Chapter 1
A Prenup Primer

Our Assumptions.............................................................................. 5

You Want to Be Fair...................................................................... 5

You’re Prepared to Make Full Disclosure...................................... 6

You’re Willing to Communicate About Finances............................ 7

You’ll Work With a Lawyer............................................................ 8

How Prenups Work........................................................................... 9

Making Your Own Rules............................................................. 11

What a Typical Prenup Covers.................................................... 13

How to Make a Prenup................................................................... 15

Step 1:............................................................................ Start Early            15

Step 2:.................................. Decide Whether You Need a Prenup            16

Step 3:........................................................ Agree on the Specifics            16

Step 4:................................................... Create a Draft Agreement            16

Step 5:.......................................... Write Up the Formal Agreement            17

Step 6:....................... Ask Your Lawyers to Review the Agreement            17

Step 7:............................................................ Sign the Agreement            17

Step 8:........................................................... Enjoy Your Wedding            18

In the pages that follow, we take you step by step through the process of making a prenuptial agreement, from deciding whether to have one to preparing a final written agreement that is customized to your situation and designed to stand the test of time. Along the way, we provide worksheets to help you assess your finances and goals. We also include sample clauses that you can tailor to meet your needs. When it’s time to put your prenup together, you can use the resources that you’ll find on the book’s companion page (see Appendix A).

To help you see how this works for actual people, we follow three couples through the entire process. You’ll meet Ted and Grace, Karen and Russ, and Steven and Freda—though these aren’t their real names. You’ll have a chance to see how they deal with each stage as they come to it, and you’ll be able to read selected parts of the agreement each couple signs. In addition, there are a host of other fictional couples who make cameo appearances to illustrate particular points that may arise as you negotiate and draft your agreement. In Chapter 5, you’ll meet some fictional same-sex couples as we discuss what’s different about prenups when both partners are the same sex.

In this chapter, we’ll show you how prenups work and what you can accomplish by preparing one. We’ll also introduce you to each of the steps you’ll need to take to make your own prenup. Before you get started, however, we’d like you to consider a few points we consider essential to making a responsible, legally valid agreement.

Other Names for Prenups

In some states, a prenuptial agreement is known as an “antenuptial agreement,” or in more modern terms, as a “premarital agreement.” Sometimes the word “contract” is substituted for “agreement,” as in “prenuptial contract.” For the sake of brevity, we’ll stick with “prenup” in this book, but occasionally you’ll find us using one of the other terms if it’s appropriate.

Our Assumptions

We have written this book with a distinct—and firmly held—point of view on the subject of prenuptial agreements. In the interest of full and fair disclosure, we want you to know up front just how we view this subject.

We think that a prenuptial agreement is more than just a legally binding contract. It is the material and financial counterpart to wedding vows.

When you marry, you make what you expect and hope will be a lifetime commitment to be there for each other in every way. Your prenup should support and reflect the spirit of partnership with which you approach your wedding vows.

Prenups aren’t always negotiated in this spirit, but we believe they should be. Not only that, we think this is the best way to ensure that a prenup will be binding in court, should a serious dispute ever arise.

This means we’re making certain assumptions about how you will approach your prenup. They are:

you want to be fair

you are prepared to make full disclosure about your property and finances

you are willing to communicate about finances, and

you’ll each work with a lawyer.

Let’s look at each of these assumptions more closely.

You Want to Be Fair

Forgive us for stating the obvious. Of course you want to be fair. However, there is often more to “fairness” than meets the eye.

In our view, a prenuptial agreement is fair if it meets two criteria:

fair terms—that is, what you agree to benefits both of you (it’s not one-sided), and

fair process—meaning that you negotiate the agreement fairly (you don’t subject each other to undue pressure or coercion).

As for the first of these criteria, it will be up to the two of you to decide what’s fair and what’s not. In fact, you may discover that each of you has a different view on what’s best in your situation. It may take some talking and a little compromising to come up with an agreement that seems fair to both of you, but we think you’ll find that it’s well worth the effort.

Having a fair process means taking the time to make sure that both of you participate in making the agreement and that neither of you feels pressured into signing an agreement you’re not comfortable with. Fair process is the basis for the rest of our assumptions

A prenup that meets both criteria of the fairness test—its terms are equitable and you’ve mutually negotiated it—is most likely to stand the test of time in your marriage. An agreement that fails the fairness test will at best be a reminder of an unpleasant experience that you put away and hope to forget about. At worst, it may erode the trust between you and your betrothed, and it could even be the source of bitter and expensive court battles in a later divorce.

