XP Pre-nups: yay or nay?

Jells2dot0

I'm surprised by the number of prenups that reference specifics of estate planning. To me, they are two different things. We were advised to have separate documents- one for the marriage and one for the estate planning. Our prenup determines the division of assets during the marriage and the aftermath of the marriage, if we were to separate. The living trust determines the specific distribution of the estate after death (and also power of attorney in the case of incapacitation). While the terms of our marital agreement will never change, the terms of our living trusts might. For example, my brother just had twins this summer. He was previously my secondary beneficiary. Now, it's the twins. That should not have any impact on my prenup, but it does on my living trust.

luckya23

I didn't see the point in my situation. 

lyndausvi

Jells2dot0 said:

I'm surprised by the number of prenups that reference specifics of estate planning. To me, they are two different things. We were advised to have separate documents- one for the marriage and one for the estate planning. Our prenup determines the division of assets during the marriage and the aftermath of the marriage, if we were to separate. The living trust determines the specific distribution of the estate after death (and also power of attorney in the case of incapacitation). While the terms of our marital agreement will never change, the terms of our living trusts might. For example, my brother just had twins this summer. He was previously my secondary beneficiary. Now, it's the twins. That should not have any impact on my prenup, but it does on my living trust.

I wouldn't say it's estate planning, it's more of making sure certain things are clear in case of death.     If it's stated in a prenup than the spouse is FULLY aware they might not be entitled to certain assets.

Remember not everyone sets up a wills or trust together.    Sometimes it's only the person with all the assets.  New wills can be drawn up without the other's knowledge.   Stating it out in the prenup means the non-receiving spouse is FULLY aware they are not getting whatever asset.   Should the non-receiving spouse fight the terms of a will then it's a document that can be used that they agreed to the terms.  

My grandfather's GF was a widow.   Her husband was wealthy.   She had a prenup that stated she was not entitled to the family estate or the business should they divorce OR he died.  So even if she lived there for 50 years, she was not entitled to sell or profit from the house.   It was to go to his/their kids.

I'm assuming he had a trust, but I'm not actually sure.  I do know at some point his will and/or trust was changed to allow her lifetime residency to the estate unless she remarried.    So like in your case, the terms of the prenup didn't change, his will (trust?) did.  

By having it clear in the prenup meant GF couldn't contest the will.   Well she could have, anyone can contest a will.  But it would be unlikely she would have won since she was FULLY aware of the terms when she got married.  Not that she would have contested it, just an example on why having it also in a prenup can save some surprises or litigation in the future.

Jells2dot0

lyndausvi said:

Jells2dot0 said:

I'm surprised by the number of prenups that reference specifics of estate planning. To me, they are two different things. We were advised to have separate documents- one for the marriage and one for the estate planning. Our prenup determines the division of assets during the marriage and the aftermath of the marriage, if we were to separate. The living trust determines the specific distribution of the estate after death (and also power of attorney in the case of incapacitation). While the terms of our marital agreement will never change, the terms of our living trusts might. For example, my brother just had twins this summer. He was previously my secondary beneficiary. Now, it's the twins. That should not have any impact on my prenup, but it does on my living trust.

I wouldn't say it's estate planning, it's more of making sure certain things are clear in case of death.     If it's stated in a prenup than the spouse is FULLY aware they might not be entitled to certain assets.

Remember not everyone sets up a wills or trust together.    Sometimes it's only the person with all the assets.  New wills can be drawn up without the other's knowledge.   Stating it out in the prenup means the non-receiving spouse is FULLY aware they are not getting whatever asset.   Should the non-receiving spouse fight the terms of a will then it's a document that can be used that they agreed to the terms.  

My grandfather's GF was a widow.   Her husband was wealthy.   She had a prenup that stated she was not entitled to the family estate or the business should they divorce OR he died.  So even if she lived there for 50 years, she was not entitled to sell or profit from the house.   It was to go to his/their kids.

I'm assuming he had a trust, but I'm not actually sure.  I do know at some point his will and/or trust was changed to allow her lifetime residency to the estate unless she remarried.    So like in your case, the terms of the prenup didn't change, his will (trust?) did.  

By having it clear in the prenup meant GF couldn't contest the will.   Well she could have, anyone can contest a will.  But it would be unlikely she would have won since she was FULLY aware of the terms when she got married.  Not that she would have contested it, just an example on why having it also in a prenup can save some surprises or litigation in the future.

In my case, the prenup says that I'm not entitled to anything in the case of death except for our jointly titled property (and vice versa), and that H's kids have been accommodated for in the living trust, but it does not go into any further specifics than that. So, I agree that it should have a statement in there about what happens upon death, but I wouldn't expect to see anything more detailed than that. It just sounded like some people had full estate planning details in their prenup (like what percentage of assets person X would receive) and I just didn't think that was the place for that type of information.

I guess in our case, we're fully aware of each other's intentions in our living trusts because we're each other's successor trustee. And, obviously, per the directions of the living trust, we have allowed for each other to receive some of the estate per the directions of the trust.

lyndausvi

Jells2dot0 said:

lyndausvi said:

Jells2dot0 said:

I'm surprised by the number of prenups that reference specifics of estate planning. To me, they are two different things. We were advised to have separate documents- one for the marriage and one for the estate planning. Our prenup determines the division of assets during the marriage and the aftermath of the marriage, if we were to separate. The living trust determines the specific distribution of the estate after death (and also power of attorney in the case of incapacitation). While the terms of our marital agreement will never change, the terms of our living trusts might. For example, my brother just had twins this summer. He was previously my secondary beneficiary. Now, it's the twins. That should not have any impact on my prenup, but it does on my living trust.

