If you’re over 40 and in a great new relationship that looks like it’s headed for marriage, chances are some of your less tactful friends have already asked you whether you’ve got a prenup. While it’s none of their business, (and you’re well within your rights to say so!) the truth is, you probably should be thinking about it—even before you actually propose or set a date.
People do put preunps off, since they can easily be a source of hurt feelings and complications. As columnist Jane Byrant Quinn notes after her experience creating a prenup, “What seems to one of you like a perfectly logical financial choice might feel like a snub to the other.” But best to sort these issues out with time to spare, rather than days before a wedding, or years into a marriage.
Marriage brings legal rights and responsibilities
States have set up rules that will govern your marriage unless you have a pre-wedding or “prenuptial” agreement to the contrary. For instance, in divorce, you may have to divide assets in half, or pay alimony or other expenses. On death, your spouse can claim a third to a half of your estate, depending on where you live.
The prenup lets you set your own rules. You can arrange in any way that you both agree, different from your state’s defaults. Once written and agreed, the prenup governs how things are owned—and divided—between you.
Why a prenup?
You may want to preserve assets for your children from a previous marriage. Or you may have been through a costly divorce already and be reluctant to repeat that experience. “I didn’t want to load the gun and put it to my head again,” says one divorce survivor.
So your prenup can have different provisions for what lawyers call (with their special sense of humor) a “happy death,” Perhaps a trust is set up to care for the surviving spouse until their death.
Working it out
Even couples with the best of intentions and goodwill find the process can be pretty emotional. It’s a good idea to hire good lawyers (one for each) who specialize in these issues. They’ve seen it all before, and they can help you find good ways to manage the inevitable conflicts.
The prenup doesn’t have to address every issue in your financial relationship, or be the most generous. It sets a baseline. But spouses can be more generous with each other in their wills or trusts, or can revise the document years later to accommodate changes in the relationship.
Your lawyers should make provision for things that can’t be resolved in a prenup. The money in your IRA, for instance, goes to your named beneficiary no matter what it says in prenup or will. On the other hand, your 401(k) goes to your spouse automatically. To assign this to your kids, your spouse has to file a waiver with the trustee—and after the marriage, not before. So make sure all these details (and others) are covered.
When one spouse is considerably older
Prenups can also help your grown children accept a new spouse with open arms, rather than seeing him or her as a usurper of the family resources. While you may wish to ensure that your spouse has enough resources to live decades beyond you, it’s also a good idea to make sure there’s some immediate provision for your grown children at your death as well. Otherwise, they may be waiting until their 80s to benefit from their inheritance. That’s an outcome that’s bound to create tensions between your new love and your kids—and is best to avoid.
Be smart—and also kind and generous
A prenup is written to cover worst-case scenarios of death and divorce, so it raises all kinds of tricky issues. As you work through it, remember that you’re negotiating with someone you love in order to care for each other and your other family members over time—and treat each other with appropriate generosity and care.
That doesn’t mean being quiet if you have concerns—far from it. Just assume best intentions as you discuss differences. Turn to your lawyers for expert advice through complicated issues.
