What is a Prenup?
The following excerpt is from Kerry Hannon's book,
Suddenly
Single: Money Skills for Divorcées and Widows.
Simply put, a prenuptual agreement a document or pact signed
before your marriage that spells out how your assets will
be divided in the event of death or divorce. Some people even
use it as a plan for how all finances will be managed during
their marriage. Some agreements go as far as to require that
the husband or wife maintain a regular sexual relationship
with the other partner in order to be eligible for any portion
of assets. Anything goes. But the important thing is that
you discuss your financial lives openly before you remarry.
If the man you are planning to marry has been married before
or widowed, he may have children to rear. He may also have
debts you know nothing about. You need to decide how you want
to share your two sets of assets.
There is no need to feel obligated to join your financial
lives together in a formal manner. Most financial advisors
argue that mingling assets by including your new husband on
the title of your house or adding his name to your investments
can lead to nothing but trouble, particularly if the man has
fewer assets than you. To ensure that your hard-earned financial
stability holds firm, it's advisable to sign a prenup.
The idea of signing a marriage agreement that concerns financial
matters isn't new at all. Jewish marriage ceremonies have
included the act of signing the ketubah for centuries. The
ketubah is a Hebrew pact that defines a husband's obligations
to his bride. It covers everything from providing clothes
and food to sexual relations. It also states that the husband
is responsible for providing a set amount of money for his
wife should he leave her through divorce or death.
Writing a prenuptial agreement might cost you a few thousand
dollars depending on how complicated it is, but it is a step
worth taking for most women marrying for the second time.
The agreement can't cover issues related to children, such
as child support or custody, but the contract can protect
your other assets and even determine who will get custody
of your labrador retriever.
How to Make a Prenup Hold Up in Court
The key to making these agreements successful is to begin
by each of you hiring your own lawyer. There are thousands
of attorneys who specialize in matrimonial law and handle
prenups frequently. You don't want your new spouse to be able
to argue that there was any type of conflict of interest.
Both you and your future spouse must divulge detailed financial
information, including all assets, income, and debts. Full
disclosure is paramount. Then the pact must be signed voluntarily
by both of you and far enough in advance of your wedding day
so your husband can't claim he signed under duress. Two or
three months ahead of your wedding date is advisable. And
it's probably a good idea to videotape the signing so you
have a record. If there are bad feelings about signing a prenup,
you might consider setting a future date on which the contract
will expire.
Who Needs a Prenup?
- A woman who is bringing a lot of assets to the partnership
($100,000 and up)
- A woman who has children from a prior marriage
- A woman who owns her own business or is a partner in a
company
- A woman on a fast career path who is likely to earn a
hefty salary
- A woman who is paying for her spouse to get an advanced
degree
Postnuptial Agreements
If you don't have a prenup and can't come to an agreement
with your ex-spouse during the divorce proceedings, your state
laws will dictate division of the assets. That means that
in community-property states--Arizona, California, Idaho, Louisiana,
Nevada, New Mexico, Texas, Washington, and Wisconsin--you will
probably get half of everything. In other states, assets will
be split by the court depending on factors such as how long
you were married and what you actually accumulated together.
It's never too late to draw up an agreement, even after you
have been married for a while. A postnuptial agreement is
just as valid as a prenup and is set up the same way. You
should seriously consider this option if you inherit a lump
sum of money or have a large cash infusion from selling a
business.
These agreements will hold up in court if they are written
properly. Never lose sight of your goal: keeping your financial
independence. If the man you want to marry is unwilling to
sign an agreement, you should probably take some time to think
things through.
Be pragmatic when it comes to linking your life to a new
person. Living happily ever after doesn't always happen for
most of us. You've learned that the hard way. It takes time
to recover from the loss of a spouse, so take it slowly and
be honest with yourself. But never forget that being responsible
for your own finances and striving constantly to educate yourself
about money issues will give you confidence and freedom to
survive these life-shattering blows. Taking control of your
financial life is a necessity.
With your financial plan firmly in place, handling money
will become a routine part of your daily life. The most difficult
work is behind you. You'll want to make a habit of checking
up on your investments every six months or so to make sure
everything is still on track. Nobody ever said life was fair,
but being fiscally fit will make your future brighter.
Excerpted from "Suddenly Single: Money Skills for Divorcées
and Widows" with the permission of the publisher John
Wiley & Sons, Inc. Copyright ©1999 by Ernst &
Young LLP. This book is available at all bookstores and from
the Wiley Web site at www.wiley.com,
1-800-225-5945.
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