On the legal front, courts in most states will not enforce a prenup that it finds to be unfair in one or both aspects. So paying attention to fairness also makes it more likely that a court will enforce your premarital agreement, if it comes to that. As you use this book, you’ll learn how to prepare an agreement that’s fair.

A premarital agreement is a binding legal document. It’s true that some prenups get thrown out of court because of some legal defect, but that doesn’t mean yours will be. If you have reservations about a proposed agreement, don’t sign it with the hope that you can get out of it later. You never know exactly what a particular court or judge might do.

You’re Prepared to Make Full Disclosure

Our second assumption is closely related to the first. A premarital agreement is most likely to be viewed as fair—by you and by the courts—if it is based upon complete and accurate financial information. This means that you should both disclose everything you own (including approximate values) and all of your debts (including any obligations from a prior marriage, such as child support or alimony). We are not alone in considering full disclosure basic to fairness. Virtually every state requires that any premarital agreement be accompanied by complete written disclosure of both parties’ financial circumstances.

As you work with this book, we’ll help you figure out exactly what you own and what you owe. We’ll also give you detailed information to help you prepare the written financial disclosures that will accompany your prenup.

You’re Willing to Communicate About Finances

Let’s face it: Although most of us marry for love rather than money, marriage is a financial partnership as well as a spiritual, emotional, and physical union. Sooner or later, the two of you will need a workable understanding about how to handle your finances, even if it’s just day-to-day stuff like whether to have a joint bank account or who will pay the bills. This means that you’ll want to be able to communicate well about money and finances.

If you intend to sign a premarital agreement, good communication about finances is not just desirable, it’s essential—before you sign. If your communications aren’t clear, it will be next to impossible to come up with a written document that truly represents a mutually negotiated agreement between the two of you.

Bringing up the topic of money can be hard. Having a sustained conversation about it is even more difficult. At a time when romance is on your minds, talking about money can feel out of place. And just the thought of disagreeing can be enough to make you avoid the subject. Maybe it feels awkward to discuss old debts when you’re in the process of clearing them up and you’re confident that they’ll soon be ancient history. Or maybe it’s your fiancé who has the outstanding debts and you hesitate to bring up an embarrassing subject.

Whatever the reasons, money and finances can be a difficult topic for many of us to broach. If this is true for you and your betrothed, don’t be alarmed, but don’t let it be an excuse to delay the inevitable, either. Straight talk between you is essential—the sooner the better. If you need help, we provide lots of tips on how to have good conversations about money, plus guidance on working with financial counselors, mediators, or other advisers.

You’ll Work With a Lawyer

If you want to end up with a clear and binding premarital agreement, you should get help from a good lawyer. In fact, you will need two lawyers—one for each of you. That may sound surprising in a self-help legal book, but it’s true. Here’s why.

As we’ll discuss in the next section, our Anglo-American legal system views marriage as a matter of contract between two consenting adults. The terms of the “marriage contract” are dictated by the laws of the state where the married people live, unless they have a premarital agreement containing different terms.

The laws governing marriage contracts vary tremendously from state to state. In this book, we provide some general information on each state’s laws relating to marriage and prenups, and we give you some tips on doing your own legal research. (See Chapter 4.) However, if you don’t want to invest your time learning the ins and outs of your state’s matrimonial laws, a lawyer who knows the intricacies of those laws will be an important resource. The lawyer can help you put together an agreement that meets state requirements and says what you want it to say.

This explains the desirability of having one lawyer, but why two? That’s because prenuptial agreements are still scrutinized by the courts, sometimes very closely. If you want your agreement to pass muster, having an independent lawyer advise each of you can be critical. While most states don’t require that each party to a prenup have a lawyer, the absence of separate independent advice for each party is always a red flag to a judge. On a practical note, having separate legal advisers can help you and your fiancé craft a lasting agreement that you both understand and that doesn’t leave either of you feeling that you’ve been taken advantage of.

That said, it’s best not to ask your lawyers to start writing up a draft or final agreement until the two of you have agreed on its essential terms. You should also put those terms in writing—either in a written outline or a draft agreement created using the clauses in this book. A prenup prepared by a lawyer who isn’t working from terms you’ve both agreed on is likely to be one-sided and adversarial. If you provide your lawyers with an outline or draft prepared by both of you, the whole process—and the final document—will be more balanced.

