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When to Sign a Prenup
And why you might actually want one.By Minda Zetlin
When I met Javier, I thought I'd finally found the ideal man.
He was bright, funny, gorgeous, and best of all, passionate about
me. Six weeks later, he proposed, and although it seemed a
little soon, I started planning the wedding.
Our finances presented some complications, however. He hinted
at vast wealth from his South American family's business but
declined to provide any details. I had a little inherited
money I depended on to supplement my income as a writer. I
also owned my apartment, which I wanted to keep in my name.
Under the circumstances, my lawyer advised, we should have a
prenuptial agreement.
"What's Mine Is Mine"
The prenup is a contract entered into before the wedding that
determines how assets will be distributed in case of divorce.
With couples marrying later and two-career mariages now the norm,
prenups are proliferating; at least 5 percent of brides and groom
sign them. Most common reasons: (1) there are children from an
earlier relationship; (2) one person is part owner of a business and
the other owners don't want the spouse's lawyers nosing around the
books; (3) either partner has assets he or she does not want to
share.
Negotiating our prenup was a supreme pain--even though we agreed to
keep our finances separate. The problem was the unromantic
dealings involved: Javier had to find his own lawyer and I wasn't
allowed to help, as that might look like undue influence.
Eventually, he selected someone from the yellow pages, and the two
lawyers started picking over details, which led to bickering between
Javier and me.
"Is this really necessary?" I kept asking. My lawyer
insisted it was; three days before we were married, we finally
signed.
Looking back now, I think: Thank God! It wasn't long before I
found that Javier had lied: He was totally broke. Then, when I
decided to leave him, he did his best to stop me, wrangling in court
for nearly a year over grounds and over who should be divorcing
whom. At least there were no property questions to fight over;
our prenup covered them all. The one delaying tactic he didn't
try was overturning the agreement.
Devious Spouses
In general, prenuptial agreements are more likely than any other
kind of contract to be questioned later, usually with claims of
undue influence. The success of these challenges varies from
state to state: Some have enacted laws recognizing the validity of a
properly drawn prenuptial, while others frown on them.
Connecticut courts, in particular, are known for overturning these
agreements, and most states will not uphold a contract if its
provisions are obviously unfair.
However, because prenuptials are now more common--and because a few
have landed in the headlines--they are becoming more durable.
"People still come in and say, 'I didn't understand what I was
signing,' but it's getting harder to make that claim, says Stanford
Lotwin, a partner at Tenzer Greenblatt LLP, whose clients include
Joan Lunden and Donald Trump.
The contract must be properly drawn, of course, and each side must
have legal representation, full information about the other's
finances, and plenty of time to think before signing. A prenup
is much less likely to survive if one spouse pulled a fast one on
the other, but many people try this anyway--like the well-known
actor who handed his bride-to-be their agreement while the two were
in a motor launch on the way to their seaside wedding.
"The signatures were wavy because of the movement of the
boat," Lotwin says. Called in to represent the actor
during the divorce, he took one look and told his client that trying
to defend the document would be a waste of time.
Then there was John Rudbeck, who asked his fiancee to sign a prenup
but neglected to tell her about his lucrative real estate holdings.
"It was a classic example of a husband trying to mislead his
wife," recalls Edward L. Winer, a partner at Moss & Barnett
in Minneapolis, who represented Carol Rudbeck when she challenged
the agreement during divorce proceedings. Asked if he'd made a
full and honest disclosure of his assets, Rudbeck replied:
"There was stuff lying all over my desk. She must have
seen it." Then he presented court with a document in
which his wife gave him her half of one of the properties.
Carol Rudbeck swore she'd never signed it, and a handwriting expert
testified that what appeared to be her signature was actually a
tracing. In view of the evidence, the court nullified the
prenup and awarded her half the couple's assets, plus monthly
maintenance for two years while she trained for a job.
