Deciding if Prenuptial Agreement Is for You

It’s a bridal nightmare: You’re getting married on Saturday, and your betrothed comes to you with a last-minute detail--a prenuptial agreement.

For some brides and grooms-to-be, the mere sight of this legal document is enough to send them scurrying to cancel the caterer. But with divorces as common as marriage in many parts of the country, others see prenuptial agreements as a prudent and necessary part of their plans.

Prenuptial agreements are not for everyone, attorneys agree. But for some couples--particularly those who have children, assets and obligations from previous marriages--they can be advisable. They simply spell out ahead of time how assets will be divided and how children will be treated in the event of the death or divorce of the parents.

“The most important part of a prenuptial agreement is the conversation you have before you draft it,” said Helene Brezinsky, partner with Rosenman & Colin in New York.

Even young couples, who generally don’t need written prenuptial agreements, can benefit from prenuptial financial discussions.

The first step is to overcome squeamishness. It may seem crass to talk about how much each partner earns, whether each is indebted and who will be paying the bills, but these are issues couples need to straighten out. Finances are a major cause of divorce.

Attorneys--and many clergymen--maintain that frank financial discussions might stop a few wedding ceremonies and prevent divorces later.

In its simplest form, a prenuptial agreement is nothing more than a written promise to handle certain aspects of a marriage in certain ways. Attorneys stress that these agreements should not anticipate every possible event that could transpire 30 years down the road. Trying to determine custody of yet-to-be-born children, for example, has no place in a prenuptial arrangement, Brezinsky says.

The agreement should only deal with what each spouse brings to the marriage. Those with a significant inheritance, a family business, a divorce settlement, a substantial bank account or children from previous marriages might want to consider them.

But agreements that overreach, are presented and signed under duress--such as moments before walking down the aisle--and those that are unreasonably favorable to just one spouse are likely to be canceled if they are ever questioned in court.

To determine whether you and your betrothed are likely candidates for a prenuptial agreement, each of you should sit down and tally your current assets, liabilities and family obligations. You should each make a list that includes how much money you have in the bank or brokerage, how much equity you’ve built up in a house or car, how much you owe on student loans, mortgages and credit cards. Also put down how much you earn, how much you have left over from each paycheck and what you do with it.

Now, trade lists.

You and your betrothed may decide that your assets and obligations are relatively equal and a prenuptial agreement is unnecessary. But the exercise is still worthwhile for the way it helps clarify your finances--and financial prospects.

If you and your spouse-to-be have more debts than income to support them, for example, you should know that you’re embarking on a difficult journey. If something doesn’t give, you may be headed for bankruptcy court, divorce court or both.

If one spouse is a saver and the other a spender, discuss what happens when you merge your finances. Can the spender fritter away the saver’s nest egg? Can the saver force thrift on the spender? Or can they reach some middle ground by setting both spending and saving goals? Working this out ahead of time is likely to save hours of argument later.

More than marital harmony is at stake. One hapless woman recently wrote to say that she married not knowing that her spouse was deeply indebted. Once the honeymoon was over, the bills started rolling in. The new wife found herself liable for all her husband’s debts. To make matters worse, her husband left but the creditors didn’t. She says she’s still struggling to pay off bills her “ex” ran up. Her credit rating is shot as a result.

As long as the subject of finances is out in the open, soon-to-be-weds should also discuss how they want to handle savings and checking accounts. Do they get all joint accounts, or do they keep at least a portion of their financial lives separate? If they leave some finances separate, how do they divide joint obligations such as housing costs, food and utilities?

In the end, some brides and grooms may find new respect for their prospective spouse’s generosity and trust. Others may realize that their intended lacks responsibility. Either way, it’s better to know now than later.