Thursday, September 21, 2006

A Harvard Law School Takes a look at Prenuptial Agreements

What is The Reason that Most People, Don’t Have a Prenuptial Agreement?

A recent release of a paper by a Harvard Law School Olin Fellow explains that about 5 percent of married people have such an agreement, although the facts are that more then 50 percent of marriages end up in a divorce. This Harvard Law graduate explains what she has discovered.

What Inspired Her to Research the Facts on Prenuptial Agreements?

The facts are that more then half of marriages terminate and these once loving couples end up in divorce court, and a microscopic 5 percent have prenuptial agreements in place. Most of the perspective mates upon deliberation decide that if they bring the possibility of a prenup up to there would be intended, it suggests that they are planning for divorce, she concluded. She would investigate why couples were not protecting themselves with prenuptial agreements.

What is the Reason Couples Contemplating Marriage, don’t have a Prenuptial Agreement?

The two main reasons that prevent people from asking their perspective partner to sign to a prenuptial agreement.

First of all, as stated previously the majority of couples feel it predicts doom to suggest a prenuptial agreement to their perspective partner. Rumor has it that when Jennifer Lopez asked Ben Affleck to agree to a prenup, Ben Affleck ended the relationship.

The other reason is the majority of couples believe that in spite of the statistics showing that more then half of all marriages end in divorce, it will never happen to them. They believe their there love will overcome any possible obstacles that can occur in their relationship and that their foundation is unbendable and more stable then most people, and divorce will never happen.

Is it true as the courts have stated that prenuptial agreements are not absolutely contrary to promoting the stability of marriage?

The reality is a Prenuptial Agreement can create a situation where the marriage will be more difficult to terminate rather then easier to end. You can design a prenup that states divorce can not happen unless a travesty has occurred, like being unfaithful or whatever you decide is important as a couple. And in contrast, the majority of states accept no fault divorce.

Is it a fact that when prenups have additional instruction besides divisions of assets and state specific provisions when a divorce can occur, be upheld in court.

To the best of my understanding this type of Prenuptial Agreement has not been tested in divorce court. In past years every state insisted that a spouse show fault before a divorce could be granted. But there are states that accept an agreement for a "covenant marriage" where one spouse will be required to show fault before filing for divorce. It would be unlikely that any court would limit a couple’s prenup because it has requirements for a divorce.

Are children of divorce more likely to have a Prenuptial Agreement before they marry?

Shocking as it seems, the answer is no! As stated previously the reasons couples don’t have a prenup in place is not logical but emotional. Neither partner wants to create a situation that predicts doom. There are also other significant factors that should be mentioned. 1) If one of the partners has wealth, it is likely they will insist on a prenup. If you are married it is unlikely you will ask for a prenup. 3) Women will usually not insist on a prenup.

Would you suggest that Prenuptial Agreements be Mandatory?

It is important to understand why a prenuptial agreement is a win, win situation for both parties. After examining the research above, I would recommend a prenup. A mandatory prenuptial agreement would be beneficial to couples. It would eliminate that uncomfortable discussion of bringing up the matter because everyone would be required to deal with it as a matter of law, even if they feel they will never divorce.

Also the practice may eliminate unrealistic optimism of what the future may bring. Since everyone that marries will have a prenuptial agreement it will create a smoother transition into marriage. If this law was in place perhaps Jennifer Lopez and Ben Affleck would still be together?

Sign a Prenup, Don’t You Love Me!

Don’t be insulted, if your future partner insists you sign a prenup, because it will protect you as well.

You are anticipating the big day, it’s not about money, it’s about love and out of nowhere, you are asked to sign a prenuptial agreement.

You don’t want to make an issue of it; you’re a person of reason and logic, and realize your future mate’s family is putting the squeeze on him. But the very idea of being asked to do this has left you confused and upset.

You want to be considerate but you feel the pressure coming from your future in-laws. They are in a position where they want to protect their assets and you don’t have much to protect.

Your fiancée and his family have more money. But when you met your fiancée money wasn’t a factor and not your reason to take the relationship to the next level. Money wouldn’t keep you there. Be reasonable.

