Four Ways to Mess Up a Prenuptial Agreement

Dear Clients, Colleagues and Friends,
You’ve been married before, and while you’re really excited about your new relationship, you’ve seen how things can unravel – and how expensive and difficult it can be to disentangle yourselves financially. Or maybe you’re looking forward to your first marriage, but you’ve got a valuable business that is your main asset and source of income, and you don’t want it to get bogged down – perhaps threatening its very existence – in a divorce lawsuit. What’s the solution?
A “prenuptial agreement” is a contract made before marriage in which husband and wife agree what property will be divided, and what will be off-limits, in the event of a divorce. “Pre-nups” are very common among second marriages, where businesses are involved, where one partner has significantly more wealth than the other, or where there are children from a prior relationship that need to be protected and provided for.
A divorce court will begin from the assumption that everything either party brought to the marriage – including insurance policies, retirement accounts, and business interests – should be divided evenly. If this is not what you want, a properly written prenuptial agreement will allow the court to bless a different arrangement – made before a relationship goes sour.
Here are the four best ways to do a prenup WRONG, dramatically increasing the likelihood that it will fail to keep you out of a messy, expensive fight that ends with your key assets in the hands of your ex:
DON’T coordinate the creation of your prenup with your estate plan – or a thorough update of your estate plan. I’m working on a contested estate where there is conflict between the dead fellow’s trust and the prenuptial he signed with his surviving second wife – and it’s causing significant problems negotiating a settlement with his stepchildren.
DO IT YOURSELF, or without qualified legal assistance. As you might imagine, negotiating a prenup requires the help of a lawyer who is both technically expert and sensitive to the delicate emotional ground you’re treading.
RUSH the agreement, and fail to fully catalog and disclose all assets. If a court senses that one side – especially the less-wealthy spouse – was pushed into signing, the judge may throw the whole agreement out.
DON’T get qualified legal counsel to assist both spouses. A fundamental principle of contract law is that, to be enforceable, a contract has to be a “meeting of the minds.” If one spouse – especially the less wealthy or financially savvy one – doesn’t have an experienced lawyer to explain the meaning of the agreement and how it is likely to be interpreted in the event of a divorce, it significantly increases the odds that a court will rule the agreement invalid.
Already married? You can still agree to deviate from the default property division rules of divorce law in a “post-nuptial” agreement. These are, if anything, a bit trickier to navigate, but still work.
If you would like to find out whether a prenuptial agreement might be appropriate for you, call me.
Best Regards,
