Are Prenuptial Agreements always a good idea?
I have been drafting prenuptial agreements for many years, and one that I have done recently has caused me to think a bit more about the point of these documents.
A young man had gotten off to a good financial start in life and came to me with just over a million dollars in the bank and a long term girlfriend he wanted to marry. Being in finance, this person had lots of colleagues who warned him about the financial perils of divorce.
Our laws recognize marriage as an economic partnership. When two people marry for the first time and they are young, they form a type of business where they share costs and expenses and acquire assets in different ways. We generally don’t fuss over nature or type of contribution, although the law does allow for this.
In this particular case, my client was obsessed with keeping all of his pre-marital assets, and everything gained by his use of pre-marital assets, as his separate property- cash, cars, real estate, retirements… He also greatly restricted alimony. All of this was acceptable by his future wife because “they were in love”. His wife’s lawyer did her best, but her client insisted on signing the document with very minor revisions.
So what is this couple going to build together? What kind of life will they have where Wife has no access to, or even any knowledge about, marital funds? What’s going to happen when the next recession comes and causes financial stress in their home? Will Husband simply make demands and everyone must fall in line as he holds all the money? How will family decisions be made about vacations, schools, purchase of homes, cars, gifts, etc? If Wife does not make her own money will she be simply a captive to her Husband’s desires? Will she ever be able to divorce him if he becomes abusive?
I have always viewed prenuptial agreements as appropriate for 2nd+ marriages in order to account for children of the first marriage; not used simply isolate a wife from all of her husband’s finances and limit her ability to collect alimony.
Wife’s counsel and I will hopefully be long retired by the time this one comes back around!