012 – Lock up Your Pre-nup
I had a client tell me one day that I should make sure my kids have a prenup in place when they get married. He was upset as we sat in his divorce mediation and the negotiations continued to center around the subject of alimony and his wife’s ever increasing requests for support.
Getting married is a fun, romantic, and exciting time. Discussing a prenup with your future spouse is the fast way to quench the romantic spirit. So why should you consider a prenuptial agreement?
With people getting older before entering into marriages, they are bringing in greater debt, greater income, and greater assets into their first marriages.
Understanding what you are bringing into the marriage and how it will be classified will help you determine whether you should pursue a prenup. Laws vary from state to state, so understanding your state’s definition will be key. If you are bringing significant assets into the marriage, your state law may define these as non-marital; however, state laws also allow for previously non-marital property to become transformed into marital property or sometimes simple appreciation in value could be considered marital.
What are my recommendations for executing this agreement? This is where the rubber meets the road. If you mess this part up you can just about run your prenup through the shredder because the family court judge will not enforce it. The first directive is to go overboard in providing information to one another. Make sure that each spouse has provided the other with full, complete and accurate information about his or her finances. That means education, work history, income history, current income, all of your assets, all of your debts, interest you own in businesses, etc. There should be nothing left uncovered.
In general, this conversation sucks to have. No one is looking forward to this. But, if you are certain that a prenup is necessary, then have the conversation and start the process early on in your engagement. Nothing will ruin your wedding day like sending over a prenup for your spouse to review the night before the big day. Even worse, if your future spouse goes through with the wedding following this slick maneuver, you may still lose out in the event of divorce because of your timing – especially if your spouse felt there was no other option except to sign.
Both spouses should have independent legal counsel. Some states may not require this, but many do. The best course of action will be for both spouses to receive legal counsel before executing this prenuptial agreement. This adds an extra layer of security to the deal and makes it much more difficult for either spouse to later say they were coerced or did not understand what the agreement meant. Also, pay special attention to the word before legal counsel – “independent”. Each spouse should choose their own lawyer. The spouse’s lawyer should not be someone in the same firm as the drafting lawyer or even someone referred by the drafting lawyer.
Remove the emotion. Finances and emotions seem to go hand-in-hand…especially in marriages. Disagreements related to finances have been cited as a key source of marital strife leading to divorce. When you are planning a wedding you are overwhelmed with emotion, love, and feelings of romance. You need to separate these pre-marital financial decisions from the emotional issues. The discussion of a prenup doesn’t mean your spouse doesn’t care about you or doesn’t want to take care of you in the future.
If you are engaged to be married and feel like a prenup is needed in your case you can head on over to LegalZoom at 6minutelegal.com/legalzoomprenup and to get started with the process of engaging with a lawyer to assist you in drafting a prenuptial agreement. If you purchase a prenup through this link, you will help support this free podcast because I will earn an affiliate commission. The great thing about prenups through LegalZoom is that you will be assisted in the preparation by a lawyer but will be charged a flat fee – meaning you know exactly what the cost for this preparation is before you sign up and you don’t have to worry about those tricky billable hours.