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Edgar Degas, Sky Study (detail)
You are about to get married – fairly soon. Your relationship has come to the point where you and your partner wish to make the ultimate commitment – marriage – a lifelong commitment to each other, of fidelity, family, and financial loyalty.
You’ve set a date, and are very excited about the future. You have heard about prenuptial agreements, and may have even heard that they are a necessary prerequisite for a marriage. Should you consider having one? What are the pros and cons, and how will it affect your marital enterprise?
A prenuptial agreement (also called a premarital agreement or an antenuptial agreement) is a written agreement that is entered into and signed by both of you before you marry. It sets forth the terms and provisions that you and your spouse will need to comply with during your entire marriage – whether your marriage ends in divorce or with the death of one of you. A prenuptial agreement incorporates divorce provisions, and most also include death provisions. In essence, you are doing financial planning for your marriage, and also estate planning for the future.
Prenuptial agreements can be very helpful when entering into a marriage, or can be highly destructive and harmful. They need to be handled with care! It is important to be mindful of the health of a marriage when you begin and as you define the terms of the prenup.
A solid marriage is based on fairness, fidelity, and love – of course. When you begin the process of negotiating a prenup, it may be the first time you may have had conflict with your future spouse. And sometimes that conflict is quite corrosive and can hurt your relationship. That’s why the choice of attorneys to guide you through the process is crucial.
Starting the discussion by engaging a neutral mediator to facilitate and assist the discussion of what the terms of the prenuptial agreement might be is often an excellent way to start the process.
Your attorney and financial advisors may encourage you to keep as much control of your income and both current and future assets as possible. The terms that you may be advised to include in you prenup may be less generous than what state law would provide if you did not have a prenup. As a result, they may take away marital rights your future spouse would have under state law. Case studies show that a future spouse can be gravely hurt by knowing that you have withdrawn benefits that would have otherwise accrued to him or her. If your parents are encouraging you to have a prenup with restrictive terms, you are now between a rock and a hard place, between your love for your future spouse, and the love for your parents.
On the other hand, prenups sometimes can create great peace for a couple who is marrying, and also peace in the extended family. By making some decisions at the outset, such as benefiting children of a prior marriage, avoiding litigation, having a financial plan that works for your particular situation, prenups can provide great benefits and reduce stress on your marriage.
There are a number of good reasons to consider having a prenup. Here are some examples:
One of the benefits of prenups is that you and your future spouse can, together, create a financial plan for your marriage. The plan may deviate from what state laws say about your rights and obligations that arise from marriage, divorce, and the death of a spouse. Prenups have the power to change the way in which these laws are applied. Therefore, entering into a prenup needs to be carefully thought through. Information on what your state law rights are will be provided by your lawyer, and that way you will know what state law rights you are deciding to change or waive. A prenup can also has to power to enhance your rights under state laws. Many prenups do both – they adjust state rights by limiting some, but adding others, to make for a personalized template for the marital plan you wish to adopt for your particular situation.
A prenup can greatly reduce or eliminate protracted and costly legal disputes in the event of divorce. It can include a robust alternative dispute resolution (ADR) provision. These require mediation, collaborative divorce and/or arbitration if the marriage is ending in divorce instead of litigation. These provisions have the power to substantially reducing the possibility of a litigated divorce. This can offer a great deal of security to people entering marriage, knowing there is a non-litigious way out.
Most prenups include a template for estate planning in favor of the other spouse should the marriage end due to the death of one of the spouses. In situations of second marriage, the prenup can include the requirement of entering into sophisticated estate planning techniques that can help support your spouse after your death (if needed), while also providing benefits to your children from your first marriage. This type of estate planning can include credit shelter trusts and QTIP estate planning, as well as lifetime giving to the children of your prior marriage.
Because formulating a prenup involves sensitive negotiations and the possibility of hurting someone you love, it is often best to consider mediation as the first step.
Prenup negotiations can be very distressing. They can sometimes cause an end to your relationship before you marry, and if you marry, the terms of a prenup could result in underlying detrimental harm to your marriage. The harm may increase gradually as the marriage grows longer. Therefore, the agreement should be fair (to both parties), with all foreseeable future contingencies taken into account insofar as possible. An excellent way to begin the process is by engaging an experienced prenuptial agreement mediator, who should be an attorney conversant with estate planning, business law, and divorce law.
A prenup is probably one of the most important contracts you’ll ever sign, both on a personal level as well as on a monetary level. It will affect your marriage, and as you work through it, you need to think about the following question, “What’s more important, my money or the health of my marriage?” When going through the process of negotiating one or mediating the terms of a prenup, these are the considerations that should be in the forefront.
A prenup needs to be fair to both of you. When you sign one, you should both feel good about it. After all, you are going to get married and wish to spend the rest of your lives together.
Prenups involve a sensitive balancing of interests. It’s not the type of contact that you should create by using an “off-the-shelf” template on a website service creating one using an online questionnaire. There are important nuances applicable to your situation that will likely not be reflected in the resulting prenup using these methods. Prenups are very important. They should be done with great care and individualized professional assistance. Yes, they are expensive – you will be paying an attorney’s hourly rate, and each of you will need a separate attorney. But the very fact that you are entering into a prenup proves that you know that there is money at stake, and of course, the health of your marriage. It’s not the type of contract that will ultimately benefit you and your spouse if you decide on a cut-rate approach.
Laurie Israel began her practice of law as a tax lawyer over 35 years ago. She is admitted to the bar in the Commonwealth of Massachusetts, and is also admitted to practice in Federal courts, including the Supreme Court of the United States. She is a Martindale-Hubbell AV Preeminent Attorney®.
Over the years, her practice of estate planning and divorce led her to an interest and concentration in prenuptial agreements. She has become one of the preeminent national experts on prenuptial agreements, and has been a presenter to conferences on the topic of prenuptial agreements and mediating prenuptial agreements nationwide.
Laurie has written a comprehensive book on prenups, “The Generous Prenup: How to Support Your Marriage and Avoid the Pitfalls” (Amazon). This book was written with the laperson in mind, but is also used by attorneys and mediators as a comprehensive and fair-minded guide to this often thorny topic.
Laurie now confines her practice to prenuptial and postnuptial agreements. She helps people by mediating and consulting about prenups all over the country, as well as representing clients in Massachusetts.
To contact Laurie Israel, email her at laurie@laurieisrael.com, or use the contact page.