Marriage is of course both a spiritual and financial union. Telling your significant other that you want a prenuptial agreement (“prenup”) can be awkward and getting it done potentially even more awkward. Here are some tips to remember to make the path easier:
EVERYONE who gets married has a prenup.
The difference is that the State of California automatically provides a set of rules for determining what happens in the event of a divorce.
By having an agreement prepared that fits one’s situation, one has in essence elected to make sure that the expectations of both are clearly defined up front in light of their specific circumstances instead of having a “one size fits all” agreement determined by the State and which can change at any time.
Both Parties must be Represented by Independent Counsel. For practical purposes, your agreement will be worthless if a (foolish) attorney represents both of you. You both need lawyers. That’s the law if you want to maximize the probability that your agreement will be enforced. Offer to reimburse your significant other for their fees. Don’t refer your significant other to the attorney they will use–let them find their own or have them call the local bar association for a referral.
Disclose up Front. Your agreement will contain schedules showing a full and complete disclosure of your assets and their values as well as your income. It’s the law. Discuss your finances with your significant other before they receive the agreement–less surprise is better. Frequently the party “without the wealth” is surprised by how much wealth their fiance has acquired. That’s bad as you will see in #4.
They WILL melt down. Almost every person who comes to see me to prepare a prenup says their significant other has no problem at all with signing a prenup. Just about all of those significant others melt down during the process. You need to be prepared for this. Be ready and take the initiative before such a meltdown occurs and discuss the prenup on an ongoing basis, including details and rationales, while it is in progress. One useful strategy for avoiding meltdowns: see #3 minimizing surprises.
Avoid the Last Minute. These frequently take longer than you think to finalize. I recommend starting at least two but preferably three months in advance of the wedding date. You don’t want to be negotiating the week of your wedding, but it happens because the process between the receipt of the first draft and the final draft can be longer than expected. (See #6.)
Be prepared for the Opposing Counsel’s Comments. The lawyer your significant other hires has two primary concerns–protecting your significant other and making sure that they are not sued down the road for not getting enough for them. So fasten your seatbelt–once your significant other meets with their attorney for the first time to review the draft you have had prepared it may get “frosty.” Your significant other will be told that at least part if not all of the draft is one-sided, unfair, and that they are being taken advantage of. This is why it’s important to start early and to be prepared for this event.
Give. Your agreement should not be one-sided. There are numerous ways to leverage your generosity, such as calibrating benefits to the longevity of the marriage. However, no penalties–they are generally counterproductive.
Estate Plan. Here is a place to be generous–estate planning provisions can be made to apply only in the event of death while married and together. You have virtually no downside here with the proper use of trusts.
Have some Room. Have the first draft resonate with what you are trying to accomplish, but don’t forget to leave a little room. Once your significant other sees an attorney, they are likely to ask for changes. If you leave yourself no room to compromise, you will likely have a difficult situation.
Be Committed. Not my words but always consider the life formula M=O-C. This stands for Mess equals Obligation without Commitment. Here, you need to be prepared for a few awkward moments, and occasionally worse. Everything may go as planned. Your significant other’s statement before starting that they will sign whatever you want may hold true, but then again it may not. If you are not clear in your thinking about doing all of this, you may end up with the worst of all worlds–no prenup and an upset partner! By being clear that this MUST be done in order for you to become married, your commitment will help carry you across potentially difficult moments in the process.