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.

What about states like California and New Mexico that have community property?

Well, in those states, your prenuptial agreement will still be valid!  Community property laws or the Equitable Division laws of Massachusetts are simply default laws.  They are default for couples who don’t have a prenuptial agreement to instruct the courts.  If the couples agree beforehand, the default divorce laws do not apply.

So don’t worry.  Move around as much as you want and wherever you want.

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.

In one of my previous posts, I had talked about the criteria for upholding a prenuptial agreement in court and one of the factors was fairness.  When I talk about fairness, it is on a spectrum of how unfair it is.  It’s not whether the prenuptial agreement is fair – or not.

A prenuptial agreement in many situations creates an “unfair” situation because in most cases, the parties will agree to keep assets held before the marriage as “separate property” and assets acquired during the marriage as “marital property.”  If there were no prenuptial agreement in place, during a divorce, a Massachusetts probate and family court judge will apply the legal standard of “equitable division” in deciding how to split up property between the husband and wife.  Equitable division is a fancy legal term for – you guessed it – fair.

So signing a prenuptial agreement is not about fair because if everyone wanted it to be fair, we’d just use the default divorce laws.  A prenuptial agreement and the negotiation process that takes place before signing one is really about both parties fully disclosing their assets, talk about money, and their financial goals.  So many couples marry without knowing much of anything about their partner’s assets and liabilities.  Yet when you look at the national divorce rate – 50% – the most common cause of divorce is disagreements over finances.  Given that finances is such a big part of marriage, it makes sense then to talk about it before getting married and writing it down in a prenuptial agreement helps the couple to facilitate the process.

In a recent article in DETAILS magazine, Yaran Noti writes about marriages where couples keep completely separate finances.  Now, they are married and they live together.  They just simply keep separate bank accounts, credit cards, bills, retirement savings, etc.  Anything you can think of financially, they keep separate.  I am a huge supporter of this idea because the majority of marriages that end up in divorce, the contention is usually about money.  People are funny about money.

Many people will say that that is simply not a marriage.  A marriage is suppose to be a joining of 2 individuals.  They want everything to be shared, including finances. But in my opinion, this causes more trouble than it’s worth.  Why start out a perfectly good marriage by ruining it by throwing money into the mix?  No, it’s not the traditional view of what married couples do, but I’d much rather prepare for the worse and hope for the best, then to hope for the best…period.

I’m also a big advocate for prenuptial agreements for everybody who ever gets married – poor or rich or homeless.  Everyone who’s marrying should have a prenuptial agreement.  Most of what makes up a prenuptial agreement is – you guessed it – MONEY.  Most couples in this country don’t execute prenuptial agreements and that is why there are so many contentious divorces and such a huge demand for divorce lawyers.  If everyone who marries had prenuptial agreements, we’d have less divorce attorneys in Massachusetts and around the country.  Again, I’d much rather prepare for the worse and hope for the best then to simply hope for the best.

Anyone who’s getting married. A prenup isn’t only for individuals or couples with a lot of money. It is a versatile document that not only outlines how pre-marital assets are to be treated but also debts, marital obligations, future division of property, alimony, etc. There is almost no limit to what can be written into a properly drafted prenup.

Is there anything that a prenup can’t include?

Yes. A prenup cannot predetermine how child custody or child support is determined. The standard is always the best interest of the child.

When should I sign a prenup?

Ideally, you should have a prenuptial agreement drawn up and signed at least 6 months before your wedding date. This gives the prenup more validity since at a later time, neither party can claim that they were forced to sign the prenup under duress of not getting married after all the invitations have been sent out.

Do I need an attorney to draft a prenup?

You not only need an attorney, but you and your fiance should each retain separate attorneys. The language of a prenup needs to be very specific and all legal formalities need to be followed. Or else, if you ever need it, it won’t be valid.

Why should I get a prenup? Doesn’t it kill the romance?

You always hope for the best, but plan for the worse. It is no different than planning for life insurance, durable power of attorney, health care proxy or a trust. People do those things because they hope they’ll never need to cash in a life insurance policy, or need to use their power of attorney or health care proxy. These are instruments and documents that you plan that you’ll never have to use.

But if you do need them, they will be invaluable. A prenup is invaluable if you need to use it.

And I don’t believe it needs to kill any romance whatsoever. It should be looked at not as a precursor to a divorce, but as loving each other so much and so dearly that you are willing to care for their future. You are planning out of love instead of fighting out of hate if you are to divorce. Given the choice, I’d choose love any day.

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.

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