Pros and Cons of Prenups
The Kings
When the news of Larry King’s marital problems surfaced recently, it was reported that Larry and his wife, Shawn Southwick-King, didn’t have a prenup. Some say that Larry is foolish because his net worth is reportedly estimated at $144 million, and in the event of a divorce, under California law, Shawn would be entitled to one-half of all marital property. Although Larry and Shawn reconciled, their unfortunate circumstances give us another opportunity to discuss the pros and cons of prenups.
Simply put, a prenuptial agreement (prenup) also known as an antenuptial agreement, is a contract between 2 people who intend to get married. In the prenup, the parties simply state how they want to divide their property if they divorce. The couple can also state their wishes about how much spousal support each would get if there is a divorce. But there are a couple things you cannot do in a prenup. You cannot agree to the amount of child support you will pay for your children in a prenup. You also cannot agree to the grounds for your divorce in a prenup.
Who should have a prenup? Well, at one time, prenups were considered a tool of the rich. But now, prenups are more widely accepted. They are not only used to protect the rich anymore, but anyone who has something to protect. So, if you have a job, pension benefits, own property, or have children, you should sign a prenup before you get married. This is especially true if the other party earns or has significantly less. Also, if you don’t earn or have much before the marriage, but you know your earnings will increase significantly as you advance in your career, you should have a prenup.
Why have a prenup? There are many benefits of having a prenup. The most significant benefit is the money it will save you. If there is a divorce and the parties cannot agree to the property distribution, it could result in costly litigation and attorney fees. And if the court action does not go in your favor, the Judge could award your spouse more support than you believe he/she is entitled to.
Another important benefit of a prenup is that it will reduce or eliminate the rancor and bitterness some couples experience during a divorce. When the parties know that they have already agreed to things like how much spousal support will be paid, and who will get which property, they are less likely to engage in undesirable behavior and antics in order to make the other party look bad so as to get more spousal support and property.
An additional benefit of a prenup is that each party must honestly disclose to the other party all assets he/she owns before the marriage in a prenup. An inventory of assets owned by the parties before the marriage is helpful because it will simplify problems of proving who owns what if there is a divorce.
Although most people know the benefits of prenups, many do not enter into prenups before getting married. One of my friends said that she is considering getting married but she doesn’t want to get a prenup because she believes it will put a cloud of doubt and negativity over her marriage even before she walks down the aisle. “Why get married if you’re planning for it to fail?” she asked.
“Why should anyone buy a life insurance policy or an automobile or homeowners’ policy?” I asked her. When someone purchases an automobile insurance policy, they are not planning to have an accident; they are trying to minimize loss by agreeing to what their rights and obligations will be in the unlikely event that an accident does occur. This is how prenups should be viewed.
Who won’t want a prenup? Anyone who owns or intends to own anything should want a prenup before getting married. The only people who will refuse to sign a prenup are those who believe they will get more without one if there is a divorce. Typically those are the folks who have less than the party who is asking for the prenup.
What is a Postnuptial agreement? If you didn’t enter a prenup before you got married, but have some concern about what would happen if you divorce, have no fear. You and your spouse may enter into a postnuptial agreement which serves the same purpose as a prenup, but it is executed during your marriag.
Initiating a discussion about a prenup may cause the other party to call everything off and take flight – and maybe rightly so. Let’s face it – if the spouse who wants the prenup intended to give the other spouse at least one-half of everything after a divorce, then he/she wouldn’t go through the trouble of entering into a prenup. That person would just go ahead and get married without the prenup because in many states (like California) the other spouse would get at least one-half anyway.
Having a discussion about what you own and what you are willing to give your spouse if there is a divorce may cause some discomfort. It will reveal things about your future spouse which may be surprising. But, it is always better to know than not know. Where marriage is concerned, ignorance is not bliss.
Just remember, a prenup is a contract, and contracts can be nullified, revoked, found void or amended (as was reported in the case of Tiger and Elin’s prenup). Also, each party must have his/her own attorney in prenup negotiations. In NY, if both parties had the same attorney or one spouse did not have an attorney, the prenup will be unenforceable.
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