Larry James' CelebrateIntimateWeddings BLOG

Thursday, January 12, 2012

The Perfect Prenup. . .

Filed under: Guest Authors,Prenuptial Agreements,Wedding Tips — Larry James @ 8:00 am
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Why every couple needs one… especially the second time around!

Raoul Felder, Esq., Guest Author

“Don’t fear the prenup. Many couples avoid even discussing a prenuptial agreement because they perceive it to be a precursor for divorce. On the contrary, it can help lovebirds tackle real issues like debts, assets, business holdings and custody of children from previous marriages – all issues that could come back to bite you if not dealt with early enough.” ~ Larry James

prenuptial agreement with two red heartsPrenuptial agreements – contracts that specify how assets will be divided if a marriage ends in divorce – are no longer just for the ultra-wealthy. A 2010 poll by Harris Interactive found that prenups are three times as common as they were in 2002. That’s because even people of relatively modest means are searching for ways to limit the financial downside of divorce.

Prenups make particular sense for those who are remarrying later in life. Such people often have sizable assets to protect… little time to recover financially from divorce…and/or children from prior marriages to whom they wish to leave inheritances.

When couples without prenups divorce, their assets are divided according to the laws of their state. Most are “equitable distribution states,” meaning that courts consider a wide range of factors, including the length of the marriage and each partner’s job skills when divvying up assets. Nine states are “community property states,” in which property accumulated during the marriage is split down the middle. Either way, it’s a long, expensive and highly invasive process. Prenuptial agreements can be an effective way to avoid this mess—but only if they’re handled properly.

Raising a Touchy Topic

Probably the hardest aspect of a prenup is that it’s tricky to tell the person you are marrying that you want one. Some interpret this request to mean that you are accusing them of marrying you for money and/or that you don’t expect the marriage to last.

You can redirect some tension by citing the demands of third parties as one of the reasons for your prenup request…

• “My business partners/major clients/creditors are insisting that I get a prenup if I marry so that they don’t have to worry about who will own my business down the road.”

• “A relative intends to leave me an inheritance, but he’s insisting that I get a prenup so that he can be sure the money stays in the family.”

• “My kids are having kids of their own, and I promised to help with future college bills. I owe it to them to get a prenup to ensure that the money is there when they need it.”

If your prenup proposal is met with great anger and hurt, consider yourself fortunate to have learned now, before the wedding, that your betrothed does not handle difficult money conversations well. Fortunately, this often is not a problem with remarriage – people who have been married before tend to understand that marriage is a tricky financial and legal coupling as well as a romantic one.

Warning: Don’t let the discomfort of this discussion cause you to postpone it. If you do not have the prenup in place before the wedding plans are made and the invitations have been mailed, your spouse later could claim that he/she signed the prenup only because of the embarrassment that canceling the wedding at that point would have caused. A court could rule that such a prenup was signed under duress and invalidate it. In fact, it’s best to sign the prenup at least six months before the wedding. And it’s wise to include a provision agreeing to revisit the terms of the prenup after five years to acknowledge that things change, such as finances, needs and physical conditions. This provision might direct that a court or independent arbitrator step in if the spouses cannot agree on new terms.

Get the Prenup Right

Think twice about doing it yourself. A prenuptial agreement is like an insurance policy that protects the assets that you could lose in a divorce. You want that insurance policy to be one that you can depend on. Steven Spielberg reportedly tried the do-it-yourself prenup approach before marrying Amy Irving. His self-written prenup was not accepted by the courts, and he lost approximately $100 million.

Make a list of your assets before meeting with your attorney. Include all accounts and major possessions—lack of full financial disclosure could later invalidate the prenup.

Will You Marry Me?You and your fiancé/fiancée each should list your life goals, then compare them. Discussions about a prenuptial agreement can leave the two of you feeling at odds with each other. Comparing lists of life goals and seeing all that you intend to accomplish and enjoy together can start healing those wounds so that you feel like teammates again.

