Should you have a Prenuptial Agreement?

prenup

A prenuptial agreement is a legal document signed by both parties previous to them getting married. In that states what assets they came to the marriage with and what will go to which partner should they end up divorced at some point in their future. Since the division of assets is one of the most contentious points in a divorce, a prenuptial agreement, or prenup as it is called is meant to act as a modicum of protection. Some people feel they are necessary in a social climate where 50% of marriages end up in divorce. Others believe that it is setting a wedding off on a negative tone. It may plant the seed that the marriage is doomed to fail, instead of encouraging the couple to work on the marriage and get through difficult situations, so say detractors. If you are planning to get married, should you have a prenuptial agreement? And how do you know if it is right for you? Remember that both parties have to sign the document for a prenup to go into effect (wikihow.com). So discuss the pros and cons with your partner and see if it is right for both of you.

Often when one member of a couple has a significant income or net worth, they want to protect it. If that person has children from a previous marriage, or others involved who stand to gain or lose out due to a contested divorce, a prenup may put those others at ease and help them to accept the marriage. How do you two interact with one another? Is this a marriage of deep love and commitment or one of convenience? Is this a trophy wife or husband or a partner whom you plan to spend the rest of your life with? These issues should be considered carefully. Even when the relationship is solid, many people get a prenup just in case. There is no shame in doing this. But you need to talk with your future partner to see how they feel. Do some soul searching, too. Research prenups online. If you are ready or want to find out more, do some research on attorneys in your area who handle prenuptial agreements and make an appointment. Make sure the attorney you choose is respectable and has a good reputation. Many times attorneys will give you one free session. See if you can come with your spouse-to-be and get all of your questions answered before deciding to move ahead. If you decide a prenuptial agreement is for you, stick with your decision. Don’t back out of it.

“Everyone has a plan ‘til they get punched in the mouth.” – Mike Tyson

Everyone has a plan

Expect the unexpected, be prepared, and look at each situation from multiple angles to prepare yourself for various outcomes.  All of this sounds like good advice that we’ve heard before, but of course we always want our plans to work out flawlessly.  Most people go into a marriage without a plan for divorce because the intent is to be united with this other person until the end.  When there are talks of prenuptial agreements, many find this to be “unromantic” or view it as preparing for the worst, almost as though it’s dooming the marriage to failure.

For those of us who have gone through a divorce without a plan of action for if/when the marriage would end, however, we now realize that a prenuptial agreement would have been helpful to say the least.  Learning from the failed marriage, we must also see that we cannot fully predict how the divorce proceedings will play out either.  We may not get what we want and there could be an unexpected turn of events that leaves us paralyzed as to what our next move should be.  Not that we should anticipate for the worst to happen to us, but we should know that we’re not immune to losses.  Being prepared can be your best weapon in any situation.  Getting punched in the mouth will still hurt, but you’ll already have a plan for how to get back up and continue fighting.

A Judge Can Reject A Signed Prenup

prenup rejection

As evidenced in the New York Law Journal, there are various divorce cases where a judge has rejected the conditions of a prenuptial agreement.  There are certain rules that need to be followed in order for a judge to consider a prenup valid, and the mere fact that one is signed, even without force, is not proof of validity.  A recent divorce case in Nassau County involved a prenup in which the wife would be left ‘practically destitute’ upon departing from an affluent partner grossing close to $1 million per year, resulting in the judge’s decision to reject the prenup entirely.

In this specific case, the wife was told to sign the paperwork if she wished to get married, and was given a lawyer referred by that of her future husband to review the prenup.  The lawyer assigned to her was already informed that the prenup was non-negotiable and so instructed her to sign it if she wished to wed this person.  Although she willingly signed the prenup, the judge saw that it was an unfair agreement, and so took the authority to reject it.

As per this case, it’s recommended that each party attain their own lawyer to review the prenup and to negotiate any aspects of it that seem unfair.  Each person should also be given adequate time to review the prenup before being expected to sign it.  It should not be assumed that a signed prenup is unbreakable, and so the person who has assets to protect should consider creating a prenup that is fair by ensuring that their future spouse attains their own unbiased legal counsel to also review the terms so that it cannot be rejected later if a divorce occurs.

A “Q-TIP” Trust Will Ensure Your Children Are The Final Beneficiaries Of Certain Assets

QTip Trust

Going into a second or even third marriage, you’ll want to ensure that any children from a prior marriage (if any) are still protected financially.  In this scenario, you can establish what is called a qualified terminal interest property trust or Q-TIP trust.  The income from this type of trust could still be considered marital property and therefore could be factored into alimony payments upon getting a divorce, however, your children will still be the ultimate beneficiaries of the trust.  Keep in mind that upon divorce, a court may find monies from a trust such as this one part of marital property, despite your efforts to keep it separate.  The best option is always to get a prenup, but establishing a trust or several trusts is the second best option.

People who go into a marriage wish to do so with complete faith that the marriage will stand the test of time, however, statistics show that close to half of Americans get divorced within the first 8 years of marriage.  To ensure that you are financially protected, couples should seriously consider devising a prenuptial agreement that is fair to both parties.  Often what can be devised in a prenup is more agreeable to both parties than the automatic contract one agrees to by getting married without one.