It’s not unusual for me to spend a sizeable amount of time each month with clients who are getting married — those who request I put together a prenuptial agreement for them. What often surprises me are their preconceived notions about the “rules” inherent in even the most basic of prenuptial agreements. Much of what they believe to be true isn’t, thus the reason those who don’t enter their marital union with such a contract in hand find themselves fighting over “things” in a big way when their relationship goes south.
What I tell every client is that tying the proverbial knot is one more formal contract — a legal agreement–like the one they would also sign if they were to become business partners. But, just like naïve business partners, some don’t understand how the laws apply to them if the business dissolves. And, it doesn’t help when they have preconceived notions —myths — about the “rules.”
There are myths about prenuptial agreements circulating, so, in Part 2 of my prenuptial series, I am going to share the five most common ones:
Five Common Myths About Prenuptial Agreements
Myth #1: I don’t need a prenup. I’m going to put my income into a separate account, and it will remain my separate property.
Without a prenuptial agreement, each person’s income (even if deposited into a separate checking or savings account) is considered community property, shared 50/50. My first suggestion is that you make a list of everything you own — money in a certain account, heirlooms, real property, artwork, jewelry…anything that is of monetary value. For instance, some of those heirlooms you thought were yours might have to be handed over to him/her/they or sold if your ex gets a judgment against you. It is best to put those and any other items on a list to give to your attorney before he does his first prenup draft. Don’t forget to list any pets you have. Film director John McTiernan, endured a protracted lawsuit with his ex over the dogs they enjoyed in their home. They fought over them for a long period of time as to ownership and custody. List everything of value. If your attorney doesn’t think an item or two doesn’t belong in the prenup, he/she/they will let you know.
Myth # 2: Prenuptial agreements are expensive
When compared to the monetary cost and emotional toll of a divorce process, a prenuptial agreement is far less expensive and well worth the money. A good way of thinking about a prenuptial agreement is that it’s a small, one-time “insurance policy” for something you never hope to use, but if you ever need it, you will be glad you have it. When you buy a house or car you wouldn’t be able to do so without taking out an insurance policy, because if there were a disaster, a person could lose everything. While it’s the law in California and many other states to have insurance on cars, boats, and homes, etc., it is not a law to have insurance on a potential divorce. As times change, though, it just might be a prerequisite one day. Not a bad law to enact since most divorce wars are over money.
Myth # 3: Prenuptial agreements will not be upheld in the courts
Although care must be taken, there are specific rules that must be followed from the get-go to ensure the agreement holds up in court. Although courts occasionally do invalidate prenuptial agreements, these are normally ones that were prepared without the help of attorneys or where only one side was represented by counsel; where financial disclosures were not obtained or were fraudulent; or where there was coercion where one partner was made to feel he/she/they were being forced to sign the agreement. If you have a properly drafted prenuptial agreement, attorney representation on both sides, and there is no duress, it is nearly certain that your prenuptial agreement will stand up in court.
One other note: my suggestion is that wait until you feel comfortable with the stipulations and terms of the prenuptial agreement before you affix your signature to it.
Myth # 4: Prenuptial agreements are only for the wealthy
Prenuptial agreements are for everyone! Given the divorce rate, the high legal fees, and the stress involved in a divorce, a prenuptial agreement can benefit just about everyone. Even the simplest prenuptial agreements call out one or two items — those “things” to keep separate. Some of them might include a retirement account, a home brought into the marriage, rare memorabilia (valuable baseball cards, rare coins, furniture…and don’t forget the pets). There have been numerous battles over animals in today’s times and they can be brutal. Debt and liabilities are also something you must consider as separate. Should the terms of who owes what not be included in your prenuptial agreement, you may be the party who is on the losing end. Dissolving a divorce (even the so-called amicable one), you’re already experiencing a substantial loss. Why add to it with resentment that can only be felt when paying off someone else’s debts — ones you never incurred? Take a quiet moment to collect your thoughts. Don’t rush. Make a thorough list of not only assets, but liabilities, too. Proceed with finalizing your list — make it painstakingly specific — and get it in the hands of your attorney. He/she/they will appreciate your doing so. Your attorney will also know which items you may have left out (like that fancy refrigerator you yanked out of the condo you gave up when you moved in together or that expensive art piece on the wall someone gifted you). Many attorneys will give you a check-off list so that you can make sure nothing is forgotten. Ask them if they have one you can work from. This list could be critically important if you ever go to court to enforce your prenup.
Myth 5: Prenuptial agreements will cause problems in your relationship
Being able to sit down with your partner and discuss both your financial plans and future money expectations with one another, that is, identifying from the very beginning who takes what with them if the union fails, is smart and considerate. Think of it this way: when many couples break up, the split is not usually “amicable.” When people go their separate ways, and do so with a lot of acrimony, which is very common in the process of splitting up, you certainly don’t want to add to the aggravation and devastation by fighting over your grandmother’s teacup — the one that’s been in your family for four generations! You’re really doing one another a favor by drawing up the prenuptial contract. If you really want a solid relationship, your first obligation should be to protect one another. That is the intent of a prenuptial agreement. It is not only to protect yourself, but it’s a responsible and loving way to demonstrate to your partner that you care about him/she/them, no matter what. It is also extremely important if your pending marriage is a second or third one, and both of you have children. Think about them. They are affected by every aspect of your split.
As you can see, there are far too many myths about prenuptial agreements — most of them negative and misleading. The intent for such an agreement is to protect the parties entering in to one. Perhaps you have a better understanding now by gaining a clearer picture of each of the five myths I’ve addressed in this article. Now, you may be thinking it all makes sense — having a “contract,” but how do you approach your mate and prepare to present your request for a prenuptial agreement without causing a rift in your relationship? I’ll address that in the next segment of this series. In the meantime, start that list I suggested.