Prenuptial Agreements: They’re Not Just for Star Athletes and Real Estate Moguls Anymore
According to a recent poll conducted by the American Academy of Matrimonial Lawyers, 80 percent of divorce attorneys have seen an increase in prenuptial agreements over the past five years. In addition, 65 percent of the lawyers surveyed answered that prenuptial agreements are most often sought out by those in the age range of 40 to 60 years old.
That shouldn’t come as much of a surprise, especially when you stop to consider that, according to the U.S. Census Bureau, about half of all first marriages among people under 45 end in divorce, which in turn leads to increased numbers of second marriages among those 45 and older.
And among those second marriages, with more assets to protect — let’s not forget that the United States is currently undergoing the greatest intergenerational transfer of wealth in history — prenuptial agreements suddenly begin to look less like romance-killers and more like sound financial planning.
“I think by the next generation, prenups are going to be standard,” said Arlene Dubin, a partner with the law firm Sonnenschein, Nath & Rosenthal and author of “Prenups for Lovers: A Romantic Guide to Prenuptial Agreements.” “It’s a case of their being more common that takes away their mystery. If your friend or sister signed a prenup, you might suddenly think it’s OK.”
Still, not all prenups are the same. Many prenup agreements are fraught with soft spots, or issues you’ll want to consider in regards to this long misunderstood little document …
Full Financial Disclosure. Full financial disclosure means making your spouse aware of your income, assets, holdings and debts at the time of the prenup signing. Prenuptial agreements that are not built on full financial disclosure from both parties are generally pointless, and thus don’t stand a chance once divorce or estate proceedings begin.
Child Custody and Child Support. In terms of protecting the assets of children from a prior marriage, prenuptial agreements are the most effective legal tool out there. However, issues involving children from the current marriage are a matter for the courts to decide. Even if the prenup contains language about custody and support, chances are the issue will be reevaluated if either party cries fowl.
“You cannot effectively address issues of child custody in prenups,” said Guy Ferro, president of the American Academy of Matrimonial Lawyers. “In every jurisdiction, the kids come first, so if there’s a prenup that the court finds to be one-sided or otherwise unconscionable, it’s probably going to be set aside.”
Free Will or Duress? In order for a prenup to maintain its validity, both parties must enter into it of their own free will. That means that both sides had time to consult a lawyer regarding the document, both sides had time to read over the fine print and neither side was physically forced into signing it. On this last point, some lawyers recommend as a matter of policy that their clients videotape the signing of the prenup.
“I’m aware of some lawyers videotaping the execution of the prenup, but I think that misses the mark,” said Ferro. “The real claim people use in court is that, because of circumstances, they were forced to sign an agreement. And circumstances can mean a lot of things, from pregnancy to all the wedding invitations have already gone out.
“There’s nothing wrong with telling a future spouse you’re not going to marry them without a prenup,” Ferro added. “What good lawyers tell their clients: If you want a prenup, tell your spouse months ahead of time, let negotiations go back and forth. It’s not what happened at the time you signed the agreement, it’s all the surrounding circumstances that are going to help that argument win or lose.”
“I think one of the good things about prenups is that they get people talking about money issues,” Dubin said, “which leads to open and frank discussions about other issues, which might help change both parties’ expectations concerning their marriage.”