The Importance of a Prenup for Everyday Folks

Not everybody needs a prenuptial agreement, but they serve a purpose for identifying separate property.

I’ve written enough of them to know that a prenup is not an anticipation of an eventual divorce. It’s just to outline what property you bring into the marriage, so usually younger people aren’t going to need one unless they inherited or were gifted substantial property.

I’ve had some clients ask for a prenup, citing terms for children they don’t yet have. I frown on that. If the children don’t exist, you can’t plan for them. There’s a lot of “ifs” in that thinking.

One client wanted to include a parenting schedule for children that didn’t even exist yet in the event of the marriage ending. Because of his present work schedule, the children they didn’t have yet would always be with him on Sundays. Pretty odd, right?

So why have a prenup?

There are many good reasons. It’s a benefit if you have preexisting property that you want to maintain as your own specific property or you have people you want to insure are taken care of through your separate assets in the event you breakup. Kids from a first marriage, elderly or incapacitated relatives, etc.

There is also the idea of identifying property acquired together, while you were living together but before you married each other. Especially for couples who lived together for many years, creating a home, a family, a lifestyle, but before it was legal for them to marry.

Does a prenup doom a marriage from the beginning?

It depends on the depth of the prenuptial agreement.

I can see having a prenup in a second marriage if you have children from different marriages and you want to make sure your children receive the property that you came into the marriage with.

But you can also take care of that through an estate plan.

So it comes back to a question, does the prenup anticipate that the marriage isn’t going to work and so I’m doing a double layer of protection just in case?

Prenups occur usually with people of a higher net worth, where there is a discrepancy of net worth between the two. That can happen in a first marriage or any subsequent marriage.

People who have already been married once often go for a prenup – once bitten, twice shy.

For centuries, the institution of marriage was a business transaction. It’s only in the past century or so that we’ve seen marriage evolve into an endeavor of love.

Still, there are business ramifications and considerations to marriage that we would be wise to remember. You can’t live on fantasy alone. Preparing rationally for what-ifs is not always a horrible idea.

And yet, a prenup can drive a wedge between two people – how do you build a life together knowing that what you’re building is really separate?

I am in favor of a prenup that protects separate property, but doesn’t take it too far. Sometimes people specify not only their existing property, but also “any asset derived from that asset” – that may be too broad and lay an initial foundation that lacks trust or commitment. I explain the concept to my client, I help my client understand what this provision may mean in the future. Ultimately, it is the couple’s decision.

I worked with a couple who were entering their second marriage, and the woman (my client) was moving to the husband’s home in a different part of the state. He wanted the prenup to state that the house would always be his, and if something happened to him, it would go to his children.

However, the wife was relocating and making that house her home. She felt strongly that her commitment to her future husband, creating a home for them and his children and hers removes the house itself from the status of separate property. I don’t disagree with her.

If you are considering a prenuptial agreement, don’t just blindly sign on.

We must ask ourselves, at what point does mine become ours?

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