What’s More Important — the Marriage or Risk Containment?
If you are a financial planner or advisor, you are understandably very concerned about your client’s welfare. If your client intends to marry, you might be concerned about his or her financial future if the marriage turns out to be one that ends in a divorce.
Prenuptial agreements are a possible solution that is talked about in professional education seminars, publications and the media. They can be very useful, but are fraught with danger.
Beware of the Gender Pride Prenup!
Just as there are good and bad reasons to get a prenup, there are certain categories of people who should probably have them and others who don’t really need them. Although the ongoing media blitz may make it seem that everyone should have one before marrying, it is not true. Prenups are sometimes suitable for people who are not affluent.
However, it’s generally true that prenups are most appropriate for four basic groups: the wealthy; older people; people with children from a previous relationship; and those with significant premarital assets. People of more modest means, especially younger couples entering a first marriage, often do not need a prenup at all. But be careful with this one: The Gender Pride Prenup.
What’s a “Gray” Marriage, and what are the challenges of a “Gray” Prenup?
People are now calling divorce of an older couple a “gray divorce.” Similarly, I call a prenup between seniors planning to marry a “gray prenup.” Similar to a gray divorce, a gray prenup has its own particular issues and challenges.
When older people (in their 50s, 60s, 70s, and beyond) get married, they often have children from previous marriages. Their financial loyalty is divided between their children and their new spouse. They generally wish to give and secure a financial legacy for their children. Hence the need for a prenup.
What does “Consideration” have to do with it?
Consideration is the hallmark of a good marriage. But prenups almost always are the antithesis of consideration.
When you think about it, in virtually all prenups, the less moneyed spouse is giving up marital rights. But does that person getting something in exchange? It seems logical that he or she should be trading those forgone marital rights for other rights. That’s what the legal concept of “consideration” in contracts is. As law students, we learned that to have a valid contract, there must be an exchange of consideration given and received on both sides, and that the exchange should be roughly equal, or in legal terms “sufficient.”
What’s a “Surgical” Divorce and How to Get One
“Surgical Divorce” is a term I’ve originated for a fairly simple divorce, where one party has engaged an attorney and the other is pro se. I’m asked this question a lot: “Why can’t you represent both of us?” It is considered a conflict of interest and therefore unethical for one attorney to be the attorney for both parties to the divorce. Attorneys are bound to represent the interests of their client. And as much as you might think there are no disputes between you and your spouse as you head toward divorce, one (or more) conflict may raise its ugly head. That’s why one lawyer can’t represent both of you. (An alternative below is to use an attorney functioning as a mediator, not as a lawyer.)
Med-Arb – An Emerging Method of Dispute Resolution
I had never heard of Med-Arb until I started writing my book on prenups, “The Generous Prenup.” I knew about arbitration, but not this intriguing combination of mediation and arbitration. When I started writing Chapter 6 in my book, (about the different ways people can get divorce), Med-Arb showed up in my research. Here’s how it works. What do you think about it?
The term Med-Arb stands for Mediation/Arbitration. This is a new area of dispute resolution in which the mediator is also the arbitrator. The parties agree to embark on mediation. The parties have also agreed that if the mediation process does not result in agreement (or to the extent it does not), then the mediator switches roles and becomes the arbitrator, and issues an award (i.e., a decision).