All of this assumes that you select and use lawyers who are not only competent and experienced in matrimonial law but who are also capable of supporting the two of you in negotiating and writing up a loving, clear, and fair agreement. You also don’t want to spend a fortune on lawyers doing background work you could handle yourselves. Finding the right lawyers can take some time, but it’s worth the effort. This book gives you some suggestions on how to find and work with good lawyers in a way that both cuts your costs and supports your relationship. (See Chapter 8.)

How Prenups Work

People have been making prenuptial agreements for thousands of years. Scholars tell us that the practice dates back to the ancient Egyptians, and that prenups have existed for many centuries in Anglo-American tradition. In previous times, the parents of the bride and groom negotiated the agreement on the new couple’s behalf. These days, engaged couples do their own negotiating, although family members often exert influence behind the scenes (especially if family money is involved).

Contrary to popular opinion, prenups are not just for the rich. While prenups are often used to protect the assets of a wealthy fiancé, couples of more modest means are increasingly turning to them for their own purposes. For example, a couple with children from prior marriages may use a prenup to spell out what will happen to their property when they die so that they can pass on separate property to their children and still provide for each other, if necessary. Without a prenup, a surviving spouse might have the right to claim a large chunk of the other spouse’s property, leaving much less for the kids.

Couples with or without children, wealthy or not, may simply want to clarify their financial rights and responsibilities during their marriage. Or they may want to avoid potential arguments if they ever divorce by specifying in advance how their property will be divided. Prenups can also be used to protect spouses from each other’s debts, and they may address a multitude of other issues as well.

Exactly what you decide to do with your prenuptial agreement depends on your particular circumstances and wishes. But before getting into the specifics of what you want to accomplish with a prenup, it’s wise to have a basic understanding of what you’re doing when you make this type of contract. To put it briefly, you’re deciding how you each want your property to be treated—during your marriage, when you divorce, or when one of you dies—rather than letting your state’s law make these decisions for you.

A Note for Same-Sex Partners

Now that same-sex couples can marry in six states and the District of Columbia, and can register in relationships that are the equivalent of marriage in a handful more, they are concerned with the same issues faced by any other couple planning to tie the knot. Addressing those issues in a written premarital or “preregistration” agreement may be as desirable for a same-sex couple as for any other. Chapter 5 is specifically directed at same-sex partners who are considering entering into a written agreement before marrying or registering.

Making Your Own Rules

If you don’t make a prenuptial agreement, your state’s laws will determine who owns the property that you acquire during your marriage, as well as what happens to that property at divorce or death. (This property is known as either marital or community property, depending on the state. We explain these terms in more detail in Chapter 4 and in the information that’s available on the book’s companion page (see Appendix A).) State law may even have a say in what happens to some of the property you owned before you were married.

Under the law, marriage is considered a contract between bride and groom, and with that contract comes certain automatic property rights for each spouse. For example, in the absence of a prenup stating otherwise, a spouse usually has the right to:

shared ownership of property acquired during marriage, with the expectation that the property will be divided between the spouses in the event of a divorce and will transfer to a surviving spouse at death

incur debts during marriage that the other spouse may have to pay for, and

share in the management and control of any marital or community property, sometimes including the right to sell it or give it away.

So what do you do if some of these laws—called marital property, divorce, and probate laws—aren’t to your liking? Enter the prenup, which in most cases lets you decide for yourselves how your property should be handled.

As part of making your prenup, you’ll review your state’s laws to see how your own preferences for property ownership, division, and distribution compare with the state’s rules. If you find that state law already provides the type of property treatment you wish, there may be no need to make a prenup. But if you find that the state’s plan won’t meet your needs, you’ll probably want to go ahead and craft your own agreement. (In Chapter 4 and on the book’s companion page, we discuss state laws in more detail and tell you how to find the laws for your state.)

Head off disputes by making a prenup if your state’s law is unclear. When you familiarize yourself with the laws of your state, you might feel that they’ll work just fine for you. But keep in mind that the law isn’t always clear or predictable. Going without a prenup can increase the likelihood that there will be contentious and expensive court battles at the time of a divorce or even after death. Often, the law says something that seems straightforward at first glance, but it turns out that there’s room for argument on the finer points. If you agree in advance on a fair approach to things like separate versus shared ownership of property and inheritance rights of the surviving spouse, you can save yourselves and your inheritors the risk of legal expense, uncertainty, and acrimony by making a prenup.

