The power of the prenup
NEW YORK (Reuters) - For centuries, men and women didn't marry for love -- they married for money. The union of a man and woman was strictly a business arrangement to create financial security and combine fortunes as well as empires.
Today's couples, at least in the United States, have more freedom in selecting a spouse. But they also have a way out of the partnership: divorce.
That is why more of them are waltzing down the aisle with a prenuptial agreement in hand. Sheila Riesel, a matrimonial attorney at Blank Rome LLP in New York, talks about the trends in prenups.
Q. Are you seeing more prenups?
A. A prenup is private contract among two individuals. We don't know how many prenups are in existence. Without question, though, prenups are becoming a commonplace occurrence before couples with some financial means, even young ones, tie the knot.
Q. Why are younger couples flocking to prenups? Is it family pressure?
A. The reality is that 50 percent of the time, these marriages end in divorce. People need some downside protection. They may come to a marriage with substantial dollars, be it something that they've earned (a la Facebook's Mark Zuckerberg) or something they've inherited or been given by their families.
Q. Does everyone with money need a prenup?
A. The conventional wisdom is that a prenup is an important thing for the "monied" future spouse if a marriage dissolves; otherwise, their assets will be divided in an equitable distribution or as community property, depending on which state they live in. But prenups give the spouse who doesn't have money a way to peek at their partner's assets -- and negotiate. It's a way of getting to assets you might not otherwise know about.
The negotiation of a prenup is very much dictated by who wants to get married more. To put it as bluntly as possible, often there's a dynamic in a couple that one person is more in love, more committed to getting married. In that context, the other person, monied or not, has the leverage.
Q. Describe a typical prenup.
A. The basic structure is: "Everything in my name is mine, and everything in your name is yours. You will receive X dollars for every year we are married." Sometimes that's also tied to the number of children produced in a marriage.
Q. What's typically covered in the agreement?
A. Existing wealth and business interests are the top priority. A person may have intellectual property rights that need to be protected, too. Or they may be an author and create characters. I know of a prenup where a wine collection was an issue -- it was a very nice wine collection.
In states like New York, the definition of assets is very broad, so prenups will cover advanced degrees that are earned during the marriage. If you are still in school, you have a legitimate concern that the business, law or medical degree you get is a valuable marital asset, and your future earnings could factor into a divorce settlement.
You'll find a confidentiality provision in a prenup when a person is of public interest or has substantial wealth. Both parties agree to keep the existence of the agreement, terms, as well as the information one gathers as a result of the marriage, confidential.
Q. How about unusual provisions in a prenup?
A. I've seen situations where one person has all the money, and the other may be younger and more beautiful. It's been a while, but I've seen prenups tied to weight of one of the spouses -- so long there was not a weight gain, they'd get a certain amount. That's incredibly appalling.
Q. How far before a wedding should you hammer out the details of a prenup?
A. The earlier, the better. Six months before the wedding is ideal, but, on average, most people sign their prenups a month before the wedding. Of course, some people wait until the last minute. I've seen prenups signed on the day of the wedding. That's not smart. You don't want to tarnish the excitement of a wedding day, or leave yourself open to claims of duress.
When a prenup is negotiated, there may be a very clear mission in terms of what needs to be accomplished financially, but it has to be done in a way that doesn't damage the fabric of this nascent relationship.
Q. Do you get a lot of tears in your office?
A. Not usually, and when I do, it speaks to an imbalance in the relationship, where one person is too vulnerable. I do get a lot of anger and disappointment. People who do prenups best see this as something to get done as a business deal.
(This is part of a five-story package on marriage and money, moving June 4-7.)
(The YOUNG BUCKS column appears monthly and at additional times as warranted. Lauren Young tweets at www.twitter.com/laurenyoung; Read more of her work at blogs.reuters.com/lauren-young; Editing by Linda Stern, Jilian Mincer and Lisa Von Ahn)