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Prenuptial Agreements: The Good, The Bad and The Ugly

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PRENUPS
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In my family law practice, I have drafted, negotiated and litigated issues involving many pre- and post-nuptial agreements. Within the last month, I reviewed two prenuptial agreements that I found reprehensible.

I believe that the purpose of a prenuptial agreement is to set forth certain assets that are being brought into a marriage and protect them in the event of a divorce or death. Another purpose of a prenuptial agreement is protect an inheritance. This is especially true in second or third marriages where there are children to be protected from prior marriages.

What is the good? The good is protecting someone. It is also a means of setting forth a road map for the future in the event that the marriage ends in divorce or there is a death. It is a way of hopefully avoiding future litigation. These are good things. It is important that a prenuptial agreement be an arms-length transaction, that both parties be represented, that there be full disclosure of assets and liabilities going into the marriage and that it be freely and voluntarily entered into. A good prenuptial agreement should be fair. It should be entered into between two consenting adults who know what they are doing. The agreement should be fair when it is signed and entered into, and also fair when it is be enforced, whether in the event of a divorce or death. This is true whether five years later or 20 to 30 years later. These are all important aspects of a good prenuptial agreement.

What is the bad? A bad prenuptial agreement is one entered into in a high pressure situation. It is one that is patently unfair. The agreements that I recently reviewed were so one-sided that there would be no spousal support in one case for at least ten years, and in another situation, ever. They called for each to pay their own attorney fees in a divorce. They set forth the fact that no matter what the reason for the divorce was, there would be an equal division of marital assets. In many states, the laws allow for fault and other factors as to property division. The agreements also provided that the premarital property would always be premarital, and any income from the premarital property or investments would never be considered in the event of a divorce. One of the agreements even set forth an income level for each of the parties so that whether there was a divorce five years or ten years down the road, everything was cast in concrete. These were extremely bad, one-sided agreements. The agreements also had clauses stating that if they were contested in the future, the losing party would pay all of the attorney fees. Remember, these agreements were drafted on behalf of the person who was entering the marriage with much greater wealth than the other party. These were also for first marriages which is unusual, although I am seeing more and more of them.

What is the ugly? The ugly in these situations was the fact that one prenup was presented to the bride-to-be less than a week before the wedding. The ugly was that there was so much pressure on the bride, that it would be almost impossible to negotiate a fair agreement in a timely fashion. The ugly is where one fiancé is trying to take advantage of the other. I see this too frequently. These last minute scenarios are the equivalent of someone holding a gun to their fiancée and saying, "sign this agreement, or our marriage is off." Often it is the bride who is in the poorer bargaining position. In the cases I am talking about, the brides were the ones entering the marriage with far fewer assets than their fiancés. Traditionally in the United States and in many religions (although not all), it is often the bride and her family who pay for the wedding. Think of the extreme pressure under these circumstances. The ugliness is a prenuptial agreement being presented a matter of days before the wedding, and the many thousands of dollars that have already been spent for the wedding and reception. If the wedding is cancelled, it is the bride and her family who may incur the financial losses. This is a horrible situation. These last-minute prenuptial agreements are ugly, and often bring out the worst in people.

I have found, over the years, that when I negotiate and litigate prenuptial agreements, these are some of the most nasty scenarios that I see.

What is my advice to avoid the bad and the ugly, and emphasize the good?

    Have an attorney represent you who is experienced in Family Law, especially with regard to drafting and negotiating pre- and post-nuptial agreements.
  • Make sure that this is discussed months in advance of the wedding and not presented at the last minute.
  • Be prepared to negotiate and be fair.
  • Have provisions so that as situations change, the agreement can be reviewed and revised, or else there can be a sunset clause. A sunset clause is one that after so many years of marriage, the agreement is deemed null and void.
  • I have some agreements, especially in high net-worth cases, that after a number of years, there is a phase-in and a sharing of some of the premarital assets and a sharing or guarantee of spousal support under certain situations.
  • Be fair. Don't be greedy. Remember the goal is not to get that last dollar, but to try to have a happy and successful marriage. Emphasizing the bad and the ugly will probably lead more quickly to a divorce.
  • These are some of my thoughts. If you have some, please share them with me.

    By: HENRY S. GORNBEIN
    Family Law Attorney & Legal Correspondent
    DivorceSourceRadio
    40900 Woodward Avenue, Ste. 111
    Bloomfield Hills, MI 48304-5116
    248/594-3444; Fax 248/594-3222
    DivorceSourceRadio.com
    hgornbein@familylawofmichigan.com
    henry@divorceonline.com