A Modest Prediction

My belief is that one name is currently finding itself in more law school exams than any other name this fall: Tiger Woods. The combination of his life falling apart at the end of November - the prime time when law school professors actually have to write the fall semester exams, the fact that his name is everywhere (even more than usual), and the fact that the details are sordid and lend themselves easily to all kinds of legal hypotheticals, makes it a seeming lock that plenty of students will be analyzing questions involving Tiger.

I have an exam on Monday for Community Property, in which I am about 75 percent sure there will be a Tiger Woods question. While Florida is not a community property state, most states that do not follow community property have created statutory structures to operate similarly at divorce. I presume my question will simply transfer Mr. Woods to Arizona, include a few cracks about bad driving and skanks and go from there.

The basic community property law is this: whatever money Woods made during the period when he was married (which he still is - I don't mean to bury his marriage before it is over, although he has been doing a pretty good job apparently) is community property, which must be split in half. Half goes to Ms. Nordegren and half goes to Mr. Woods. During his marriage I believe - although I have not verified - that Mr. Woods made roughly eleventy bajillion dollars. Ms. Nordegren, thus, would be entitled to half of that, or fivety point five bajillion dollars. Her half is not reimbursement or spousal support but simply an ownership interest. In a community property jurisdiction, marriage is a partnership in which the money that is earned is earned by the community, not its component members.

Money or assets that are received during marriage through gift or inheritance are not community property, but just about everything else is. For the Woodses, the golf prize money, the endorsements, the video game royalties, etc. - it is all community property.

In Arizona, community property must be split "equitably, though not necessarily in kind." Courts have generally read this to mean that not all property needs to be divided perfectly in half, but the in the aggregate the property distribution should be 50-50. A court cannot deviate from this structure, no matter the actions of the parties. And by statute, a court must make its property distribution "without regard to marital misconduct." While Mr. Woods might look to that particular language as a lifesaver, courts have often chose to make "equitable" distributions in ways that appear to punish those who have been less than perfect spouses. Mr. Woods likely would fear going before a judge in a divorce action - even if he had lots of statutes on his side.

But you protest that this is all irrelevant: Mr. Woods opted out of the community property system - and any similar statutory system - through a prenuptial agreement. While community property is a default system in community property states, couples are able to avoid the system by agreeing to alternate property schemes. The basic prenuptial agreement specifies that a couple will not share any community property except for any property that they choose to be jointly titled, such as a home or vehicle. With such an agreement, the money that each spouse makes remains their separate property, which will not be split at divorce. This likely would mean that Woods could keep his eleventy bajillion dollars, and Ms. Nordegren would get much, much less. (Obviously, the prenuptial agreement probably takes quite good care of Ms. Nordegren - they had to get her to sign it somehow - but I explain this merely to show the general outline of the law.)

What is most interesting about the prenuptial agreements issue is that in many states a prenuptial agreement is MORE likely to be enforced than a regular contract. That seems ridiculous when one considers all of the stress and, for lack of a better word, drama that often goes into the signing of such a document. However, many states have adopted the Uniform Premarital Agreements Act, which only invalidates a prenuptial agreement due to procedural unconscionability or when certain financial disclosures are not made. The UPAA entirely eschews analysis of substantive unconscionability (an impressive legal term that basically looks at whether something is fair or not) and instead will enforce prenuptial agreements as long as certain requirements were met. There is often some duress in the signing of a prenuptial agreement (such as, sign this or I'll call off the wedding) and there is often a large sophistication or power differential among the parties (hence the need for such an agreement at all). I would assume - although I do not know - that Ms. Nordegren was represented by counsel in the negotiations of a prenuptial agreement, so it is likely that the agreement is fair. But nonetheless, many prenuptial agreements are not fair, and yet courts, constrained by the law, enforce them.

Another point to make clear about prenuptial agreements is that it is not the person who has a lot of money that has all the power, but it is rather the person who has the capacity to make a lot of money that has all the power. All of the money that Mr. Woods already had was not going to become Ms. Nordegren's money just because they got married. That was his separate property money for him to do with as he liked. But it was clear that Mr. Woods was likely to make a lot of money during marriage, and it was this money that would become community property to which each spouse would have an undivided one-half interest.

If there is no prenuptial agreement or it is unenforceable, Mr. Woods will be subject to the divorce law of Florida. While I am not familiar with it specifically, I assume it is similar in structure to what has been outlined above. Many of the super-rich live in Florida to avoid income tax, but the divorce law is also something about which they should be knowledgeable. The money that they save in taxes can easily go out the door at divorce if their prenuptial agreement fails and their ex leave with half.

Additionally, there are interesting community property questions as to the home that the family lived in - such as could Ms. Nordegren receive reimbursement for community property payments made on the mortgage (if there was one?) and could Ms. Nordegren even have an ownership interest in the home due to community property money being used to pay the mortgage. Additionally, does Ms. Nordegren have an interest in trophies and other non-monetary winnings that could be considered ownership? The more likely result would be for Ms. Nordegren to receive a somewhat larger portion of the community property as an offset for Mr. Woods being allowed to keep those trophies.

The final "interesting" question (I realize no one else finds this interesting, but it is cathartic for me) is the matter of negotiating a settlement. Every settlement is negotiated "in the shadow of the law," which means that counsel must first objectively analyze the client's position and what is likely to happen at trial. Mr. Woods' reputation has already taken such a beating that it is possible he would be willing to go to trial, but it seems more likely that Ms. Nordegren could get seemingly anything she wanted in order for Mr. Woods to avoid a trial and further embarrassment. Even if Ms. Nordegren is "only" entitled to fivety point five bajillion dollars, I think she could easily ask for eight-ty point six bajillion dollars and find a willing taker.

In the end, while community property would seem to be the best candidate for Tiger Woods law school exam questions this fall, there is also the possibility of family law, criminal procedure questions, criminal law questions, negotiation, and others. It should be an exciting exam period!

Community property questions are often the domain of the super-rich, and I feel the Tiger Woods saga - however it turns out - may be fodder for law school questions for years to come. I'll let you know whether I get to write about it on Monday.

(None of the above was legal advice. This blog does not dispense legal advice. You should not look to this blog for legal advice. Looking to this blog for legal advice is prima facie evidence of lack of capacity.)