Robin McGraw invites you to share in the magic of the holiday season with advice on how to budget, organize and celebrate, while keeping stress to a...
Are you ready to walk down the aisle? Have you considered getting a prenuptial agreement?
Ann-Margaret Carrozza, an asset protection attorney and author of Love & Money: Protecting Yourself from Angry Exes, Wacky Relatives, Con Artists, and Inner Demons, says that everyone getting married should consider signing a prenuptial agreement, an exchange of written promises between two parties done prior to a wedding to deal with things that the couple thinks may be potential problems.
Below, she answers five common questions about prenuptial agreements.*
1. My parents want me to have a prenuptial agreement so my fiancée has no claim on assets I will, one day, inherit from them. I read somewhere that gifted or inherited assets can’t be touched in a divorce. Who is right?
You both are. You are correct that the law provides that gifted and inherited assets are off limits in a divorce settlement. This is the correct answer, if you are on a game show! In real life, however, the majority of states are so-called “Equitable Distribution” (as opposed to Community property). This means that the judge has very broad discretion to order whatever he or she deems necessary to achieve their notion of “equity.” It is far better, in my opinion, to deal with these issues on the front end. Going into a marriage, you will certainly be revising your estate planning. Failure to do so would trigger the “default” inheritance rules written into your state law. Creating a prenup should be no different from your estate planning. They both provide security in the event of a crisis (death or divorce). Proper planning for both possibilities can prevent us from enduring the consequences of “one size fits all” rules created by our state legislatures.
2. We are on a tight budget. Can we share an attorney?
No. Prenup agreements have been invalidated by courts when both parties were not independently represented by counsel of their own choosing. A better way to keep costs down is for each party to give some serious consideration to what they would each need in order to remain secure, or to be made whole, in the event of a divorce. This can greatly reduce the dreaded “billable hours.”
WATCH: What You Need To Know About Prenuptial Agreements
3. A prenuptial agreement only benefits the wealthy spouse. T/F?
False. A good prenuptial agreement should protect both spouses. A prenup which is completely one-sided, will probably be invalidated by the court. If, for example, one party put his or her career on hold or turned down out of state promotion opportunities for the sake of the marriage, these are factors that should be addressed within the prenup. Ideally, this document will ensure the financial security of both spouses in the event that the marriage does not work out.
4. I heard that it is easy to have a prenup invalidated. If this is true, why should I even bother?
It is not likely that a properly drawn prenup would be thrown out. Prenups subject to challenge fall into three clearly defined categories:
a. A prenup is vulnerable if it gives everything to one party and nothing to the other. Any contract is subject to challenge if it is so one-sided as to be “unconscionable.”
b. I have also seen prenups invalidated by a court when one party was not separately represented by counsel.
c. The third category of weak prenups are those created under duress or by fraud. Courts are inclined to find duress if the prenup was signed too close to the wedding. While the law does not spell out a strict timeframe, my rule of thumb is that the document should never be signed after the invitations have gone out.
WATCH: Test Your Postnup IQ
5. A prenuptial agreement only deals with financial issues. T/F?
False. A prenup provides a contractual framework to deal with any and all sources of actual or potential conflict. Lifestyle clauses dealing with overspending, gambling, weight gain, substance abuse issues, infidelity,TV time and social media parameters can be addressed within a prenup. This is why I like to think of a prenuptial agreement as a couple’s mission statement or Love Contract.
Ann Margaret Carrozza is a renowned Elder Law and Estate Planning Attorney who served for 14 years as a New York State Assemblywoman. She is a TV legal contributor and the author of Love & Money. www.mylawyerann.com
*This information is provided for your consideration and information only. You should consult with a legal professional before making any decisions.
In her recent book, Love & Money: Protecting Yourself from Angry Exes, Wacky Relatives, Con Artists, and Inner Demon, estate management attorney...