You’re not marrying a control freak, so the prenup should not be a problem. You can’t control everything, but the prenup can be crafted to be advantageous to you.

Create A Solid Base for Your Relationship

To begin with it’s a chance (If you decide to have a prenup) for you and your future mate to put your financial cards on the table, which is very prudent. It’s good to know what will be expected in real terms, not just in your mind. Marriage is a joining of two people in a social and financial agreement.

For the most part unless you or your future mate are wealthy, economic concerns are rarely brought up because of the fear of offending the other. This is a terrible error in judgement and can cause unreversible problems in the future.

To create a great partnership you will need to sit down and draw up a plan that will be the foundation of understanding between you and your future spouse. The Prenuptial Agreement should be something you can both happily live with. It needs to be fair and be able to stand the test of time.

If you both get what you need (Not Necessarily What You Want) you have a successful prenup. Both parties have a responsibility to contribute to the final prenup. The one with the greater financial assets does not rule. If they do, it will cause resentment and result in a weak foundation to what you hope is a lifelong relationship.

The point is consideration, based on fairness and not greed. Each person has needs that must be addressed.

Boost up Your Financial Position

Even if you are not the one with the greatest assets the prenup can protect you as well and not leave you out in the cold.

It actually can be a way to put you in a better financial position. So discuss and negotiate what your position should be. When someone loves you and wants to marry you, could you ever be in a stronger position for generosity. It’s an opportunity to make a great deal. If you get a divorce and you don’t have a prenup your once great love will not be in a generous mood and want to give you as little as possible. Your position should be to try to get more then the law would allow without a prenup.

In a great majority of couples the wealthy partner will cover living expenses. The person with the least money or earnings usually gets to keep their assets in their own account to do with as they wish.

From the very beginning of the marriage there could be an outright transfer of money or assets. Usually increasing as the years go by. This is a form of protection if the wealthy spouse dies first. Certainly your new mate will want to protect you in the event of their death.

There are differences and variations in prenups as there are in people. Everyone has to customize their agreement to meet their specific needs. You must respect each other above all to work out the best possible prenuptial agreement.

Will A Prenup Override Your State Law

Won’t the state laws alone protect you, in the event of death, divorce or terminal illness? Surely the state will be fair? Why do I need it now? Experts in this area claim you and your partner will never be at a point when generosity and fairness will have a stronger position, considering that you are in love. If for some unfortunate reason you wind up in divorce court things will be very different.

If your partner dies the state cannot protect you. If your wealthy spouse’s family does not want to be generous or guarantee you security, there is no law that can protect you. They are not obligated to treat you as your spouse would if he/she was alive.

Educate yourself specifically to laws governing marriage where you live and find out if there is any protection. When you get married without a prenuptial agreement you are voluntarily agreeing to the laws of the state you live in. So ignorance or fear of dealing with this issue can be very costly.

Most states are equitable distribution states where the laws of the state will consider what each partner contributed financially to the marriage and if divorce occurs assets are divided according to your contribution. It may be approximately 50-50 split, but not necessarily. It would be a good idea to establish this from the beginning. If one of you are planning to stay home and take care of the kids make it clear that there will be a 50-50 split, if divorce happens.

For the most part assets or inheritances brought into the marriage are not considered joint assets. But the day you get married the clock starts ticking. So if you marry a wealthy person who doesn’t work, can’t work for any reason, there may not be much of a contribution to your personal account, if any. In the final scene you could be shut out with nothing. Could there ever be a stronger reason for a prenup!

Don’t let the state decide for you. Their interests are different then yours. When you have a prenup you and your future mate have decided what you want and they are very different from what state law may or may not give you. If divorce comes you may not be happy, but you will be protected with a prenup.

Most importantly Get Legal Advice

You must each have your own lawyer to represent your personal interests.

Any attorney will not do. Find a lawyer who specializes in this area. It will be more expensive, but worth every dime. Look for someone with a lot of experience and not someone right of law school. You wouldn’t want to be a new surgeons first operation.

It’s a trust building process and you don’t want it to be adversarial. Don’t go into this with "what I can I get if things fall apart". It’s an opportunity for bonding.

Remember you’re getting married, and you’re in love! And that’s Wonderful! Just cover you assets!