Prenuptial Agreements are not for all couples entering into marriage.
For those who start married life without wealth or the promise of wealth, the idea of entering into an agreement that defines terms for divorce or death would be pointless, even detrimental, to building a relationship based on sharing and mutual life goals.
For others, however, one or both party’s personal history or financial situation may be sufficiently disparate to call for an open and honest disclosure of concerns prior to the marriage. It is for these couples that prenuptial agreements are most helpful; offering a pro-active opportunity to design mutually agreeable provisions in the event that their marriage ends by divorce and/or death.
Who are these couples, you might ask? Here is a sampling of the most common reasons for entering into prenuptial agreements:
Couples in which one (or both) party has been married previously and wishes to protect his/her children’s assets resulting from the prior marriage – ie. an inheritance due to the death of a spouse/mother, or assets that had been divided in a prior divorce agreement.
Couples in which the financial holdings of the parties are significantly disparate at the time of the marriage
Couples in which one or both of the parties will inherit significant assets,
Couples in which one or both of the parties wishes to protect a family business from being viewed as a marital asset
In structuring a prenuptial agreement, mediation is an especially effective process.
Mediation offers couples the opportunity to work with a neutral facilitator in a confidential setting. It is imperative that the mediator helps each party to put forth his or her individual concerns and feelings. The objective is always to reach an agreement that is fair and reasonable (and feels so) to both parties. Moreover, time or length of the union, is an important component of the discussion. A marriage that ends in divorce after two years is simply not the same as one of twenty years.
And, too, there are other considerations that influence the terms of the agreement. What if the couple has children and one party stays home to care for the children or in any other way sacrifices his or her career or relinquishes the opportunity to have a career? What if one party’s roles in the family do not result in increased income or the accumulation of assets, but have non-monetary benefits?
Is dissolution of the union by death the same as by divorce? Often couples view death and divorce quite differently.
Handling of the disposition of assets, held prior to the marriage and those acquired during the marriage, are central to the discussion.
Does the growth of holdings, deemed “separate assets” (e.g., those that are acquired prior to the marriage), constitute marital property or separate property in the event of divorce and/or death?
How are joint assets handled if the parties’ contributions are disparate?
Does the formula change overtime?
Is it the same in divorce and in death?
Not surprisingly the more one delves into different options and circumstances, the more the questions multiply. Consideration of a variety of different circumstances may seem confusing, but in practice it helps each party to feel that the conversation is relevant to present and future situations. It is important to the future health of the marriage to think beyond the here and now. A future spouse must be willing to enter into an open conversation, without taboos or lines drawn in the sand, based on full disclosure of his/her assets, income, and future projections.
A thoughtful prenuptial agreement, resulting from the open sharing of concerns, feelings, and information, will increase the chances that the document will be relevant in the years to come.
Please Call Our Office For Answers To Your Questions – 781.239.1600