Hire two lawyers. If you hire just one lawyer to draft your prenup, your spouse could later claim that this attorney represented your interests while he/she effectively lacked legal representation. The prenup could be invalidated if a court believes this to be the case.

Each person should select his/her own attorney. Ask lawyers you know who specialize in other legal areas to recommend an attorney with expertise in drafting a prenuptial agreement. If your intended asks for your help choosing, ask your attorney or the state bar to produce a list of the leading attorneys in the region who handle prenuptial agreements, then give your fiancé this list.

An experienced attorney might charge between $1,500 and $5,000 to arrange a typical prenuptial agreement, or even up to $15,000 or more if the lawyer is from a prestigious law firm. Typically, the wealthier spouse-to-be pays the entire fee for both lawyers.

Make it clear that your goal is a fair division of assets when you meet with your attorney. Courts sometimes invalidate prenups that are too one-sided, though typically only if the court considers the division of assets so skewed that no reasonable person would have agreed to it.

A prenuptial agreement usually specifies each partner’s “separate property” – the assets and items that will remain exclusively the property of one partner. It also explains how “marital property” – the couple’s co-owned assets – will be divided in the event of a divorce. The prenup also might specify that premarital debts are the responsibility of the spouse who incurred them.

The line between separate and marital property can be complicated. Be sure that your prenup is written in a way that your separate property does not accidentally become marital property.

Example: A widow remarries and asks for a prenup to ensure that her home remains in her family. This prenup should specify that the home will remain her separate property regardless of whether the new husband lives there and contributes to the home’s upkeep and regardless of whether the couple’s jointly owned funds are used to pay for expenses such as home repairs or homeowners insurance.

A prenup also might specify that certain items will go to the children or other relatives of either person. It might even say who gets the pets.

Take into account other legal agreements. The prenups of those who remarry should take into account obligations under prior divorce agreements. If certain assets and/or income already are promised to the ex-spouse, they cannot also be promised to the new spouse in a prenup – the original divorce agreement takes precedence.

Prenups also can play a role in estate planning. A clause in the prenup could waive some or all of each partner’s rights to the other’s estate. That’s particularly useful for older people who wed but wish to leave most or all of their assets to children from a prior marriage. The prenup must be coordinated with the terms of the will to be effective. Consult with an estate-planning attorney for details.

Consider including a sunset clause in the prenup, so it dissolves if the marriage lasts a certain length of time – perhaps 20 years – to reassure your future spouse that you are willing to share your wealth as long as the marriage lasts for a long time.

BONUS Article: So, What About a Prenuptial Agreement?

RaoulFelderCopyright © 2012 – Raoul Felder, Esq. Reprinted with permission. Raoul Felder, Esq., an attorney who has practiced matrimonial and family law in New York City for more than 40 years. He has been named one of the nation’s 100 most powerful lawyers by The National Law Journal and has served as an assistant US attorney for the Justice Department. He is author of The Good Divorce: How to Walk Away Financially Sound and Emotionally Happy (St. Martin’s) www.RaoulFelder.com

Larry James is an award winning, non-denominational wedding officiant and performs the most “Romantic” wedding ceremony you will find anywhere! Every wedding ceremony is customized to your complete satisfaction. Call to check availability: 480-998-9411 or 800-725-9223. Pre-maritial relationship coaching is available and not required. You will find more than 470 pages of Wedding ideas, tips (90 tips and growing), ceremonies, and more at: http://www.celebrateintimateweddings.com. Something NEW about weddings is posted every 4th day on this Wedding BLOG. Check Larry’s availability.

Subscribe to Larry’s FREE monthly “LoveNotes for Lovers” eZINE. Contact: CelebrateIntimateWeddings.com, P.O. Box 12695, Scottsdale, AZ 85267-2695. – CelebrateIntimateWeddings.com

NOTE: All articles, “LoveNotes” and wedding tips listed in this Wedding BLOG – written by Larry James – are available for reprint in magazines, periodicals, newsletters, newspapers, eZINEs, on the Internet or on your own Website. Click here for details.

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Monday, October 19, 2009

So, What About a Prenuptial Agreement?

