Why You Need a Prenup

Excerpted from
Prenups for Lovers: A Romantic Guide to Prenuptial Agreements
By Arlene G. Dubin

Statistics are scare in the prenup area. Anecdotal evidence suggests that 5 to 10 percent of couples and 20 percent of remarried couples now enter into prenups. By 2020, I predict that more than 50 percent of couples will be preceded down the aisle by prenups. Here are two dozen reasons why:

1. You're living in the real world. Since 1960, as a result of no-fault divorces and societal acceptance, the divorce rate in the United States has doubled. Currently the divorce rate is about four to five out of every ten marriages. The median duration for a first marriage that ends in divorce is 6.3 years and is even shorter for a remarriage.

You probably believe you have the right stun to beat these grim statistics, but studies show that almost all people getting married are sure divorce won't happen to them. Further, prenups dictate the disposition of assets upon death. You do believe that will ultimately happen to you, don't you?

2. Divorce laws are changing. Forty-one states and the District of Columbia rely on "equitable distribution," which provides a court with broad discretion to split the value of assets. Even in the remaining "community property" states, a court exercises some subjective judgment. In a prenup, you and your partner can clarify and write the rules of your marriage. Otherwise, you may leave yourself at the mercy of a total stranger-an arbitrarily assigned judge-to decide your fate.

3. You're worth more than you think. You're marrying later these days-the median age is 25 for a woman and 26.8 for a man-and by the time you do, you've begun to accumulate assets (as well as acumen). You may think you don't have savings - but your 401 (k) plan is savings. What about your stock options? life insurance policy? a prospective inheritance? your home or your car?

The number of millionaires jumped from 1.9 million to 8 million from 1989 to 1999. Even if you're not a millennial millionaire, you probably benefited in some way from the stock market, IPO, Internet, and 401 (k) boom since the 1990s. You'll want to hold on to your nest egg, no matter how small or large it is.

4. Your parents are worth more than you think. This country's greatest intergenerational transfer of wealth in history-from the "Depression" generation to the "baby boomer" generation and their "boomlet" offspring-is occurring over the next few decades. In the next half-century, at least S40 trillion will be handed down. Your prenup will ensure that your parents' hard-earned heirlooms (and cash) all stay in the family.

5. The "little woman " grows up. Women have entered the job market, risen through the ranks, even broken the glass ceiling, and they want to protect the progress they've made. At the same time, women in traditional roles have become more assertive about the value of nonmonetary contributions to marriage.

6. You're living to a ripe old age. At the beginning of the twentieth century, the estimated life expectancy was 46.3 for a male and 48.3 for a female. By the end of the twentieth century, life spans increased to 79.1 for women and 73.1 for men. As medicine advances, longevity will increase, further increasing the chances that you will be married more than once.

7. You're on the remarriage marry-go-round. Rising divorce rates have led to rising remarriage rates: 75 percent of divorced people remarry within five years. Further ratcheting up the remarriage rate is longevity. Since the failure rate for second and subsequent marriages is even higher than for first marriages-a whopping 60 percent-you need a prenup more than ever.

8. Take care of your children and dependents. In a prenup, you can arrange for the payment of support and tuition for your children from a prior marriage. You can provide your children with an appropriate inheritance. You also can take care of aging parents or a disabled relative.

9. Save the family Jewels. Since your spouse most likely would be entitled to a share of your family or small business in the event of a divorce, you need a prenup to prevent potentially disruptive litigation. Equally important, you and your family members or business partners must protect yourselves against the transfer of a business to an ex-spouse or liquidation of the business to pay off the ex-spouse.

10. Don't fall on your assets. Your prenup enables you to protect valuables, such as your pension plan, your vacation hideaway, your season tickets to the Denver Broncos, and your rent-controlled apartment, as well as your newly minted MBA or J.D. or unsold software program or screenplay or novel. You need to protect not only the current value of your assets, but also their future limitless worth.

11. Cherish the memories. In your prenup, you can make sure that your family's cabin, artwork, jewelry, antiques, and anything of sentimental value stays close to your heart.

12. Stay out of debt (not only yours but your partner's!). Prenups point out and protect you from your beloved's indebtedness, whether student loan, gambling, business, or credit card debts.

13. Get your just dessert. A prenup can ensure you are justly compensated, for example, if you suspend a career to relocate, raise a family, or support your spouse in a professional or trade school.

14. Strengthen the bond between you. You share information and discuss sensitive matters. You express optimism that you will be able to raise and resolve pressing problems. You create a mechanism for further dialogue and dispute resolution.

15. Trump the trick. By full disclosure, you and your partner put your financial cards on the table up front, thus playing with a full deck on financial matters. Since studies show that monetary issues are responsible for 70 percent of divorces, you're both way ahead of the game.

16. Play governor! You veto laws that you don't like or that are inappropriate for your situation. For example, the law in your state may automatically entitle your spouse to one third of your estate. But you may want to leave your estate to your children from a prior marriage. Or you may desire to leave your entire estate to your partner-but that's the point: You should make the choice. You can override this legal mandate by entering into a prenup.

17. Stay out of murky legal waters. In many states, "separate" property is not split up in a divorce and includes premarital property and gifts and inheritances acquired after marriage. By contrast, "marital" or "community" property is split up in divorce and generally consists of earnings from employment after marriage. Despite the seemingly clear distinction between these types of property, the line easily can become blurred. In a prenup, you can define separate and marital property the way you see fit.

18. Reduce legal fees. The cost of a prenup is a bargain compared to the cost of contentious divorce or probate proceedings. The average price of a wedding party is $20,000. For a fraction of that amount, you can make a lasting investment in a prenup.

19. Avoid "divorce, incorporated," as New York magazine calls the cabal of divorce lawyers who control the divorce "system" in New York City. They charge a lot, they're clubby, and they may have their own agenda. You can circumvent any such clique in your hometown if you have a prenup.

20. He self-reliant. A prenup reminds you that your marriage license is not a meal ticket and that ultimately each of you must rely upon yourself to make your way in this world. It prevents you from being lulled into a false sense of security about the financial ever-after of marriage and discourages you from unduly leaning on your partner. It encourages you to be independent, which in turn gives you the strength and resources to cope with the economic vicissitudes of life, irrespective of your marital status.