Why Everyone Should Consider a Prenup
Kanye West’s cry of “We want prenup!” may be the furthest thing from your mind as you consider your upcoming marriage, but as he says, it may be “somethin’ that you need to have.”
People asking about a prenup often fall into one of two groups: (1) they are re-marrying after difficult and trying divorces, or with blended families; or (2) they are concerned about preserving existing family wealth.
While these are valid reasons for desiring a prenup, they are only two pieces of a much larger puzzle. Even couples with little family wealth to preserve and no children from prior relationships can benefit from discussing and deciding about potential conflict areas before they ever arise.
Why is a Prenup Important?
Maryland and DC divorce laws are complicated, especially with respect to alimony and division of property. This leads to many potential outcomes, which is not a recipe for a fair resolution of issues, particularly at a time when emotions may be running high.
Fanning the emotional flames further is the inclusion of marital fault (e.g., issues such as adultery, abuse, neglect, and substance abuse) as a factor that must be considered by law when addressing alimony and division of property. The result is that divorces are often contentious, costly, and painful experiences for one or both spouses.
A prenup can eliminate much of the ambiguity and financial waste that occurs during the divorce process by defining what is and is not marital property, and how such property will be valued and divided in the event of divorce. The same can be said for alimony, although that can be more difficult if spouses-to-be are uncertain of their future career and life plans.
Simply put, the odds are greater that you’ll make sound decisions objectively before a potential divorce. At the very least, discussing and considering the potential benefits and detriments to a prenup, on both sides, will better prepare you for what to expect should the marriage sour.
What Can a Prenup Do for Me?
A prenup can do far more than insulate existing pre-marital wealth. It can address, among other issues:
- What property acquired during the marriage will be shared and/or divided, and how and when such property will be shared and/or divided (e.g. while most assume that marital property will be divided equally, that is not the law in Maryland and DC. Both jurisdictions favor equitable distribution of property – not necessarily equal – leaving a lot of room for debate);
- How jointly titled property purchased prior to the marriage will be treated upon divorce (e.g. per existing Maryland law, such property would be considered joint non-marital property, which courts cannot equitably divide, even if one or both spouses contributed unequally to the acquisition of the property).
- Whether or not spouses will receive a return on their investment of pre-marital property into the acquisition of a jointly titled residence acquired during the marriage and, if so, how much.
- How jointly titled assets will be treated in the event one or both spouses dies prematurely, either before or after a breakdown in the marriage (e.g. ordinarily, these assets would pass by title, even if the marriage is irretrievably broken at the time of death).
- How individually owned businesses, started either prior to or during the marriage, will be treated.
- Spousal support rights (e.g. whether or not alimony is available to either party in the event of divorce; if alimony is available, how will it be calculated and for how long it will be paid).
- How family expenses will be paid during the marriage, and by whom, and from what source or sources.
- Financial penalties for infidelity.
- How disputes concerning the interpretation and enforcement of the prenup will be resolved and how the cost of those disputes will be paid.
How Much Will It Cost?
The answer is that it depends on what you’re looking for and the amount of detail in the prenup. Generally speaking, the range of fees incurred to negotiate, draft, and execute a prenup pale in comparison those incurred in a hotly or even mildly contested divorce action. In that regard, a prenup can be thought of as a “divorce insurance policy.” You might never need it. But if you do, you’ll be glad you have it.
What If I Didn’t Obtain a Prenup Prior to the Wedding – But Want One Now?
Have no fear! You can still consummate an agreement that accomplishes objectives similar to the above. It will instead be called a postnuptial agreement. But the principles remain the same.
The difficulty in that instance is will your spouse be amenable to signing such an agreement now that the marriage is underway and rights and responsibilities have been altered by the legal status of marriage? This is why giving attention to these topics before the wedding is so critical.