Since this is the season of engagements and love, I asked family law attorney Deanna Lucci for a crash course on the prenup. Growing up in Southern California, Lucci was “often teased for acting like an ‘armchair psychologist’,” so when she found herself in an introductory family law course while in her second year of law school in New York, she realized that she was home. [quote_right]The word prenup conjures up images of celebrity weddings, outrageous net worths, or old millionaires marrying former Playmates. Bringing up a prenup in a relationship seems to unearth questions of distrust and starts to turn a blissful engagement into a business transaction.[/quote_right] “Being a family lawyer came very naturally to me because so much of what I deal with is not logical, it’s emotional.” Since then Lucci has served as a court attorney to a matrimonial judge and is currently in private practice in New York focusing exclusively on matrimonial and family law.
I told Lucci that the word prenup conjures up images of celebrity weddings, outrageous net worths, or old millionaires marrying former Playmates. Bringing up a prenup in a relationship seems to unearth questions of distrust and starts to turn a blissful engagement into a business transaction. In any case, prenup seemed like a dirty word that did not apply to myself or any of my friends. Apparently, I needed to be set straight. In our new economy/reality/world, where women marry later, build assets of their own, or acquire families pre-new-love, there are many instances when a prenup is no longer just in the realms of the rich or famous.
Simply put, “a pre-nup is a legal contract between two people who are about to get married. Anyone who is concerned about protecting assets that they currently own, or expect to obtain or inherit during their marriage may want to consider entering into a prenup before walking down the aisle.” According to Lucci, there are many scenarios where a prenup would be beneficial and a few where it would be ill-advised, so she was kind enough to map out a few scenarios to help illustrate who would benefit from a prenuptial agreement.
Who are the types of people who would benefit from a prenup?
The Rising Star
“The young professional who has either recently graduated from or is in the middle of completing an advanced degree program such as medical school, law school or an MBA program. He or she may not have much now in the way of assets other than a mountain of student loan debt, but one day they will likely be earning some serious money. This person may want to protect their degree or license if they live in a state, such as New York, that recognizes them as marital assets, and they may want to set the amount of alimony or spousal support that their husband or wife-to-be would be entitled to in the event of a divorce down the line. This is especially true if their intended spouse is not expected to earn at the same level, or will likely stay home for an extended period of time to raise children. Moreover, if this person ever “makes partner,” opens up his or her own medical practice or starts a business, those assets – the partnership, the medical practice, the business – can also be divided in the event of a divorce. This can make for one messy, time consuming and very expensive divorce.”
“A man or woman who has already been married and divorced, or whose first spouse passed away and is ready to dive back into the marriage pool. However, before taking that plunge, these people should really think about entering into a prenuptial agreement. People in this category tend to be older than those marrying for the first time, so they usually have more significant assets that have accumulated throughout the years or that they received in their first divorce. In addition, they tend to have children from their first marriage. These complicating factors really necessitate a prenuptial agreement to clearly define which assets are and will remain separate so that property they intended to pass down to the children from their first marriage is protected. Moreover, if these spouses have been divorced, they may be paying or receiving alimony or child support during their new marriage. It is important to make clear in the prenuptial agreement that the receipt of support or payment of support by one spouse from or to their first spouse will not be considered marital property or marital debt that the second spouse could potentially seek in a divorce or become liable for in a divorce.”
The Business Owner
“Whether it’s a family pizzeria or a multi-million dollar hedge fund, any business owner should consider signing a prenup before getting married since their spouse could seek a portion of that business, or the appreciation of the business that occurred during the marriage, in the event of a divorce. This issue [quote_right]Whether it’s a family pizzeria or a multi-million dollar hedge fund, any business owner should consider signing a prenup before getting married since their spouse could seek a portion of that business, or the appreciation of the business that occurred during the marriage, in the event of a divorce. [/quote_right]becomes even more complicated when the business owner has partners because in the valuation process of the divorce the business may be required to turn over all of their business records and even be subjected to an on-site inspection by forensic accountants to determine the true value of the business and each parties’ share of the business. As you can imagine, this can make for some very awkward conversations between business partners. In the case of a family business, it is often the family members who co-own the business with the party who intends to get married who insist that a prenup be signed before the wedding to protect the business in the event of a divorce.”
“For those lucky ones who were born with a “silver spoon” in their mouth, they may already own or are expected to inherit significant assets throughout the marriage. These assets can range from trust funds and fine art to real estate investment properties, and usually their parents and grandparents will insist that a prenup be signed before their child walks down the aisle in order to protect that old money from attack by a potentially gold-digging spouse. Think Charlotte and Trey on “Sex and the City”.”
“Think Donald Trump – a “master of the universe” type who owns properties and businesses all over the world and has likely been married a few times before. He is an experienced businessman who takes calculated risks and getting married will be no different– he’s not going to leave anything to chance because there is just too much to lose.”
[divider] Conversely, many of us don’t need to fuss with all the extra legal paperwork. Ms. Lucci gave us a few scenarios where a prenup would just be overkill.
Who are the types of people or couples for whom a prenup would not be necessary or advisable?
Just Starting Out
“The young couple who met in high school or college and are entering into the marriage with nothing more than a rental apartment, a dog and their love for one another. Any assets that they will accumulate during their marriage will be the result of a joint effort so a prenuptial agreement will likely not be necessary.”
“If I were the sister or friend of a classic “trophy wife,” the beautiful bombshell who is marrying a much older, richer man, I would tell her to avoid a prenup at all costs because in all likelihood that prenup would only result in depriving her of potential assets and alimony in the event of a divorce down the line.”
On Equal Footing
“Two people who have a similar education, profession and come from similar family backgrounds. Like the “Just Starting Out” couple, this marriage will likely be a true partnership where everything they accumulate will be the result of their joint efforts.”[divider]
Lucci has some final words of advice for the soon-to-be-wed, “It is extremely important that each party entering into a prenup is represented by their own attorney. This is one of the most significant legal contracts a person will sign in their lifetime, so it would be incredibly foolish to go it alone. This is even more true in light of several recent court rulings in the area of prenuptial agreements. Each party should hire an attorney who focuses their practice on family law and has experience drafting and negotiating prenuptial agreements to make sure that every area is covered and that they truly understand the legal effect of the contract before signing. Often times the “less-monied” party who has been presented with a prenup will be reluctant to hire an attorney because of the cost. In these situations, I will ask the fiance who presented my client with the prenup to pay for my client’s legal representation in connection with the prenup. This is usually agreed to and will be added to the prenup.”
Have you ever considered a prenup? Let us know in the comments below!
If you are seeking counsel or want to contact Ms. Lucci, you can find her on Linked In.