Conversations about money can be difficult and as a result, some people simply avoid them. Avoiding them can have negative consequences, so my goal is to call your attention to the conversations you need to be having. I’m going to cover a different topic each month with an explanation of the issue and what you need to convey and learn from the other parties involved. The prenuptial agreement (prenup) is one of the most charged conversations and also one of the most essential, depending on your circumstances.
What is a Prenup?
A prenup is a legally binding contract between two people engaged to be married that dictates what happens to each person’s assets and debts in the event of a divorce. Prenups in 28 states follow the 1983 Uniform Premarital Agreement Act, federal legislation meant to standardize prenup agreements in the US. Massachusetts is not among them. The agreement defines financial and personal guidelines regarding the separation of property when a couple separates. These documents are drafted with the guidance of a family law attorney and best practice is for both parties to be represented by independent attorneys. While separate attorneys are not required in Massachusetts, a judge may consider whether each party had separate representation when deciding if the agreement is enforceable.
When is a Prenup Prudent
Entering a second marriage with children from a prior marriage can be an excellent way to protect them in the event of a divorce. The agreement can set aside pieces of property or specific assets that are intended for existing children and shouldn’t be considered marital property. If one of you has significant debts, such as from education loans or medical care, a prenup can identify this as premarital debt. Should you get divorced, the other spouse would not be responsible for the debt. The same thing goes for partners who have unequal wealth. You may not want half your assets being distributed to your spouse in a divorce. Small business owners, who run their company without the help of the partner, can use a prenup to ensure half their business doesn’t get awarded to their spouse. Do you stand to inherit substantial wealth from your parents? This contract is an excellent way to protect your future property from becoming shared marital property. A prenup can be used to protect family heirlooms or things with sentimental value. Some prenups have even been drafted to ensure respectful behavior, outlining penalties for infidelity, gambling and substance abuse. While a prenup can award custody of a pet, it cannot predetermine child custody, support or visitation rights. Those things are decided by a court based on what is in the best interest of the child.
History
Prenups used to be entered into by wealthy men trying to protect their assets. It was a tool of the rich and famous. Now it’s entered into by partners not wanting to be responsible for their spouse’s debt. Today more women are favoring prenups to protect themselves financially. Another use is to determine, in writing, which of their property is separate versus marital or community.
When to Start the Conversation
It’s best to start the conversation at least 4 to 6 months before the wedding. If you can bring it up before you get engaged, that’s even better. This is a deliberate process that takes time to discuss and time to craft the document with the attorneys. Planning a wedding is often stressful and trying to squeeze this conversation in between cake tasting and arranging seating charts can lead to overwhelm. You both need time to consider and discuss what you want from the agreement. After that, there’s work with the lawyers to draft the document and you will both need time to review. Rushing increases mistakes or things that are overlooked. If there are disagreements, you will need time to work them out fairly.
The Approach
First understand that your partner may be hurt or feel that you don’t trust them. They may be worried about losing out financially if the marriage ends, especially if they are the more financially dependent party. Choose a calm window when you have the time and space to have the discussion, when you are both feeling relaxed. This is not a quick discussion, and you don’t want to feel pressured, or be interrupted. Emphasize that this is something that can protect both of you. Do your homework by reading about prenups and share the information with your partner. Emphasize that this is about planning for a strong future, not anticipating divorce. Ask about how they are feeling about this subject and be sure to actively listen to their response. Discuss what you each want, what concerns you have and what will make you feel more secure financially as well as emotionally. This discussion and the ones that follow can actually be an exercise that strengthens your partnership. Learning and planning together reinforces that you are a team.
Be Honest and Open
Explain carefully why you are asking for the prenup. Be open about what you want to protect. It could be your business interest, your inheritance or just peace of mind. If your partner understands your perspective, it can go a long way to ensure you are both open and transparent in your discussion. Approach the conversation and the topic as though it’s a bridge helping the two of you to get to a place that serves you both. This conversation can set the stage for honestly discussing your concerns and goals. Approach it as if the two of you are tackling this issue together and your communication skills will be enhanced as a result.
Be Prepared
You will both need to make full financial disclosures, which can feel uncomfortable. Financial discussions are sensitive for most couples, but starting early in your relationship may serve to strengthen your skills. Be aware of how your partner approaches money and their familial relationship with money. Understand that the awkwardness is temporary, and humor can help. Try to keep emotions out of the discussion.
Practice listening without interrupting. Pay attention to what is being said rather than crafting your response while they speak. Take breaks and give each other time to think about the conversation before coming back to it. Ask questions. You want to get to the place of understanding what is behind their concerns. Genuinely try to see things from their perspective. Creating a collaborative approach helps it to seem less like a demand and more like you are working on creating a solution together. When disagreements arise, remember that you are on the same team. Work to create compromises that allow you both to feel heard and cared for. As with any important presentation, you may want to practice it first. Hearing yourself talk without an audience can help you refine your tone and approach.
As long as you both focus on the fact that this is a person you love and want to marry, you should be able to come up with an agreement that serves both of you. Focus on your shared financial aspirations and collaborate. At the end of the day, speak up. If you don’t have the conversation, you may end up paying for it later.
Connect with our team today if you have further questions regarding Prenups, and look out for more articles on conversations about money!
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