Originally published in Woman's Day August 19, 1986
Marriage is still popular, but more and more women are now looking beyond romance to economics. And many are signing—even insisting upon—prenuptial agreements. No one knows exactly how many are drawn up each year, but one survey of lawyers indicated an increase of 25 percent since 1970. Although 80 percent are for second marriages, some first-timers have them too. Postnuptial agreements—similar contracts signed after the wedding—are also on the rise.
No matter when they’re drawn up, these agreements specify the financial terms of the marriage and the division of property at divorce or death. Once reserved for people like Jacqueline Onassis, they now serve an important function for the middle class. In my work as a matrimonial lawyer, I’ve drawn up a number for people who were neither rich nor famous. Here are four reasons for considering one:
- Protecting individual property. These situations are typical: • A couple about to marry is planning for one spouse to put the other through college or graduate school. Their prenuptial agreement can provide compensation for the sacrifices of the working partner if the marriage doesn’t last. (New York’s highest court ruled that a medical license is “marital property,” subject to a divorce settlement.) • One person has assets large enough to attract marriage partners motivated by greed. Take Paul, who at age 24 appeared on paper to be quite wealthy. A recent law school graduate, he had extensive real-estate holdings. But they really belonged to his father, a developer, who had listed them in Paul’s name to reduce taxes. The father asked that Paul and his fiancee, Elaine, sign a pre-nuptial agreement defining the real estate as “separate property,” to which she’d have no claim in the event of divorce. Elaine refused to sign and the marriage was called off. • Prospective mates are involved in businesses they don’t want to put at risk. Before Anne and Steven met and decided to marry, she had built up a prosperous boutique while he ran a lucrative coin company. Their prenuptial agreement specified that neither had any claim to the other’s enterprise.
- Giving up estate rights. Those entering a second marriage may already have children to whom they want to leave their assets. Yet In most states, one third or more of the property and possessions would have to go to the widowed spouse. A prenuptial agreement can waive these rights and clear the way for the children’s inheritance.
- Replacing alimony. Karen, divorced after thirty years as a homemaker, received $10,000 a year in alimony. When she fell in love and decided to marry again, Karen knew she’d have to give up the alimony. If her second marriage—to Howard—were also dissolved, she was unlikely to receive the same level of support. The solution: a prenuptial contract stating that Howard would replace the $10,000-a-year alimony in the event of a divorce.
- Avoiding divorce litigation. Nancy and Bob planned to marry in a state which had recently enacted an “equitable distribution” law regarding divorce settlements. About forty-two states have such a law that distinguishes between “separate” property (owned by an individual before the marriage or inherited during it) and “marital” property (a home, pension or savings accumulated during the marriage).
If Nancy and Bob should divorce and be unable to agree on a division of assets, a court would determine what is marital property and what percentage should go to each spouse. To avoid the financial and emotional drain of a court battle, the couple drew up a prenuptial agreement listing each item of separate property to stay with its owner if the marriage ends. They also agreed to divide marital property 50-50 if they have no children, and 60-40 in Nancy’s favor if they do have children.
Setting Up an Agreement
When a couple decides on a prenuptial agreement, they should discuss and then put down on paper exactly what they want to accomplish. Each should hire a lawyer with experience in matrimonial law. Once both are satisfied with the terms, the lawyers draw up the agreement. When properly signed, it becomes a binding contract. The cost varies from a few hundred to several thousand dollars, depending upon the complexity of the agreement and the rate charged by the lawyers.
Some prenuptial agreements are contested—usually for one of these reasons: 1. lack of full disclosure—one party hid information about assets or income; 2. fraud—it contained information known to be false; 3. coercion or duress—a prospective spouse was forced to sign; 4. lack of legal representation by one party.
When properly executed, most contracts between spouses are found valid in court. Like wills, they can be initiated or changed at any time before or during the marriage. Although not right for everyone, prenuptial agreements offer many couples an end to financial fears and a step toward marital bliss.