Prenup doesn't need to be a bad word: A lawyer's take on this misunderstood document
How to get an agreement everyone is happy with before the big day
Prenuptial agreements are not just for the rich and famous anymore. Before saying, "I do" millennials are asking for prenups in larger numbers than ever before. Associate Lawyer at Shulman Law Firm, Diana Isaac stopped by The Goods to explain why.
A lot of times the word 'prenup' is seen as a bad word. But what does the word mean exactly?
Diana Isaac: A prenup refers to a marriage contract. It's a written agreement between parties that are getting married and it outlines how you're going to deal with legal issues when there is a dissolution of marriage. Certain terms I've seen in marriage contracts would include things like how do we opt out of property divisions, or how are we able to not have support obligations. And we're seeing more and more people ask for prenups at my firm.
Who needs a prenup?
DI: A lot of people ask this. Traditionally, it has been high income earners or those who can earn a lot, or those who have significant assets. But now I'm seeing a lot of people entering into their second or third marriages, and they want to preserve what financial security they have left. Also, given the current real estate market, there are a lot of adult children who come to the firm and say that their parent wants to help with a downpayment on a house. They ask how they can protect this gift if the marriage dissolves, and for this you need a marriage contract. More and more with millennials they are getting married later in life so they're coming into marriage with more assets and they want to protect that. In 1972 the average marrying age was 25 for men and 23 for women. In 2016 the average marrying age was 31 for men and 28 for women. This is a radical change.
What about common law couples? Should they also consider a prenup?
DI: It's important that we understand how a common law couple is defined. According to legislation, a common law couple is two persons who are unmarried and have cohabited for 12 months, or they have a child together and there is a relationship of some permanence. In that situation, people are seeking a cohabitation agreement which functions like a marriage contract for people who are not married. This can help them protect assets or restrict certain rights.
Let's say you're in a serious relationship and thinking of marriage – when should the prenup conversation be brought up?
DI: Although it is definitely a challenge to broach the topic of a marriage contract when you are embarking upon a life together and not apart, I think the sooner you are candid about wanting a marriage contract and the reason for it, the better it is. It does not make for a great honeymoon when you break this kind of news at the eve of your wedding. And some people do wait until the last minute. This can cause issues in the future because your spouse could claim that they signed the agreement under duress, which can affect the legitimacy of the contract. I think the first date is a little premature, but when you know that this is the person you intend on spending your life with, it's probably safe to say the discussion is warranted.
Can a couple write their own prenup/separation contract? Or do I need a lawyer?
DI: You could, but I don't recommend that parties draft their own marriage contracts. I would recommend obtaining independent legal advice from a lawyer. Many people come into my office and say, "I entered into this marriage contract that myself and my spouse completed, but I don't want to rely on it and I don't think it is in my best interests. How can I get out of it?" Well, this is tricky. These "kitchen sink" agreements are problematic and extremely costly to set aside, and there is no assurance a court would set aside the marriage contract. Instead, it is recommended that parties complete a marriage contract that properly protects their interests. This short-term cost will provide long term savings if done properly.
Let's not forget in 1989, Steven Spielberg had to pay actress Amy Irving $100 million dollars after a judge invalidated a prenup the pair had written on a cocktail napkin. And that was after only 4 years of marriage!
What's the hardest part of the prenup process?
DI: Clients seem to be hesitant with financial disclosure with their spouses. They feel uncomfortable to reveal it all. The other part people find difficult is the emotional aspect of a marriage contract. To combat this, everyone should be on board when it comes to the agreement. The parties have to know what they're giving up, and what their rights are. Once that confusion is gone, the hesitation dissipates and it's not as emotional anymore. And that's the role of the lawyer – to explain your rights.