The Good Pre Nuptial
For many the phrase ‘good pre nuptial’ is an oxymoron. Aren’t all pre nuptial agreements in essence an admission of defeat and of not having faith that the marriage will last?
The short answer is ‘it depends’. One might suggest that a ‘bad pre nup’ is one in which one of the parties feels that they are ‘helpless’. The ‘weaker’ party signs the pre nup so that the relationship can move forward to a more stable level. The ‘stronger’ party feels that they must be ‘protected’ from circumstances should the relationship falter.
A good pre nuptial agreement, in actuality, protects both parties and can promote fairness in the relationship moving forward. It can, in some cases, establish the legitimacy of the ‘rights’ held during the marriage if one spouse dies.
Pre nuptial agreements can prevent inter and intra family disagreements, particularly in ‘blended’ families (where both parties have children from prior marriages).
For high net worth individuals the pre nup can promote security and fairness for both parties.
For the previously divorced or recently widowed, the pre nup can offer the knowledge that both parties are approaching the marriage for the ‘right’ reasons.
One important factor of the ‘good pre nup’ is to approach the agreement with an ‘all cards on the table’ approach to finances. Disclosing assets and debts prior to marriage means that both parties can expect honesty and integrity moving forward in the relationship.
Yes, it can be embarrassing to have to admit that you have a large outstanding debt to your ‘soon- to- be- spouse’. But it is far better to disclose that before the marriage rather than burden your new spouse with unforeseen debt at the outset of the marriage. Such a financial ‘secret’ could spell doom to the new couple.
For a ‘good pre nup’, both parties should enlist the services of separate attorneys, someone who is knowledgeable in contractual agreements. Sufficient time should be allocated prior to signing the agreement. It is no advisable to present the request for a pre nuptial agreement one day prior to the wedding date!
Because your pre nup is a legal document, make sure that it is properly executed according to all state laws. The pre nup should be in accordance with any trust documents in existence and there should be no conflicts between the documents. One simple example would be if the pre nup states that the new spouse would have financial rights to an asset, but that asset has a different beneficiary or is held as a joint asset with another party – that is a conflict to be resolved.
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