Prenup: Don't Get Married Without One
Some people flip immediately to the obituaries in the morning paper, my wife, on the other hand, goes right to the wedding announcements. This time of the year, the paper is loaded with announcements of couples exchanging vows at the First Church of Holy Matrimony.
Instead of describing the wedding dress, the rubbery chicken served at the reception and what all inclusive island honeymoon they went on, I wish the wedding announcement would proudly declare that Timmy & Susie entered into their marriage with not only a marriage certificate from the state, but a signed prenuptial agreement. After all (no matter how unromantic this may sound), a marriage is a contract between two people. Any contract should be written down and signed so there isn't any confusion. This is exactly what a prenuptial (or postnuptial) agreement does.
Prenuptial (or prenup, antenuptial, premarital) agreements aren't only for rich people, they are for everybody. If you have children already and are entering a second marriage, a prenup can define what premarital assets should be left to your children when you die. Otherwise, the surviving spouse can end up with most of the estate and leave your kids out in the cold.
No kids? Doesn't matter. How well do you know your future spouse's financial background and debt (credit card, student loans, etc.)? Did you recently inherit some money from a relative? Do you own your own business? Prenups will prevent you from "absorbing" the debt of your partner, spell out how the assets should be divided in the event of a divorce and can even decide in advance on whether alimony will be paid. If you don't have a prenup than the courts of your state get to decide who owns what during the court proceedings.
Under the law (in the absence of a prenup stating otherwise), a spouse usually has the right to:
- share ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce or at death.
- incur debts during marriage that the other spouse may have to pay for
- share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.
Now that we know why we should get a prenup, below are some tips on how to get started:
- Start early. The best thing to do is to discuss prenups before you even need one. If you are getting serious about someone, talk it over one night during dinner. Relationships are about communication. I hope anybody would share their thoughts (and know their partners financial history and habits) before entering into the sacred bond of marriage.
- If you haven't talked about it already, blame your accountant, lawyer or a news story. Just make sure you do it early in the engagement (or before).
- Include only items related to assets and liabilities. Everything else is nonsense and unenforceable by the courts. This includes cliff and sunset provisions. Cliff provisions state if the marriage only lasts a short time that the one spouse will get far less than if the marriage lasts a long time. On the flip side, the sunset provision nullifies the prenup (or postnup) if the marriage lasts a long time. Don't include either of these or any other stupid clauses not related to material property.
- Contact an attorney. Lawyers are going to cost a lot less to draw up a prenuptial than both of you getting a divorce attorney and battling it out at the end. Just make sure you are both present and are satisfied with the lawyer and the agreement. Definitely discuss what your thoughts are before going to the office so neither person feels "blind sided" in front of the attorney. Also, make sure the attorney isn't your college roommate or best fried. Your spouse may feel like they are being bamboozled. Instead, use a neutral party.
Still don't feel like you need a pre or postnup? If you are absolutely against it, here are some things you can do:
- Put pre-marital assets in a trust. This may provide some protection against divorce or probate proceedings. Just make sure to tell your future spouse that you have a trust.
- Keep a separate savings account and DO NOT TOUCH IT. If you inherited money, sold a business or what not, create a separate savings account before you get married and don't do anything to it. If a divorce is inevitable, you should be able to prove to the courts that this account was a premarital asset.
Nobody likes talking about prenups and divorces (especially when you aren't even married yet), but they are a reality in today's world. You and your spouse shouldn't feel threatened by discussing these topics and it may even help your relationship in the long run. One of the best things my wife and I did before our marriage was go to a class sponsored by our local church that may each one of us answer questions on all kinds of topics. We then sat together and went over our individual answers together and discussed those topics where we had differences. I learned so much about my wife in those 2 hours. Hopefully by getting a prenuptial, you too will open up dialogue about the sensitive issue of money.
Additional Resources on Prenups:
