Did you ring-in the new year with a marriage proposal? If you said, "Yes," amidst the promises of a lifetime of togetherness and joyful wedding preparations, now is the time to also think about the true value of a prenuptial agreement, namely, agreeing to mediate before choosing to litigate. In addition to protecting you or your partner's net worth, entering into a prenuptial agreement gives you both the opportunity to promise to try mediation before resorting to litigation in the event the marriage isn't working. There is no more important language in this document than the words that state that you both agree not only to resolve conflict before it arises, but also that you agree to use alternative dispute resolution methods in an effort to mitigate your damages. This twist on the prenup encourages couples to use mediation to both draft the agreement, and to resolve conflicts if and when they arise.
The current trend shows mediation being used regularly to resolve family law disputes such as issues relating to divorce, time-sharing, alimony, and child support. Many jurisdictions require couples to engage in some form of mediation prior to a court hearing or trial. This requirement benefits both the backlogged court system, as well as the litigants, who stand to save significant costs in unnecessary legal fees. Taking this trend one step further, newly engageds can further utilize this alternative method for dispute resolution by weaving mediation into the preparation of their prenuptial agreement.
A prenuptial agreement is simply an agreement between prospective spouses, made in contemplation of marriage. It is a document ideally designed to protect the interests and rights (financial and otherwise) of both individuals in the event the marriage ends. If you fall into any of the following categories, you should be considering a prenup:
1. You have significantly more assets than your partner.
2. You have significantly less assets than your partner.
3. You earn much more money than your partner.
4. You earn much less money than your partner.
5. Your partner has substantial debt obligations.
6. You intend to leave the current workforce or drop out of school so that you can stay at home and raise your family.
7. You stand to inherit substantial assets in the future.
8. You own all or part of a business.
9. You and/or your partner were previously married and/or have children from prior relationships.
Prenuptial agreements come in many shapes and sizes, and are unique to each couple. There are complicated prenuptial agreements typically drafted by lawyers, as well as DIY agreements available online. Experienced family law mediators can also prepare these agreements, and may often suggest that the final document be reviewed by an attorney. The costs of preparation can range from hundreds to thousands of dollars, depending on the complexities of each case. However, with careful drafting, this little document can save tens of thousands of dollars in legal expenses, in the event of a litigated divorce.
Planning a wedding may be overwhelming enough, and the thought of addressing the topic of a prenup may be paralyzing. Where should you begin? Start by opening the conversation with your soon-to-be spouse, to simply determine whether he/she is willing to consider a prenup. If so, keep the conversation light and explore the following areas:
1. How will you handle assets and/or debts acquired during your marriage?
2. If you have assets and/or debts acquired prior to your marriage, how do you intend to handle these?
3. Do you intend to inherit from each other? Are your intentions consistent with estate planning documents?
4. Do you both intend to work during your marriage and contribute equally to the marital household either financially or otherwise?
5. Do you plan to have children, or, do either or both of you already have children from prior marriages? How would you envision time-sharing/custody?
In the end, a well-thought out and properly drafted prenuptial agreement is like an insurance policy. You purchase the policy and put it away in a drawer until it is needed. At the time you "cash it in," the proceeds take care of you and your family in a time of crisis. Similarly, the prenuptial agreement helps to reduce the conflicts associated with most divorces, by planning ahead for the crisis and agreeing to certain terms and conditions. Moreover, comparatively speaking, the nominal cost associated with the preparation of a prenuptial agreement is a bargain, compared to the high costs associated with most divorces. And remember, brides and grooms, the most important part of your final agreement is to include mediation as your first choice for dispute resolution.