Filed under: Prenuptial Agreements — Larry James @ 8:00 am
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Is a prenuptial agreement a cynical admission that love comes second to money or simply a practical nod to reality? Typically, a prenuptial agreement is viewed as a negative element of marriage because it presents the thought of expecting failure within the marriage.

In my research, there are 3 times when a prenuptial agreement “might” make sense.

First of all, a prenuptial agreement, which couples mainly use to state how money will be divided if the marriage doesn’t work, can cost from $2000 to $25,000 depending on the circumstances. Is it worth it?

Maybe. . . if you have a family business and are getting married again. With a prenup you can cut the spouse out of business appreciation, says attorney Mitchell Karpf, “Otherwise he or she may be entitled to half.”

Maybe. . . if you have vastly more savings than your spouse. If you’d be unhappy splitting assets squarely in the event of a divorce, you may want a prenup to state a different arrangement. While a prenup can be a sensitive issue to discuss, you can also look at a prenuptial agreement as a way to allow you, as a couple, to make your own rules about the distribution of your finances, rather than leaving the decision in the hands of the court.

Maybe. . . if you have kids from a previous marriage. A prenup can back up the terms of your will by spelling out the assets that you don’t want your spouse to inherit upon your death.

A prenuptial agreement is a written contract between two people that defines the rights and benefits that will exist during the marriage and if the marriage ends. As a bilateral contract, a prenuptial agreement is harder to contest than a will. In the event of a divorce or death, a prenuptial agreement can determine your right to property, life insurance benefits, retirement plan assets and support payments. Without such an agreement, state laws will determine these rights and benefits.

prenupcartoonThe subject of a prenuptial agreement is a difficult one to bring up. It’s best to discuss this BEFORE the marriage. Does it raise a red flag that screams “I don’t trust you” or “I have my doubts this marriage will work?” It may, if you don’t present it properly, especially if you are a couple that doesn’t communicate well. (If the latter is true, you may want to seek some counseling before entering into a prenuptial agreement.)

If you decide to go the route of the prenuptial agreement, it is recommended that both you and your partner consult an attorney to assist you in the process. Do not attempt to do a prenup by yourselves.

While one of the best preventions to divorce is ensuring you and your soon-to-be spouse have similar expectations of married life – meaning you have to talk about things such as religion, child-rearing, money (joint accounts, etc.), sex, etc. – as well as being able to say “I’m, sorry. I was wrong.” when you really mess up.

Marriage is not an experiment, littered with prenuptial agreements; gushy platitudes and an attitude of “Try me! If it doesn’t work, you can always bail out!” Your vows must mean something for your relationship to prosper. This kind of commitment demands discipline and perseverance.

Remember, relationships are something that must be worked on all the time, not only when they are broken and need to be fixed. Marriage is tough work – it does not “just happen.”

Copyright © 2009 – Larry James. This idea is adapted from Larry’s “romantic” Wedding Website. Larry James is an award winning, non-denominational wedding officiant and performs the most “Romantic” wedding ceremony you will find anywhere! Every wedding ceremony is customized to your complete satisfaction. Call to check availability: 480-998-9411 or 800-725-9223. Pre-maritial relationship coaching is available and not required. You will find more than 470 pages of Wedding ideas, tips (90 tips and growing), ceremonies, and more at: http://www.celebrateintimateweddings.com. Something NEW about weddings is posted every 4th day on this Wedding BLOG. Check Larry’s availability.

Subscribe to Larry’s FREE monthly “LoveNotes for Lovers” eZINE. Contact: CelebrateIntimateWeddings.com, P.O. Box 12695, Scottsdale, AZ 85267-2695. – CelebrateIntimateWeddings.com

NOTE: All articles, “LoveNotes” and wedding tips listed in this Wedding BLOG – written by Larry James – are available for reprint in magazines, periodicals, newsletters, newspapers, eZINEs, on the Internet or on your own Website. Click here for details.

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Add Larry James as a “friend” to your Facebook page: http://www.Facebook.com/larry.james
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