Category Archives: Prenup

A prenuptial agreement (known as a prenup) has the purpose of establishing certain assets brought into the marriage and protecting them in the event the marriage should fail or one of the partners becomes deceased. Another purpose for a prenup is the protection of an inheritance. This is very much the case in instances of second or third marriages where the welfare and future of children from prior marriages  have to be protected from subsequent divorce.

Fair Prenup

Prenups are good when they protect a party. It also establishes a route to follow for the future if the marriage ends in the death of a partner or a divorce and should avoid the need for future litigation. A prenup should have both parties represented by separate lawyers and it is vital to make sure there is a complete and full disclosure of liabilities and assets and the marriage is being entered into between two consenting adults. The agreement needs to be fair when it is signed and the enforcement should be fair as well, regardless of whether it is five years down the line or decades later. These are all primary aspects of a good and healthy prenup.

Unfair Prenup

A bad prenup often results when a party feels a great deal of pressure to sign, particularly on the eve of a wedding – and that is clearly unfair. Some agreements can be so one sided in favor of one spouse there would be no way an equitable solution could be agreed if the agreement was put into practice. Although each case is unique, some unfair features can include when both parties have to pay their own fees for legal fees during a divorce. Equal divisions of assets obtained in marriage when individual states often have different rules governing the allocation of assets, especially regarding property.  Sometimes agreements state one party will receive a set income in the case of a divorce which decades later can be wholly inadequate because of inflation and the shifting cost of living.  Agreements that in the case of a contested divorce that the “losing side” should shoulder all the attorney fees can been deemed void by a judge as fundamentally unfair. This kind of unfairness is often seen when one party is wealthier than the other and also the case when both parties are entering marriage for the first time.

Last Minute Prenup

The inherent problem with last minute prenups is the wedding is so soon, there is often not the time, or the party is not in a reasonable emotional state to negotiate the prenup in a way that is fair. It is a modern equivalent of the “shotgun wedding” scenario and often it is the female partner who is put in this situation by their fiancé who usually has far greater assets. In the U.S. it is traditional (and dictated by some religions) the family of the bride foot the cost of the wedding so there may already be a great investment in the marriage and the female partner feels as if she cannot back out and so she signs the unfair prenup despite their being a large deficit in the balance of power of the relationship. It is a very unfortunate egregious scenario that does not at all reflect well on the person trying to get the other party to agree and sign.

Advice For Fair Prenups

• In marriages where there is a great deal of net worth, institute a phasing in of sharing assets obtained before the marriage over a number of years with a guarantee of support under certain circumstances.  This is a phase-in-over time approach of wealth transfer.
• Make provisions for when things change. Remember an agreement can be reviewed once more and revised. Do not forget there is the option of a sunshine clause where after X amount of years, the agreement is no longer valid and it simply evaporates as void.
• Be fair in your negotiations and avoid being greedy. Remember, you want a successful and happy marriage. if you focus on the negative, it is more likely to lead to a divorce down the line.

Source:

Gornbein, Henry. “How To Avoid Becoming A Prenup Horror Story.” HuffPost, HuffPost, 16 Jan. 2012, https://www.huffpost.com/entry/prenuptial-agreements-the_b_1088748.

Millennials are embracing prenups like never before – but is it right for you? Older generations have forever complained their offspring do things differently and marriage is not exempt from that. Millennials are getting married later in life and a prenup is becoming more common. Once only the choice of the wealthy, Millennials are getting prenups for non-financial reasons, too, reflective of the fact many Millennials put a higher value on experiences than material possessions. Therefore, Millennial prenups often cover “intellectual property” rather than physical or financial assets.

If you are a millennial and considering a prenup, read on to find out if it may be right for you.

What’s A Prenup?

Officially called a “Prenuptial Agreement” it comprises a legal document couples obtain before tying the knot. Its purpose is to make a determination of property division should the marriage end in divorce. It also protects one spouse from the debt of the other partner. Laws regarding what can and cannot be included in the agreement as well as what happens to assets that are accumulated during the course of the marriage differ from state to state. Normally a prenup does not address items earned |during the lifetime of a marriage – this has posed issues for lawyers as millennials often want to include concepts, ideas and assets that they may obtain in the future.

Why Are Millennials Getting Prenups?

When polled by their own member organizations, attorneys claim there has been a marked increase in the total amount of millennials seeking prenuptial agreements. Indeed, prenups are up around 62 percent for all sections of the population but the greatest spike has been for millennials. One reason is millennials are more aware of the high divorce rate that hovers around 40 percent. Therefore, millennials feel it is important to enter marriage with a plan as opposed to spending large sums of money should they later divorce. Millennials are also wanting to include more than just physical property in prenups. The thought being if a partner creates something (e.g. a company), their intellectual property should be protected in a prenuptial agreement. There is even a concept that a prenup can prevent couples from sullying the reputation of the other partner should the marriage end in divorce. This is considered important for professional occupations, particularly roles with a strong exposure to social media populations.

Do I Really Need A Prenup?

Prenups can be good but they are not always needed. if a couple has large financial assets it may be wise but there are also other reasons to consider a prenup. Your credit can take a major hit in a divorce and you may have to pay alimony as well as the debts of your spouse and of course you will be required to pay child support as well as your own living expenses. Prenups are also good at avoiding potential debt traps like the other person’s student loan debt. It is a fact millennials have more student loan debt than any previous generation and a couple who has to shoulder additional debt when they marry should certainly be considering a prenup to keep those debts solely on the shoulders of the person who incurred them.

How Do I Get A Prenup

Prenups are not free but they cost a lot less than what you would pay lawyers in a subsequent divorce. Each party should have their own legal representation. Thankfully, most lawyers will assemble a prenup for a flat fee. You will have to spend time deciding on the proposed division of debts and assets you both have, and your lawyers can guide you through the rest of the process.

Conclusion

More than ever, couples are choosing prenups when they marry. A lot of stress can be saved if alimony, assets and debts are divided up prior to the marriage taking place, should the marriage end in a divorce.

Source:

“Should You Get A Prenup?” Money Under 30, https://www.moneyunder30.com/should-you-get-a-prenup.