prenuptial

How common are prenuptial agreements in 2013?

Prenuptial agreements are designed to protect prior investments, debts, and family inheritances when a couple gets married. These agreements should not encourage divorce, and should clearly outline the terms of a potential divorce. Unclear premarital agreements can case a great deal of stress and headache for the marriage, which is unfortunate, since prenuptial agreements should ease decisions post-divorce.

In the Cioffi Petrakis case, lawyers were able to null the couple’s prenuptial agreement based on oral agreements before the wedding. This case is unprecedented, because well-written prenups tend to hold up in court. According to the ABA Journal,

In what lawyers are calling a landmark ruling, a New York appeals court has upheld a Long Island judge’s decision to void an prenuptial agreement that the wife of a millionaire says she was tricked into signing by false promises made by her husband-to-be, days before the wedding.”

This case spurred our interest in prenuptial cases, and our legal resources gave us some unique insight about prenuptial frequency and types of prenuptial agreements.

1. Frequency of Prenuptial Agreements

According to Christina M. Scott, divorce is on the rise, but divorcing couples do not typically have premarital agreements in place.

In a study conducted by the American Academy of Matrimonial Lawyers in 2010, 73% of divorce attorneys reported an increase in prenuptial agreements. In practice, however, despite the benefits that a prenuptial agreement can provide, the majority of divorcing couples do not have prenuptial agreements.”

This begs the question: Does tackling tough decisions while writing prenuptial agreements create a stronger base entering marriage? Openly discussing finances and prior debts before entering the marriage could potentially prevent unpleasant surprises down the road.

2. Why Are Prenuptial Agreements on the Rise?

Traditional marriages that commence early in life are on the decline, while more established, mature adults are marrying often. According to Michael Helfand,

They are becoming more common because people are marrying later in life and have often accumulated enough that they want to protect it, or they’ve started a business and their partners require it.”

Marrying with more assets can make brides and grooms much more cautious entering marriage, and premarital agreements become more attractive to such couples.

3. Poorly Written Prenups

Most premarital agreements are written in case of divorce, but are not particularly attractive to either party. But in some marriages, one party will want to divorce in order to acquire what was promised to them in the prenuptial agreement. As attorney Malcolm Taub further explains,

“In rare occasions, prenuptial agreements have encouraged divorce. Certain agreements contain “sunset provisions,” which means that the agreement will terminate after a period of time. Some of these parties may be encouraged to end the marital relationship prior to the time set forth in their sunset provision. There have been circumstances where divorces have been initiated in order to avoid the continuation of marriage without the provisions of the prenuptial agreement being in effect.”

If the couple divorces after the prenuptial period has expired, typical divorce proceedings will determine asset divisions.

4. Prenuptial Agreements are not Solely Designed for Wealthier Marriages

While wealthier parties may be more inclined to protect their assets when entering marriage, premarital agreements do much more than divide money. Prenuptial agreements can be designed for anyone. Attorney Andrew Drazen expands:

A prenup can obviously take into account much more than just division of assets, but that would likely be the most important aspect of the agreement. An average person will likely not have enough assets when they get married to consider forming a prenup, whereas a wealthier individual will. More practically speaking, this is a likely circumstance of networking. Wealthier people are generally more likely to be in regular contact with an attorney (for work like estate planning or business matters). If you are in contact with an attorney and mention pending nuptials, that attorney may likely mention consulting a family law attorney about a prenup.”

While prenuptial agreements are more common within wealthier marriages because of financial incentive and attorney connections, they can be designed for any marriage. For example, some couples might be interested in a prenuptial agreement to protect family inheritance, or children from prior marriages.

Altogether, prenuptial agreements should make a plan that both parties agree upon in case of divorce. Attorney Nicole Aeschleman sums it up best, saying

A prenuptial agreement allows for the organized division of assets in a time of great angst and stress. When both parties understand what the financial division will be ahead of time, it adds clarity to a confusing situation.”