Cruising yahoo a couple of days ago I came across an article on divorced billionaires. It was the usual thing – they had a couple of sensationalistic examples of billionaires who divorced. – You know the story…texas oil money man looses 500 million in divorce to floozy wife, etc. etc. The article then quoted a couple of high powered divorce attorneys who said that because of high divorce rates everyone needs a prenuptial agreement to protect them.
These kinds of articles get me steamed up. – I don’t like them because they promote an alarmist and negative image of prenuptial agreements. Prenuptial agreements are essentially contracts between individuals who intend to marry. As such, their terms are entirely up to the two people who wish to marry. There is nothing that makes them necessarily “protective” of one person or another.
In fact, a prenuptial agreement, if it is properly done can increase the level of trust and harmony in your marriage. While I can’t speak for Miel, my personal feeling is that having a prenuptial agreement has elevated my level of trust and feelings of commitment for my wife. But, I would advise our readers that it must be done properly. What do I mean by “properly”?
1) The prenup should be negotiated, signed and notarized well in advance of the wedding. By in advance I mean 3 to 6 months. This gives both people time to reflect on the terms of the agreement and to have their respective attorney’s review the documents. You can’t try to work it out a half hour before the wedding.
2) Both people should want the prenup. This is a “no brainer”. While the issue might be brought up by one partner, for the prenup to “work”, both people have to understand the value.
3) The agreement should protect both parties. This can’t be a situation in which only person benefits. For example, Miel and I have an agreement that if we divorce in under five years, premarital assets are kept separate and postmarital assets are divided 60/40 in Miel’s favor. This was done because Miel is provide a greater amount of financial support during the first years of our marriage, given that I’m in school.
4) It should specify what property is to be shared as well as what should be kept by one spouse. The idea here is that the agreement can be integrative and provide substantial protection for both parties. This is specifically useful for an inheritances, known or unknown. Without an agreement in place all money earned and received during marriage are considered joint property.
5) Keep it to property and money. While it is important to discuss all sorts of issues before marriage, this isn’t the time to focus on where to live or who is going to do the vacuuming. Its important to think about these questions, but probably your agreement should stay focused on finance.
6) Update nuptial agreements over time. You might consider setting specified time lines to reevaluate a nuptial agreement. Lives change over time, and so should your financial agreements.
So, just to wrap this up. The point of this posting is that a properly done prenup is not about protecting one or the other parties against each other. The point is rather to mitigate the risks to both parties while creating a framework for both people to move forward financially with a maximum of love and mutual respect.
Thanks,
James
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