Getting Hitched this Year? Get a Prenup!

Last week, the founder of Amazon, Jeff Bezos, and his wife Mackenzie, reached a settlement regarding the division of their multi-billion dollar marital estate.  Unfortunately for Jeff and, fortunately for Mackenzie, the parties did not have a prenuptial agreement (aka a prenup).  As a result, Mackenzie Bezos was awarded 4% of Amazon stock, worth approximately $36 billion dollars. Ms. Bezos is now the 4th richest woman in the world.

Does she need a new best friend?? Seriously. I’m available.

Are you getting married this year? If you are, then you and your fiancee need to get a prenup! Don’t know what a prenup is? Want to know why you need a prenup?

I’ll explain . . .

What is a prenup?

contrary to popular opinion, prenuptial agreements are not just for the wealthy. A prenup is simply an agreement signed by a couple before marriage. It only becomes effective when you wed.

Don’t think that you have any stuff worthy of a prenup? I disagree! You should still get one! You and your intended don’t need to have any property to agree on how you would distribute your future property if your marriage doesn’t work out.

What does a prenup include?

In a prenup, a couple lists all of the assets and debts that they have at the time of the marriage. The agreement then sets forth how they will divide up any assets or debts owned either before or during the marriage. Usually, anything that you own prior to the marriage, and the increase in the value of that property is excluded from the marital estate. This means that you don’t have to share it with your spouse should you divorce.

The prenup will also explain how you and your spouse will divide the property that you acquire together during your marriage. Usually this property is split equally (i.e. 50/50). Prenups can also include clauses about buying a home, spousal support, and a lump sum payment from one spouse to another if a divorce occurs.

However, prenups generally can not include language regarding who would get custody of the children or how much one would owe for child support. This is because such provisions are generally against the public policy of most states.

Setting forth how you want to divide your property and address spousal support now, when you get along, is a great way to save time, money and emotions when you don’t. In other words, it’s doing the financial work of a divorce on the front end so the back end goes quickly, smoothly, and cheaply.

What about those uncommon provisions that you hear about on the news?

I’ve heard a lot of rumors about wacky provisions being included in prenups, such as that one spouse has to stay within a certain weight range or the parties have to have sex a certain number of times per week. I think these are usually associated with prenups of the uber-wealthy or celebrities.

I’ve personally never included any such language in my prenups. The most unique provision that I included was that if either the marriage ended because of infidelity, then the cheating spouse get 40% of the marital assets rather than 50%.

These kind of provisions can be valid. To a point. However, if your spouse is asking to include these kind of clauses in your prenup, you may want to reconsider if you want to marry them in the first place.

Would you ever agree to include language like this in your prenup?

Why get a prenup?

Many couples are already seeing the benefits of prenuptial agreements. In fact, attorneys are seeing a rise in prenups, particularly among millennials. Want to know why?

I think one reason for this trend is that people are getting married later in life. Is this you?Often, by the time those parties walk down the aisle, one or both of them already own a house and/or have significant retirement accounts.

As a result, like Veruca Salt and Wonka’s golden eggs, these millennials don’t wish to share their assets if the marriage doesn’t work out.  I also see a lot of clients who are entering into a second marriage. They are still bearing the fiscal scars of their first divorce (as well as the legal bills) and wish to avoid the same fate with their second spouse. Finally, some clients are hoping to protect family businesses or inheritances should their marriage not be successful.

Don’t DIY your agreement!

Not all prenuptial agreements are created equal.  If your prenup is not prepared correctly, it could be declared void. This would result in lengthy court proceedings and expenses, the exact result you wished to avoid in the first place!!!

Yikes!

Therefore, don’t do it yourself! I know it’s not fun to add “prenuptial agreement” to your wedding budget when you’d rather use that money for flowers or a Belgian waffle bar. However it is money well spent. It can save you thousands if the marriage doesn’t work out.

Also, having a conversation about a prenup with your intended can have the unintended benefit of facilitating a serious discussion about debt, bill paying, spending styles, credit scores, and long-term financial goals. That conversation will certainly serve your marriage better than a waffle topped with chocolate and whipped cream.

Related: Tips for finding the right lawyer for your family law matter and keeping your legal fees low.

Want to know more about prenups? Wish that you would have gotten one? Let me know in the comments!