Table of Contents
Introduction
For many, prenups have a way of deflating the romanticism leading up to that special day. It could be perceived as a form of negative signaling or thought of as agreeing to failure before you even get started. So, is agreeing to a prenup the same as forecasting the demise of a planned life together? A well-crafted, ironclad prenup is likely to persuade the unsure partner that what is being presented is at least enforceable and equitable.
Mention the idea and you may see a grimace or cringe. How is it possible that in the throws of romance and the excitement of planning, “you actually want me to agree to such a thing!”.
At a glance, the thought of such an agreement might make the strongest of hearts think twice about a spouse’s motives.
A prenup, or premarital agreement is any agreement that protects each person’s accumulated current or future wealth heading into matrimony or at the time of the death of a spouse.
These agreements are also more common in second marriages, where the first divorce was financially tasking, and in first marriages of older couples who have had time to accumulate assets.
Newly weds may have business assets they wish to protect if the marriage is not successful. However, it is usually the spouse initiating the discussion that will have assets that need to be protected for a variety of reasons.
Sometimes parents or other family members of the wealthier soon-to-be will insist on a prenup. Sometimes the business advisor or lawyer of a family business will have that discussion with the family and propose a solution.
For example, a son of a prominent, generations-old business has been married and divorced. Personal costs to the son and family business were not negligible. That son wishes to remarry.
When the idea of a prenup is mentioned this time around, it is rejected outright. The fear of having to request such a thing seemed to overrule any rational thought to its benefit.
The next discussion then, might center around how to persuade the groom that a prenup was necessary, especially with the previous divorce’s bad tastes still lingering. Better to have this conversation before the wedding, than wishing you had it when one is needed.
A crafty solution might involve taking the heat off the groom and the other shareholders. It could be decided that the insistence of a prenuptial agreement was on behalf of the company, not the groom.
That is, written into the shareholder’s agreement might be a clause that states that any marriage proposal, by any shareholder, would have to enter into a prenuptial agreement.
If not, the shareholder would have to forfeit all existing shares back to the company.
In approaching a prenup this way, the groom can “blame” the prenup on the company and not have to bare the responsibility.
Farm families may also find themselves needing the protection of such an agreement, where farms held by families for generations do not lose part or all of the enterprise where one or two family members may marry and divorce.
These generational farms may also demand someone marrying into the family would be obliged to agree to a prenuptial agreement.
Is a Prenup Necessary
You may already know that divorce rates are high. Depending on where you look, the rate reflects between forty and fifty percent of all marriages will fail. How is it, that four or five in ten marriages fail?
The institution of marriage has been evolving. The sacrament of marriage has been eroding over the last number of years.
“Today’s family conversely, may have a same-sex partnership, a single dad or a single mom.”
Cultural norms change over time. Laws are a reflection of the needs of a society, so it would make sense that legal battles would change how an evolving society sees marriage through legal eyes.
The once solid, rigid sacrament of marriage can now be challenged on many grounds. The occurrence of no-fault divorce has made it possible to make the process a little more tolerable.
Private Investigators could not have been happy. No further need of grainy photos taken through draped windows to get proof of infidelity.
What of the marrying couple of our time? What is marriage to them? What does a family look like?
Previous generations saw marriage as a partnership, most often a man and a woman, that had to be worked on together, and attention to self was not a part of the contract.
Today’s family conversely, may have a same-sex partnership, a single dad or a single mom.
It seems present brides and grooms are more interested in how the marriage will advance their personal goals rather than losing self and falling to the partnership of marriage.
Where previous cultural, social and legal ideologies made it more difficult to end a marriage, today’s shift in values, laws and motives for marriage have made the legal entity of marriage easier to walk away from.
In this environment, an ironclad prenup, one that will be upheld, might be worth the consideration. It is a smart thing to do.
How to Forge an Ironclad Prenup
Having completed your research on how to create a well-crafted, ironclad prenup, you would have noticed that without exception, there are a few standard inclusions.
Prenuptial agreements weren’t always enforceable. However, laws have been created and amended to reflect societal values. That is, courts will uphold agreements providing they include the following;
- It needs to be a formal agreement, usually drafted by a lawyer. What works for you regarding legal advice may differ from another. Prenups should be considered one-offs as each will have different contingencies. There seems to be no such thing as an off-the-shelf prenup.
- Each person might want to obtain independent legal advice. In doing so, the court acknowledges that a party who may have more to lose financially, has had an opportunity to understand what is being signed and explained to them by independent counsel.
- If you are expecting a judge to uphold your prenup, s/he will want to see full proof of financial disclosure. In these cases, a complete financial audit will be necessary. In the case where there is some suspicion of hiding assets, you can be sure the chances of the agreement being upheld will be slim.
- The agreement must have, in some form, security for present or future children. It is unlikely any court would uphold an agreement where the children are not taken care of financially.
- A prenuptial agreement must be fair. Imagine having to rule on an agreement that was written unfairly. It would be obvious to any court that the agreement was not done to protect both parties, but written to leave the challenger with pittance. There would have to be amendments, if upheld at all.
- An obvious characteristic of an ironclad prenup is that there should never be any proof of pressure to sign under duress. That is, it should be signed voluntarily. Anecdotes of one newly wed or the other being shown the papers hours before the ceremony might not be fiction.
The likelihood of any prenup being upheld that was signed under duress, well I think you are getting the picture.
- Conversely, bringing up the discussion of the prenup as early as possible is advisable. Twelve months out would not be considered too early. There will be enough to do as the day creeps up. Having to deal with the queries concerning a prenup while deciding which dress to buy might get tangly.
- Reflecting on an earlier description of today’s evolved bride and groom, it gives both the opportunity to participate in open discussion about their futures, both individually and as a couple. It is here where a family therapist or pre-marriage therapist might help. Not surprisingly, the opportunity for open discussion might be considered the reason for a prenuptial agreement.
- To say emotions may be running high during the planning would be too obvious. If you are the person suggesting the prenup, expect an emotional response.
- A well-crafted prenup will also have the option for a lump-sum payout in case of divorce. This option gives both parties an idea of future finances. This is an easier option that having to consider future earning and payouts based on those. Also, a lump-sum payout stops any future attempts to sue for more.
An Ironclad Prenup Conclusion
Prenuptial agreements seem complicated. They are. When the fear of not bringing it up outweighs the benefits of bringing it up, it has to be a powerful thing and therefore worth the discussion.
Not unlike planning well for any task to increase its likelihood of success, it is no different for the prenuptial agreement, for it seems there are prenuptial agreements and then there are prenuptial agreements.
What do you think? Please continue the conversation below by asking about or commenting on your experience with prenups.
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