Making Sure Your Prenup Is Valid

As prenuptial agreements become more common, the law is becoming friendlier toward them. Traditionally, courts scrutinized prenups with a suspicious eye, because they almost always involved a waiver of legal and financial benefits by a less wealthy spouse. In the days when married women had far fewer legal rights than today, many courts believed that a woman was at too great a disadvantage when negotiating with her prospective husband. Even more unacceptable legally was a prenup that spelled out the couple’s rights in the event of a divorce. Prior to 1970, such an agreement was considered unenforceable in all states because it was seen as a way to encourage divorce.

As divorce and remarriage have become more prevalent, and with growing equality between the sexes, courts and legislatures are increasingly willing to uphold premarital agreements. Today, every state permits them, although a prenup that is judged unfair or otherwise fails to meet state requirements will still be set aside—and some state laws are stringent about prenup procedures such as waiting periods. Because courts still look carefully at prenups, it is important that you negotiate and write up your agreement in a way that is clear, understandable, and legally sound. As you progress through the steps in this book, we’ll show you how to avoid the pitfalls that could invalidate your agreement.

What a Typical Prenup Covers

Every prenup is unique to the couple that signs it. However, to introduce you to what a prenup can include—and what you might accomplish with yours—this section offers a list of typical prenup provisions.

Most prenups begin with a brief description of each party’s circumstances—such as age, occupation, any children, and maybe even intentions for future employment or education. And prenups almost always include disclosures of both parties’ finances—that is, assets, liabilities, and incomes. (These disclosures are usually attached to the end of the prenup as separate lists.)

Beyond that, what appears in the contract depends on your prefer­ences. Here are some provisions that couples commonly include:

A provision that each spouse’s separately owned property will remain that spouse’s sole and separate property during the marriage. (Sometimes this refers only to assets owned before the marriage, but it can also include property acquired during the marriage, especially gifts and inheritances.)

A provision confirming that each person is responsible for his or her own premarital debts.

A waiver of the surviving spouse’s legal right to claim a share of the other spouse’s separate property at death.

Here are some other typical but less common provisions:

A provision that all property acquired by a spouse during marriage will be that spouse’s separate property, and that there will be no marital or community property to be divided in a divorce or upon death.

An exchange of property for the waiver of property rights, sometimes including one or more of the following:

payment of a certain amount of money (either right away or according to a specified timetable)

life insurance coverage, or

establishment of a trust for the spouse who is giving up rights.

A provision spelling out how property will be divided in the event of a divorce.

A provision requiring each party to sign documents after the marriage reaffirming any waivers contained in the prenup. (This usually applies to waivers of rights to retirement benefits or an interest in real estate.)

A provision specifying how household expenses will be paid.

A provision that the agreement will automatically terminate on a certain date in the future—often called a “sunset clause,” or adjusting terms as time passes.

Some prenups also include provisions that are enforceable in some states but not in others. The most notable examples are provisions waiving alimony if there is a divorce or legal separation, and the so-called “bad-boy” (or “bad-girl”) clause requiring financial compensation if one party is caught cheating on the other. (These aren’t very common, but a few states still allow them.)

In addition to the typical provisions, many prenups contain terms that are tailor-made to the couple’s circumstances. For example, there might be an agreement that the couple will own a home in certain percentages, or perhaps the couple will promise to take turns supporting each other while obtaining an education.

Finally, every prenup contains standard clauses that go into all agreements of this kind. Lawyers often call these clauses “boilerplate” (a newspaper term referring to preset or syndicated features). The boilerplate in a prenup would most likely include clauses naming the lawyers who represented each party, a statement about who prepared the agreement, the agreement’s binding effect on the couple and their inheritors, which state’s law will apply in any legal dispute over the agreement, and other terms relating to the legal interpretation or enforcement of the agreement.

This material is just to get you started thinking about the issues that might be involved when you set out to make a prenup. In Chapter 2, we discuss in much more detail what a prenup can—and can’t—do. And in Chapters 6 and 7, we provide plenty of sample clauses that you can include in your contract.

How to Make a Prenup

From getting started to getting married, there are eight basic steps to making a prenup. Here, we introduce you to each in turn, and explain how this book helps you along the way.