Prenup vs. Previous Wife
The "moneyed" partner is usually the one who asks for a
prenup--and most of the time, that's the groom. But these
days, more and more brides are seeking them too. One
matrimonial attorney was asked to give a talk at a recent bridal
show, and many women in the audience became pro-prenup on the spot.
But not always for the reasons you'd expect. Sally,* a Houston
dentist, decided she needed a prenup when she married Joe, a college
professor who made less than half what she did. The problem
was Joe's first wife, who had custody of their five-year-old son.
Texas is a community-property state, and under its laws at that
time, Sally's earnings were vulnerable to a suit for additional
child support.
"Sure enough, six months after the marriage, my ex filed a
motion to increase child support based on my new wife's
income," Joe says. He immediately offered a more modest
increase based on raises he himself had gotten, but his ex refused.
At his deposition, Joe produced information about his own income,
but not Sally's--which infuriated his ex-wife's lawyer.
"It took several repetitions of 'We keep our incomes separate'
before she caught on," he says. He produced the prenup as
proof, and the deposition ended abruptly.
Preventive Medicine
Sometimes, a prenup can even protect the less affluent partner.
"I represented a woman whose fiance wanted her to quit her job,
move to his state, and stay home and raise their children,"
Winer recalls. "She was willing to do that, but since she
was going to give up her career, she wanted to make certain that if
they divorced or he died, she would be taken care of. Her
husband-to-be refused to share any of his assets, however, and
eventually the wedding was called off."
As this story illustrates, prenups can be paradoxical: Sometimes the
negotiations themselves lead to broken engagements. "The're
not supposed to be anti-nuptial agreements," Winer says,
"but look at it this way: We are preventing a divorce rather
than obstructing a marriage."
Should You Ask Him to Sign?
The answer is yes if you need or want to do any of the following:
1. Protect your business from scrutiny. If you own or
are partner in a company or think you might be someday, your
husband's lawyer will have the right to examine the firm's books
should the two of you divorce. A prenup may allow you to
prevent this.
2. Protect your future earnings. Are you getting a
medical degree or an MBA? Are you in a high-paying job or in
line for one? Most states would give your husband a claim to
part of your earnings unless you have an agreement that stipulates
otherwise.
3. Protect your right to his future earnings. What if
you help your husband finish medical school, say, and then, degree
in hand, he leaves you? New York considers the earning
potential of an advanced degree as a marital asset, but most other
states do not. A prenup could give you the right to a
settlement in this situation.
4. Be compensated for giving up a good job. Joan left a
$120,000-a-year position to relocate to her new husband's town.
After six months, he wanted a divorce, but she couldn't get her old
job back. Desperate, she refused to move out until her husband
offered her a decent settlement, which he eventually did. A
better idea would have been to start out with an agreement that
specified a settlement.
5. Keep what's already yours. I emptied my savings
account to make the down payment on my apartment, and I wasn't about
to let anyone else have it. But since I was paying the
mortgage with money earned while we were together, my ex might have
had a claim if we hadn't signed a prenup.
6. Be protected from your husband's creditors. Does your
spouse-to-be have any debts or other financial obligations, such as
child support? His liabilities could become yours too, without
the protection of a prenup.
7. Safeguard or reassure offspring. If either of you has
children from a previous relationship, you'll want to make sure
their interests are protected. A prenup can do this--though
sometimes it makes as much sense to transfer assets to the children
or into a trust fund for them. (Any of these measures may make
it easier for them to welcome a new stepparent.)
8. Protect an inheritance. Though many states consider
bequests nonmarital property, people who have or may receive
inherited wealth often use prenups to make it clear exactly which
assets are theirs alone.
9. Write the will you want. You probably haven't thought
much about who gets what after you die, but most states give spouses
very specific inheritance rights. If you think you might want
to leave a substantial portion of your assets to someone other than
your husband, a prenup can allow you to do this.
10. Expedite matters in case of a divorce. With about
half of all American marriages ending this way, it's smart to
consider the possibility. Many couples settle property
questions and sign prenups to keep a possible future split simple.
*In the interest of privacy, some names have been changed.
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