[B]oomers have become more anxious to hold on to whatever they have left, says Gabriel Cheong, a divorce attorney with Infinity Law Group LLC in Quincy, Mass. Today, the majority of inquiries come from boomers “concerned about protecting their assets,” he says. “Not just with the markets, but with protecting their spouses and children.” And they often enter a marriage with substantial assets—and children from an earlier union.

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The article recommends that couples learn about each other’s (1) assets and liabilities, (2) money history, (3) outlook on financial duties, and (4) organizational goals regarding money.

All these are great suggestions along with the New York Times article but what they don’t mention is that a prenuptial agreement is the perfect instrument to facilitate this talk.  Whether a couples has money or don’t have money, a prenuptial agreement forces the couples to divulge their assets and liabilities and in the course of talking about finances, you will inevitably discuss each other’s financial history and each other’s outlook on how to handle money.

1. One spouse pays it all.  Sometimes when a spouse has all the earning power, it makes sense that they pay for everything.  It might be that the spouse wishes to take care of the other spouse and the relationship has always been so.
2. The expenses are split 50/50.  Whatever bills that come in, be it the mortgage, car payment, child care, credit cards, utilities – they are all divided equally between the couple.  They each pay half.
3. Everything is separate.  The couple will keep all their finances separate.  There would be no joint accounts, be it credit cards, car payment or mortgage.  Everyone pays what their name is associate with.  No muss. No fuss.

I have seen variations of all of these and they work for some people.  The plan that I believe works the best is none of the above.  The plan I believe works is based on paying equal percentages.  How it works is this:  each spouse has their own separate individual accounts and they have one shared joint account.  Paychecks are deposited into their respective individual accounts.  Household expenses are paid from the joint account.

The trick is determining how much of each spouses’ salary is deposited into the joint bank account.  If both spouse deposits an equal percentage into the joint account, it should be enough to pay for all the bills.  Note that equal percentages is not the same as equal amounts as described in example 2 above.  If Mary makes $1000 and she has to contribute $500 while her husband Bill makes $10,000 and he also contributes $500, they are contributing 1/2 of the expenses but not equal percentages.  That is because $500 of Mary’s salary is a bigger percentage than $500 of Bill’s salary.

Why is equal percentages more fair than an even split of all expenses?  It is because contributing equal percentages leaves both partners with the same percentage of their income to themselves.  It gives them the same spending power and it spreads the burden.  When the power dynamics of a marriage is closer to equal, it provides for a more harmonious marriage.  There is no inequity because each spouse is contributing to an equal percentage of the upkeep of the household.

Given that almost half of all marriages end in divorce and a majority of those that get divorced is due to arguments over money, a scheme that will equalize and benefit both parties financially in a marriage will hopefully make the marriage last and avoid the most common cause to divorce.

These 4 things (and more) is what I discuss and get my clients to discuss with their fiance when preparing a prenuptial agreement.  As I’ve said before, these conversations must be had before anyone gets married, with or without a prenuptial agreement.  Lisa Peterson, the founder of Harmoney, who I have had the pleasure of meeting, provides a great service to engaged couples where she helps facilitate this conversation over money with them.  Sometimes, it’s easier to have someone help you and your partner talk about such a sensitive and often contentious subject.

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Money Talks To Have Before Marriage

I’m often surprised when I do estate planning for newly wed couples when I ask them about each other’s financial picture and they simply can’t tell me.  They don’t know and they never bothered to have that conversation.  Nearly half of all marriage eventually end in divorce and of those, most are driven by disagreements over money.  If those are the statistics, then having a clear picture of each other’s current financial picture and also an understanding of each other’s goals and outlook on money is invaluable to keeping a marriage healthy and going strong.

Most couples however, only consider a prenuptial agreement with one or both have significant assets.  This is of course a wise thing to do.  However, couples on the other side of the spectrum, those with lots of debt, should also consider a prenup.  Debt incurred in a sole person’s name is generally regarded as that person’s debt alone.  But when couples get married, finances are mixed and sole debt starts to become marital debt.  At some point, there’s little or no way to distinguish what was sole debt and what is marital debt.  Bottom line: If you have a large amount of debt, get a prenuptial agreement to protect your future spouse.

Love is patient, love is kind. It does not envy, it does not boast, it is not proud. It is not rude, it is not self-seeking, it is not easily angered, it keeps no record of wrongs. Love does not delight in evil but rejoices with the truth. It always protects, always trusts, always hopes, always perseveres.

Love never fails. But where there are prophecies, they will cease; where there are tongues, they will be stilled; where there is knowledge, it will pass away. For we know in part and we prophesy in part, but when perfection comes, the imperfect disappears. When I was a child, I talked like a child, I thought like a child, I reasoned like a child. When I became a man, I put childish ways behind me. Now we see but a poor reflection as in a mirror; then we shall see face to face. Now I know in part; then I shall know fully, even as I am fully known.

And now these three remain: faith, hope and love. But the greatest of these is love.

- 1 Corinthians 13

Because of the Defense of Marriage Act (DOMA), constitutional bans on same-sex marriage in other states, and a lack of same-sex marriage laws in other states, couples who marry here in Massachusetts and in New England suffer great inequalities once they leave the safety of those select states that allow same-sex marriage.  Once they leave and go to a state that does not have same-sex marriage, they’re no longer married!

So what happens if you were married here in Boston, Massachusetts and you  move to Texas AND you now want to divorce your spouse? You can’t.  You cannot get a divorce because you’re not married.  This is where a prenuptial agreement might help.  If you had a prenuptial agreement and you and your spouse is having a disagreement on how to divide the marital assets, then the prenuptial agreement is simply a contract between two people.  It is a contract whether or not the couple is classified as “married” or not.  In theory, a prenuptial agreement will still hold up in court (although not family court most likely) if a disagreement and dissolution were to occur in a same-sex relationship in a non-friendly state.

This is not guaranteed to work however because many states are still hostile towards the concept of same-sex marriage and therefore, they might seek any excuse to disenfranchise anyone who is gay.  However, having a prenuptial agreement can only help – not hurt.

The unfortunate thing I find myself telling most of these clients is that they should’ve contemplated drafting this prenuptial agreement with a Massachusetts attorney months ago. You should start negotiating and drafting a prenup, ideally, 3 to 6 months before the marriage date.

Why?

If the day ever came when you actually need to use this prenuptial agreement, during a divorce or separation, you want your prenuptial agreement to be upheld in court if it were to get challenged. The court looks at 3 main criteria: (1) when the prenup was signed (2) whether both parties had independent legal counsel and (3) the fairness of the prenup.

If you drafted a prenup a few weeks before marriage, the argument for invalidating the prenup would go as such: ”I didn’t want to sign the prenup but because all the invitations had already been sent out, I felt I had no choice but to sign it.” This is the definition of duress and would, if the judge was convinced, invalidate the prenup.

So does this mean that if you didn’t read this blog post and you’re getting married in a few weeks just give up and forgo the prenuptial agreement? No. Having one is still better than not having one at all. This is because there’s a good chance that the prenup won’t get challenged at all if there ever was a separation or divorce. In addition, there’s also a chance that even if challenged, the prenup would still be valid because the other 2 factors were met.

In conclusion, if possible, try to get a prenup drawn up 3-6 months ahead of time, have separate lawyers for both parties and make the prenup somewhat fair.