What Is A Fair 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.