With wedding season quickly approaching and new high-profile divorces every other day, I thought it was high time we discuss prenuptial agreements. This week, I consulted with a very prominent family law attorney in Beverly Hills to help me answer the question: Should we be afraid of prenups?
Prenuptial Agreement: n. a written contract between two people who are about to marry, setting out the terms of ownership of existing and later acquired assets, treatment of future earnings, control of the property of each, and potential division if the marriage is later dissolved or if a spouse dies.
Please keep in mind that these are general concepts and that the laws in your state could affect the answers to these questions because the laws in some states and countries are extremely different from others.
Who should get a prenup? The easiest way to answer that question is to explain who should NOT get a prenup. If you have no assets, don’t anticipate high earnings or a significant inheritance, and intend for your marriage to be a true partnership where all income and assets are split equally, then you may not need a prenup. Also, if you spend what you make, then there is nothing to discuss. However, it is important to consider that all marriages end. They end by either death or divorce. Would you rather make the decision about how your assets will be split yourselves under these circumstances or have the state decide?
What subjects should be included in a prenup? At a minimum, you want to state what rights each party has to the existing assets, including increase in value and income from premarital assets. You should also state what rights each will have to assets acquired during the marriage from earnings and/or gifts and inheritances. You may or may not want to state how to share ordinary living expenses, obligations from a prior marriage, and/or existing child support, and whether or not it will be paid from existing assets or earnings obtained during the marriage.
What else can prenups address besides money? Prenups can address non-economic issues. Examples of this would include religion for unborn children, how medical treatments will be addressed in the event of illness, where the family will live, penalties for bad conduct, etc. Frequently, however, a court will not enforce this part of the agreement if contested.
Are prenups more necessary in 2nd marriages or if there are previous children? Yes! Prenups offer a wonderful benefit to spouses with children from previous relationships by avoiding a later disagreement in court. Prenups could separate assets owned before the marriage and define how they are to be distributed in the event of an untimely death. Without a prenup, a surviving spouse could claim the assets previously owned by the deceased as “community property,” claim ownership of 50%, and most likely end up in probate court in conflict with the children from the prior relationship.
I’ll be honest...I once had an ex-boyfriend who gave me months (yes...months!) of grief over a cell phone bill. I can’t even imagine how difficult a divorce could be. I’ve always been in favor of prenups for the simple reason that breakups of any kind are usually messy and, with today’s divorce rates, it would be foolish to believe that a divorce could “never happen to me.” The most important piece of advice I learned during my conversation with the family law attorney is that it is best to have these discussions before the marriage. Both parties should consider all of the possibilities that prenups prepare for. Make a joint decision about how to handle these possibilities and then decide whether or not to get a prenup. Making these decisions while you are in love has to be more pleasant (and a whole lot less expensive) than discussing them during a divorce, but it’s still never easy.
Would you sign or demand that your spouse sign a prenup? Should assets acquired during the marriage always be split evenly? Should assets owned before marriage always remain separate? Stay tuned for Part 2 tomorrow where I will discuss POST-NUPS and how both of these agreements are nullified!