Prenup

Do you need a prenuptial agreement?

While prenuptial agreements aren’t for everyone, they are an absolute necessity for some people.  I cannot tell you how often I have someone sitting in my office surmising “I wish we had signed a prenup.”

As you may or may not know, prenuptial or antenuptial agreements, colloquially referred to as prenups, are generally contracts entered by parties prior to their marriage (or civil union in some states).  The substance of prenuptial agreements can vary, but typically they address the divorce issues of property division, property rights, liabilities, debts, and alimony.  A properly drafted prenuptial agreement should address the commingling of separate and joint property.  (Note, prenuptial agreements cannot address custody and child support, because the best interests of the children controls at the time of divorce.)

But how do you know if you need a prenup?  While I encourage you to discuss this question in confidence with a lawyer trained in this intricate area of family law, I think the following checklist of questions will help guide you in determining if you should have that discussion with an attorney.  If you or your future spouse answers “yes” to any of the following, a prenup might be appropriate for you:

– Do either of you consider yourself high net worth individuals?
– Do either of you have significant stock holdings, stock options, profit sharing, bonds, other investments, or cash?
-Do either of you own any real estate (including investment / rental property)?
-Are either of you a business owner?
-Do either of you currently earn more than $100,000.00 per year?
-Is there a disparate difference between your income / assets and those of your future spouse?
-Do you want your estate (or a part of it) to go to your children (and/or children of a former marriage) instead of your spouse?
-Do either of you have professional licenses or degrees?
-Do either of you have significant family wealth or expected future inheritance?

While this checklist is not intended as an all-inclusive list, it is one that should at least start the conversation with yourself (and perhaps your future spouse), about whether a prenup is appropriate.  Again, I encourage you to speak with an attorney who specializes in this area of law if it is something that you are considering or are on the fence as to whether or not a prenup is right for you.


Prenups are not romantic, especially for the Prince and Princess

There is no question that a Prenuptial Agreement is unromantic (although I have heard of a man getting down on one knee to offer a prenup to his fiance). Whatever the reason a prenup may be desired (a bad first marriage and expensive first divorce, for instance), asking your intended to sign a prenuptial agreement is very unromantic. But then again, many things about marriage are unromantic. The decisions about the wedding, for instance, are often a struggle between the desire for the most beautiful, exotic wedding in the world versus the finances available. Or whether to even have a big wedding and invite everyone, or save the money for a first marital home? Even the question of who to invite to the wedding can be very unromantic and often the cause for dissention. Should a relative who has been unfriendly to the fiance’ be invited? Do step-parents walk down the aisle? So the issue of whether or not to sign a prenuptial agreement is not the only practical question an engaged couple faces. But it may be the most troubling. After all, isn’t the request to sign a prenuptial agreement bascially a nice way of saying I don’t trust you one hundred percent? Or at least, maybe it is a way of saying I don’t trust me, or us, one hundred percent. Either way it casts doubt on a couple’s certain belief that their marriage will last forever.

But many, about half of all marriages don’t last forever. And what really should be avoided is a contested divorce. And that is the one true potential benefit of a prenuptial agreement. It can avoid, or at least reduce litigation and the related costs.

So the issue of whether or not to execute a prenuptial agreement is a balance bewteen practicaity and romance. And for a couple being looked upon these days as the epitomy of romance, the Prince William and his bride, Kate, the Duke and Duchess of Cambridge, it is understandable why apparently no prenuptial agreemen was signed (click here for press coverage of that issue). It is understandable why they may have opted for romance, but even so, it was a required consideration, and likely that the question at least caused the Prince to consider it. There is nothing wrong with weighing options, even if only for a millisecond, especially for a future leader (at least a future figurehead leader) of his country. But for a fairytell wedding, it seems a prenuptial agreement just would not have fit the storyline. And they are not the only ones to feel that way. These questions and emotions are not unique to British Royalty. In my practice I have seen this exact dilemma often, and can never predict whether a prenuptial agreement will actually be signed. But the process is intriguing and one of the most human endeavors I have the opportunity to witness from time to time.


Divorce Insurance? Why not a prenup?

I was recently asked to comment for CNN (click here to see the video clip of my appearance on “Newsroom” with Don Lemon) about a new fad: Divorce Insurance. My first reaction, as I told Anchor Don Lemon, is that the best insurance against divorce is not getting married. Of course that was said “tongue in cheek”, but really, if you plan to get married and want to pay, monthly, for divorce insurance, it seems very strange if not counterproductive to the goal of a long-lasting marriage. Let’s explain it this way. If a couple, or even just one spouse is considering a divorce, AND they know the expenses of a divorce are already paid for by insurance, isn’t that just one more thing that facilitates them moving forward with divorce? It is almost like saying “hey, we paid the insurance, let’s collect on it”.

Prenuptial and postnuptial agreements can predetermine division of assets and alimony. Once those things are decided, only issues related to children remain. And how can you predict the cost of issues relating to children. There are so many variations on parenting time, decision making, travel expenses, etc. How can we insure against all such costs?

Yes, divorce insurance sounds like a nice, safe bet. Why not limit your exposure? But when you start to think about the concept, it unravels. For instance, if I want to be sure I have the best divorce lawyer, is there any guarantee that the best lawyer will accept my insurance company (since insurance companies typically pay reduced rates to lawyers)? And what about a wealthy spouse who can afford a good lawyer and then, when the other spouse says “well, I need a good lawyer too”, the court’s reply may be “You have insurance so use that”?

I am all about prevention, but smart, effective prevention. To me, that is a prenuptial agreement. A prenuptial, or post nuptial agreement forces a party to think about all of the possibilities specifically. It is unclear to me how divorce insurance can address evrything, but if it makes someone more comfortable getting married, then perhaps it is not that bad. But for the best protection, I would suggest a consultation regarding a prenuptial agreement (which of course must be prepared and reviewed by an attorney in the proper jurisdiction, and I am certainly offering advice since prebuptial agreement laws vary from state to state). And besides, isn’t it nice flying without a safety net sometimes? Yes, I am a divorce lawyer saying that. Perhaps the thrill of a good marriage is that each spouse is voluntarily continuing to commit without fear of consequence. But if that thrill has been spoiled once by a bad divorce, then perhaps a prenup is right for round two.