his family life but also in his vast global charities.

I myself have always felt a deep personal admiration for Bill and Melinda Gates – for Bill because of his remarkable business success, and in the case of both of them, on moral grounds. I suspect that many readers of this column share this feeling.

In my April 18 column, I wrote about the six types of oral contracts that ordinarily cannot be enforced in court. One of them was contracts that involve promises of marriage. Under the laws of many states, including our own state of New Hampshire but also of the state of Washington, where the Gates live, these include prenuptial agreements.

Sadly, Bill and Melinda announced last Monday that although they have made every effort over a period of many years to preserve their marriage, their paths have diverged too much and that they have decided to divorce. In their announcement, they stated that each of them feels a need to go in a new direction, and that they feel they must do so on their own. It was reported on Monday, though not with certainty, that when they married, both signed a prenuptial agreement.

Presently, however, it appears that although they do not have a prenuptial agreement, they do have a “separation” agreement that addresses the same key issues as a formal prenuptial agreement would address – namely, how they will share their joint wealth after their divorce.

A detailed discussion of New Hampshire law governing prenuptial agreements, and, by implication, separation agreements is beyond the scope of this column. However, New Hampshire law is undoubtedly similar to Washington prenuptial and separation agreement law, and the following comments may be useful to readers who, both for personal reasons and to better understand these agreements as applicable to the Gates, may want at least a basic understanding of the relevant law and its human dimensions.

■When two people are in love and decide to get married, one could argue that if they feel a need to enforce their rights against one another through a written marriage agreement enforceable in court during their marriage and, if they become divorced, after the divorce, there is something wrong with their love right from the start. But as we all know, even among the most sincere, generous, and mature couples, divorce will always be a possibility. And if divorce becomes inevitable, their prenuptial or separation agreement will protect the spouses themselves, their children, and their extended families from potentially costly and bitter litigation. This is undoubtedly one reason why, according to anecdotal evidence, increasing numbers of young couples in New Hampshire and elsewhere are entering into such agreements in connection with their wedding.

■Indeed, as these young couples no doubt sense, far from undermining a marriage, a carefully negotiated and well-drafted prenuptial or separation agreement may often strengthen and even preserve it, since, among other benefits, it will eliminate possibly acrimonious disagreements among the spouses during their marriage about critical financial issues and even about personal ones. And perhaps even more importantly, it will constitute powerful documentation of their equality and of their continuing independence from each other except, of course, to the extent of their marriage.

■In New Hampshire and most or all other states, prenuptial agreements, and, by implication, separation agreements are legally enforceable, but only if, in the event of a dispute between the parties about the agreement, the presiding judge is convinced that both parties had an ample opportunity to review it before they signed it; that they were adequately represented in signing it; that, when signing it, both of them fully understood its terms (which can be numerous and complex); and that no circumstances have arisen since their wedding that they could not have foreseen but that has since made the agreement unenforceable.

■Indeed, in my view, no lawyer should draft such an agreement for either party to a marriage without obtaining a waiver from that party that there can be no guarantee of its enforceability.

However, I have no doubt that the Gates’s separation agreement will be enforceable. But if it is not, their divorce will be even more tragic than it already is.

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