When you've just become engaged to the person of your dreams, the last idea on your mind is the possibility of your relationship ending. But nowadays, when more than half of all marriages end in divorce, making plans for your financial future is more important than ever. According to attorney Ann Carrozza, even if you are drowning in debt, you and your future spouse should still sign a prenuptial agreement.
Here are the 10 most frequently asked questions Ann hears about pre-nups. Read her answers below!
1. Isn't a pre-nup unromantic?
No. Think of it as an extension of one's wedding vows. Ideally, it can be a joint goal-setting exercise that covers so much more than just money. What’s not romantic is letting some strange judge decide who gets your stuff (and pets!) in the event of a divorce.
2. Why can't we just make verbal promises to each other?
Putting something in writing guards against faulty expectations and faulty recollections. When something is important, we put it in writing (i.e. to-do lists, New Year's Resolutions, etc.). Research shows that we are more likely to remember and prioritize things if we write them down.
3. A pre-nup is only important for the wealthy party, right?
Not if it is correctly prepared. A pre-nup should make sure that both spouses are in a decent financial position in the event the marriage doesn't work out. This is especially true if one partner is planning to postpone or sacrifice career advancement opportunities for the sake of the marriage.
4. Isn't it awkward to bring up?
I tell my clients to blame it on me or their parents. If there is a family business involved, the corporate rules should require all shareholders to enter into pre-nups to avoid forced liquidation should any family members divorce. Blaming it on the lawyer is easy, no one likes us anyway!
5. What is a social media clause in a pre-nup?
It prevents the parties from publicly maligning or humiliating each other on social media during a possible breakup. It can also place limits on social media sharing (think: unflattering pictures) during the relationship.
6. How can a pre-nup actually prevent fights over money?
We all know that finances are a leading cause of all breakups. I have found that when couples address spending expectations on the front end, they can avoid a lot of fights. I know one married couple at war over the husband's sports memorabilia collection. He has spent more than $1 million on this. The wife wishes she knew about this ahead of time. A good pre-nup can set forth the couple's long term financial goals and put them on a solid path to attain them.
7. What are some of the lifestyle clauses that couples are incorporating into their pre-nups?
I advise my clients to start by looking at failed relationships they've had and isolating their "poison pill" items. One of my clients didn't want his new in-laws coming on vacations with the couple, because this is what drove a wedge between him and his first wife. For others, we have negotiated limits on clothes spending, cosmetic surgery obsessions, sexual bucket list items, as well as weight gain penalties.
8. Aren't we just scripting the divorce rules ahead of time?
Newsflash: The divorce rules already exist. However, they were written by someone else, who has no clue about your specific situation. Think of the time and effort you are willing to spend customizing every other aspect of your wedding and life together. You wouldn't tell the bridal boutique that you'll take whatever dress most people take. Why then, in the event the marriage doesn't work, would you take whatever divorce rules that your state legislators happened to be in place?
9. What are some common mistakes people make when doing a pre-nup?
Don't share a lawyer. Don't sign it too close to the wedding, and don't forget to disclose all of your assets, income and debts.
10. Why is it especially important to have a pre-nup in a second marriage?
The divorce statistics in a second (or third) marriage are more than 60 percent! Plus, when we are older, we have fewer working years ahead to recover from being financially devastated in a divorce. Lastly, in a second marriage, there are likely to be separate children. It is critically important to discuss your financial obligations to your ex-spouses and children from prior relationships ahead of time. If your household finances will be seriously affected, you deserve to know this and plan for it ahead of time.
Ann Margaret Carrozza is a renowned Elder Law and Estate Planning Attorney who served as a New York State Assemblywoman. She is a legal contributor to television and print media outlets. www.mylawyerann.com