Step 1:       Start Early

Begin planning for your prenup as soon as possible—at least three months before the wedding. If you wait until the last minute, you may not have time to decide what you want and get it done in time. (An agreement signed after the wedding is not a prenup. It is a postnuptial—or postmarital—agreement, and is covered by more stringent legal rules. See Chapter 10.)

Plan to sign your prenup about a month before the wedding. The closer you get to that all-important day, the greater the risk that your agreement won’t stand up in court later.

Before signing, you should allow a couple of months—or longer, if you can—for talking together and figuring out the details of your agreement, getting it reviewed, and putting it into final form for signing.

Although it’s possible to plan and finalize a prenup in less than three months, moving too fast will add unneeded stress and could doom your efforts to create a clear and fair agreement.

Timing is everything. While it is important to get an early start on your prenup, it is possible to be too early. You want all of your information, including your financial disclosures, to be current when you sign your contract. As a rule, you should start working on your prenup no less than three or four months before your wedding and no more than eight or nine months before. If you end up postponing your wedding date after signing a prenup, take the time to update the prenup in writing before you marry.

Step 2:       Decide Whether You Need a Prenup

If you’re reading this book, you may have already decided that a prenup is what you want. Even so, it doesn’t hurt to take a little time to examine your situation (together, if possible) to figure out whether a prenup is what you need. Chapter 2 is devoted to helping you decide whether a prenup is right for your situation.

Step 3:       Agree on the Specifics

Once you’ve decided to go forward, the next step is to figure out exactly what your agreement should say. This involves doing some list making and some soul searching, both separately and together. Clear communication is essential to success in this endeavor, and it doesn’t hurt to know a little about constructive negotiating, too. Chapter 3 explains how to decide on the specifics of your agreement, and Chapter 9 offers tips on communicating and negotiating.

Step 4:       Create a Draft Agreement

As Chapter 3 explains in detail, you’ll almost certainly be better off if you have your final prenuptial agreement written up by a lawyer. A good lawyer can ensure that you put together a contract that meets the requirements of your state and says exactly what you want it to say. In fact, as we explain later, you will greatly improve the odds that your prenup will stand up in court if each of you has a separate lawyer review and sign off on the agreement.

Even if you take our advice and work with lawyers, you’ll save expense—and wear and tear on your nerves—by taking the time to write down what you’ve agreed on. That way, you’ll both be in sync on the fine points before you ask a lawyer to prepare the final agreement. You’ll also minimize the risk of having a lawyer put together a one-sided agreement that doesn’t reflect what either of you wants. You can use your draft to check the lawyer’s work, making sure nothing’s been missed or misunderstood. Of course, if you elect not to use a lawyer to write up the formal agreement, then your draft will eventually become the document you sign.

Chapters 6 and 7 provide a format for your draft prenup, with sample clauses covering the most common situations and suggestions for customizing your agreement.

Step 5:       Write Up the Formal Agreement

After you’ve made a draft agreement, each of you should read it carefully to see whether you need to make changes to it. Once that’s done, you’ll either prepare the formal document yourselves or hire a lawyer to help you; the best way to proceed is to hire separate lawyers for each of you. Chapter 8 takes you through the process of finalizing your prenup, including suggestions for finding good lawyers and tips on how to work with them.

Step 6:       Ask Your Lawyers to Review the Agreement

Whether you’ve prepared the formal agreement yourselves or with the help of a lawyer (or two), the next step is to have your separate lawyers review the agreement to confirm that it’s legally sound. (We discussed the importance of having separate lawyers review your agreement earlier in this chapter.)

Step 7:       Sign the Agreement

Signing the agreement should be something you remember without regret. Plan to sign at a time when you can pay attention to the moment. If the agreement will be notarized, you’ll need to arrange to sign when a notary is available. You may also have to contend with your lawyers’ schedules, so it’s important to plan ahead. You may even want to make a ceremony out of the event, or you might plan a little celebration afterward—just the two of you. Whatever you do, after the hard work you’ve done getting to this point, do what you can to make signing the agreement a relaxed and positive experience for both of you. (Chapter 8 provides more details about signing your prenup.)

Step 8:       Enjoy Your Wedding

Your wedding day promises to be one of the happiest moments of your life. When you get there, put away this book, file away your prenup, and enjoy the day. Our best wishes will be with you.

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