Prenuptial agreement

getty

What is a Prenuptial Agreement:

A prenuptial agreement is a contract between you and your future spouse that is entered into before marriage. It is a legally binding contract if you marry. It contains disclosures of all property and money you own and owe at the time of the prenuptial agreement. It also sets forth each of your rights and responsibilities as to how money and property will be divided and whether spousal support will be paid to one of the parties by the other. Issues such as counsel fees and how they will be paid can also be included. Under most state law, child custody and child support for any unborn children cannot be included in a prenuptial agreement.

What is the benefit of a prenuptial agreement?

A prenuptial agreement can set forth property that you had prior to the marriage and can keep it separate throughout the marriage as well as any increase in its value or any change in its composition. An example being using it to purchase another property and maintaining that property as separate. Parties can agree to waive items such as spousal support or to keep their income as separate property. It can also address inheritances and family businesses that may need protection. It can protect generational wealth.

Parties can choose where and under what state’s laws a prenuptial agreement is to be interpreted in the event of a divorce. If parties live in California and draft the prenuptial agreement there but are moving to New York, they can elect that New York’s equitable distribution laws apply. Parties living in California who want to continue the community property laws in that state can determine that California law will apply even if they move to New York. Couples in foreign jurisdictions can elect that the law of where they will live will control the interpretation of the prenuptial agreement.

Prenuptial agreements are based on state law. By example, California requires a strict 7 day waiting period before the presentation of the final agreement and the signing of it. New York requires that agreements must be in writing, signed and notarized as a deed of property and that the agreement was not unconscionable at the time of signing. Florida requires full and fair financial disclosure.

There is a Uniform Premarital Agreement Act (“UPAA”), but it is not adopted in every state. Twenty-eight (28) States and the District of Columbia have adopted the UPAA. Twenty-two (22) states have not adopted the UPAA, including New York. All fifty (50) states do recognize prenuptial agreements.

The Hype About Prenuptial Agreements:

Google “prenuptial agreement” and numerous law firms and entities will appear touting the benefits of prenuptial agreements and their role in crafting them, from “Do It Yourself” legal websites to videos of lawyers explaining them to law firms available to draft them.

Other websites address the pros and cons of prenups.

There are pros but there are also cons.

Why I really dislike Prenups

Couples find it harder to discuss money than they do sex. Many couples have never had a discussion about money. They have no idea what their future spouse has in assets, owes in debt or earns annually. The idea of raising the topic is uncomfortable and not at all romantic pre marriage. What couples don’t recognize is the role that money will play in every aspect of their marriage and its capacity to doom their intimate relationship.

Many parties who want a prenuptial agreement dislike paying to negotiate a prenuptial agreement and expect that it is a pro forma document that every attorney can produce from their computer.

When there is an imbalance between couples in age or career experience there is also likely to be an inherent unfairness in the prenuptial agreement. The monied party wants the prenuptial agreement to protect them. They don’t want their future spouse, the younger or less advanced career wise party, to get much of anything. When there is a financial imbalance, and an age imbalance, the older more financially secure party wants their younger spouse to travel with them, enjoy the fruits of their success until divorce and then the younger spouse should return to their pre marriage life with nothing-like Cinderella and the pumpkin coach. This scenario plays out too often.

Lawyers often make referrals to other lawyers who won’t challenge the prenuptial agreement they drafted. The lawyer to whom a party is referred is expected to rubber stamp the draft received for a flat fee paid by the monied spouse. A proper prenuptial agreement involves negotiation and meaningful representation.

If the prenuptial agreement is a blueprint for a marriage, it can tell a future spouse who they are marrying and what that spouse values. Do they want an economic partnership or are they accepting living together separately? Do they want to be part of a business in which the CEO will determine their entitlements? I ask clients: do you see how he/she values you? Do you want a marriage in which everything your spouse earns is theirs unless it is titled to you? What about artwork? Furniture? Household items? All these belong to the person who paid for them with their separate income. Is this a marriage or an arrangement with benefits?

I ask them, can they really tell at age 25 what their lives will be like financially in 20 years? If they waived spousal support shouldn’t that be a clue to the lesser earner that they best be using their years married to get an education, find a lucrative career, and start working? Even seeming innocuous clauses in a prenuptial agreement can be unfair. If one party has an extremely wealthy family who will fund their divorce, clauses such as who will pay the legal fees in the event of a challenge to the prenup create an imbalance. The lesser monied party will have to avoid any challenge because they cannot afford to lose whereas the other party can litigate indefinitely, win or lose to bankrupt the other.

What should you do?

First check the laws of your state as to prenuptial agreements. Secondly, select an attorney of your own choosing who works for you. Expect the attorney to negotiate on your behalf. Do not pay a flat fee. If you pay a flat fee, you are not getting an agreement crafted to suit you and your spouse. Talk to your spouse. In several prenuptial negotiations when I explained to my client what their future spouse wanted in the draft prenuptial agreement I received, when they went back and explained what the prenuptial agreement actually said, the spouse instructed their attorney to change it as it is not at all what they wanted.

Ask your attorney what would be the result if there were no prenuptial agreement and the parties divorce.

If the prenuptial agreement is non-negotiable as written, rethink the marriage.