As holiday season nears, many couples will get engaged, and then embark in the typical 6-9 month planning process that will result in a wedding, which on average costs $25,000 in the United States (not including the cost of the engagement ring). During this process, money talks are an inevitable– not just with respect to the short-term decisions such as the cost of a venue, caterer, invitations, florist, photographer, entertainment, or honeymoon, but also long-term decisions that will impact the household, such as plans for housing and managing combined expenses/savings. In recent years, trends show that these money talks often include one addition topic: the possibility of formalizing the couple’s financial agreements with a prenuptial contract.
Young professionals, who are already painfully aware of the rate of divorce, seem to be increasingly aware of the option to redefine joint property, protect separate assets and/or set limits on future alimony claims by entering into a prenuptial agreement with their betrothed. While previously, these agreements were mainly used by individuals with significant personal or family wealth, and/or those entering into second marriages, there are now a growing number of young professional couples without significant resources requesting a prenuptial or post-nupital agreement in order to minimize the financial damage that can be caused in the event of a litigated divorce.
These days, pre-nuptials are considered standard legal contracts that are generally upheld as long as they are (1) not signed under duress, (2) there has been full financial disclosure, and (3) each party had the opportunity to consult independent legal counsel. Unfortunately, some couples wait until the last minute to arrange for a prenuptial agreement, and in the event it cannot be finalized before the wedding, many will opt to convert the contract into a post-nuptial agreement.
While these agreements may not be very romantic, they certainly are a useful tool to promote money talks upfront, alleviate important financial fears, and promote a clear understanding of what will be part of the couple’s “marital pie,” including what should happen with each person’s assets in the unfortunate event of either party’s death or a divorce.
Various corporations are now requesting that their partners/shareholders enter into prenuptial or postnuptial agreements to protect the company from being involved in any litigation between spouses. In addition, many individuals are now using these agreements to protect intellectual property rights or business interests that are not yet developed.
Many pre-nuptials also now address the issue of who will move out if things do not work out and include mechanisms for valuing and selling joint assets quickly if either party requests a separation in order to avoid a “War of the Roses” scenario. Confidentiality clauses and provisions for mediation or ADR are also common.
In the end, by covering the most common difficult issues and establishing protocols for handling a dissolution in a prenuptial well before any invites go out in the mail, the goal is to remove as much as uncertainty as possible and reduce the risk of costly litigation in the future. Those willing to have the tough money talks upfront should be applauded, and in the meantime those die-hard romantics out there may well have to accept the fact that prenups are no longer for just the rich and famous. It is a viable option that minimizes great risks, and more and more young professionals (as well as those a bit older and wiser) are embracing it.
Here is the link to a recent podcast on prenups: http://directory.libsyn.com/episode/index/id/2864452
@2014 by Regina A. DeMeo, Esq.
reprinted from Wealth Strategies Journal