Getting a Prenup Signed
By Felicia Paik
It’s the not so fun side of deciding to get hitched. Talking assets, future inheritances, and well, what will happen if all this wedded bliss unravels. Here’s how to hash out this premarital contract and ensure that it will stand up in court.
When former Beatle Paul McCartney married Heather Mills in 2002, there was no prenuptial agreement. When the couple separated, they skirmished over a financial settlement with McCartney’s estimated $1.5 billion fortune at stake. While Mills didn’t get the more than $200 million she was seeking, she ended up with the not-so-shabby sum of $49 million.
Almost half of all marriages in America end in divorce and the dissolution of a union typically involves emotions that are the polar opposite of those happy and joyful sentiments present on the wedding day. That’s why a prenuptial agreement, a contract signed prior to marriage that outlines how finances will be divided in the event of divorce, is a financially prudent move, legal and financial experts say. “People say that prenuptial agreements are terribly unromantic,” said celebrity divorce lawyer Raoul Felder. “But, a prenuptial agreement gives people protection and the ability to know what you are entitled to. These days, prenuptial agreements are no longer just the province of the super wealthy and anyone entering into a marriage with assets to protect should consider this contract.
Broaching the subject, without getting slapped
The numbers say it all. Just half of all marriages make it to the 15-year mark. It seems only prudent for people to sign prenuptial agreements, but bringing up that touchy subject may in fact be the biggest stumbling block to getting the agreement signed. A prenuptial agreement calibrates the romantic relationship into dollars and cents. Depending on
your point of view, a prenuptial agreement could be considered offensive or pragmatic. Some people would say they would never sign a prenuptial agreement because they don’t plan on getting divorced and others would say since you don’t plan on getting divorced, you should just sign the agreement because it’ll never be enforced any way. So how do you start the discussion with your significant other? With kid gloves, taking care to bring it up at the appropriate time, preferably as part of a wider discussion on finances. If you were smart, you floated the idea before the big proposal. And no surprise here, be prepared to negotiate.
To prenup or not to prenup
The big question, of course, is do you even need a prenup? Particular financial circumstances can make a prenup even more of a must. Are you much wealthier than your future spouse? Do you have assets like a home, stock or retirement funds? Do you own all or part of a business? Are you set to receive an inheritance? Or you expect a financial windfall because your career is taking off? Children or grandchildren from a previous marriage should also make signing a prenup a priority.
To prenup or not to prenup
The big question, of course, is do you even need a prenup? Particular financial circumstances can make a prenup even more of a must. Are you much wealthier than your future spouse? Do you have assets like a home, stock or retirement funds? Do you own all or part of a business? Are you set to receive an inheritance? Or you expect a financial windfall because your career is taking off? Children or grandchildren from a previous marriage should also make signing a prenup a priority.
Don’t write it on the back of a napkin
In addition to laying out the premarital assets of both bride and groom, a prenuptial agreement may also dictate alimony or settlement payments in the event of divorce. Nine states in the country—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin–are considered community property states where the law states that assets accumulated during a marriage must be divided equally. The other states are called equitable property states where assets are supposed to be divided fairly as deemed by a judge. However, in all states, if a prenuptial agreement has been signed, the contract will supersede the law with the exception of custody and child support issues. ”This is what the prenuptial agreement is all about – to predetermine the outcome in the event of divorce” said Randall Kessler, an Atlanta family law attorney and the former chair of the American Bar Association’s Family Courts Committee.
For instance, you can outline an alimony payment schedule that gives a wife (or husband) $1 million after a year of marriage, $5 million after five years, and so forth. Some attorneys have also seen clauses where amounts for a divorce settlement is tied to whether a spouse gains too much weight or if a spouse uses profanity through the course of a marriage. However, stipulations about children from the marriage—in relation to custody and access—are not allowed in all U.S. states. Children are not