I wouldn't say it's estate planning, it's more of making sure certain things are clear in case of death.     If it's stated in a prenup than the spouse is FULLY aware they might not be entitled to certain assets.

Remember not everyone sets up a wills or trust together.    Sometimes it's only the person with all the assets.  New wills can be drawn up without the other's knowledge.   Stating it out in the prenup means the non-receiving spouse is FULLY aware they are not getting whatever asset.   Should the non-receiving spouse fight the terms of a will then it's a document that can be used that they agreed to the terms.  

My grandfather's GF was a widow.   Her husband was wealthy.   She had a prenup that stated she was not entitled to the family estate or the business should they divorce OR he died.  So even if she lived there for 50 years, she was not entitled to sell or profit from the house.   It was to go to his/their kids.

I'm assuming he had a trust, but I'm not actually sure.  I do know at some point his will and/or trust was changed to allow her lifetime residency to the estate unless she remarried.    So like in your case, the terms of the prenup didn't change, his will (trust?) did.  

By having it clear in the prenup meant GF couldn't contest the will.   Well she could have, anyone can contest a will.  But it would be unlikely she would have won since she was FULLY aware of the terms when she got married.  Not that she would have contested it, just an example on why having it also in a prenup can save some surprises or litigation in the future.

In my case, the prenup says that I'm not entitled to anything in the case of death except for our jointly titled property (and vice versa), and that H's kids have been accommodated for in the living trust, but it does not go into any further specifics than that. So, I agree that it should have a statement in there about what happens upon death, but I wouldn't expect to see anything more detailed than that. It just sounded like some people had full estate planning details in their prenup (like what percentage of assets person X would receive) and I just didn't think that was the place for that type of information.

I guess in our case, we're fully aware of each other's intentions in our living trusts because we're each other's successor trustee. And, obviously, per the directions of the living trust, we have allowed for each other to receive some of the estate per the directions of the trust.

   Death often turns reasonable people into unreasonable people.  So in some situations specifying percentages might be necessary in a prenup.  

I'm thinking the wealthy dude with 8 kids from 6 partners, now on his 5th wife. I can see stating in a prenup do not expect more than "x" dollars should I die would be helpful.   Doesn't stop litigation (think Robin William's wife), but it certainly helps to prove they knew up front what the deal would be when their spouse dies.

 The prenup should be used in conjunction  with wills and trusts.

Pinksatin91016

Thank you guys again for sharing your experiences. I think I'm learning a lot from this thread. A lot of things I never thought about...

short+sassy

I'm going to borrow my friend's prenup story.

She got engaged to a surgeon who made a substantial income.  She always worked full-time also, but her income was probably only 20% of his.  He wanted her to sign a pre-nup.  She refused and told him she wouldn't marry him if he insisted because that wasn't showing faith in their love and their marriage.  He didn't push the issue and they got married without one.

Other than marrying him to begin with, she counts not signing that pre-nup as one of the worst mistakes she ever made.

She caught him cheating 6 months into their marriage and she left him.  However, the details of their divorce took years.  If she had signed a pre-nup, it would have been very cut and dry what would have happened in a divorce.  But because she didn't, he fought her over every little thing.  Including wanting her to pay half his income tax and half their bills, even though he had kept pretty much all the money and the assets.

And every little thing he brought up, was a minimum of $250 to her divorce attorney to respond.  Same for him, but he could afford it.  She had thousands of dollars in legal fees and it took a very long time to get back on her feet financially from that.

Pinksatin91016

Gosh, that story sounds horrible! 

I just decided to ask my friend her opinion after work today and she happens to also be an attorney and my boss (how I got the job as her assistant). She more or less said she thinks everyone should make a living will and a last will and testament no matter who they are or how much money they have. She would help me write it if I write down all my assets, liabilities, and things I'm responsible for and what I think should happen to them should I fall into a coma tomorrow or die completely. But she said I probably don't have reason to worry about a prenup since it's a first marriage, there are no children, and we both are starting the marriage in a similar place financially. She said if I decide I want one that's fine of course, but in this case it's really nothing I need to worry about. It is just an opinion but I trust her and feel like that's true. Other people have other needs obviously.

Novak

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Jells2dot0

NovakNuptials2016 said:

FI is 9 years older than me and has done quite well for himself, which has actually inspired me to get better with saving money too!

long story short- he would like a prenup and I don't disagree. he has a house, money, stock investments, cars, a boat, etc, etc.

I'm willing to sign one because obviously we don't plan on divorcing so it should never come into play. however, if we do divorce there is no chance of a 'take him for all he has' situation.

if you plan on a prenup that is fine but don't sell yourself short. I absolutely plan to have a clause about children and something along the lines of 'if we're married 10 years and have kids then he cheats, he has to support us' like alimony only more because he would be at fault for the breakup. it's something to explore with your lawyer and maybe you want to talk to the lawyer without FI there but have a conversation with FI about it as well.

If you live in a no-fault state, then that clause will be thrown out by the courts. Kids are already accommodated for by the child support laws. You cannot dictate child support in any way in a prenup.

You really need to talk to a lawyer about all of this.

MyNameIsNot

Jells2dot0 said:

NovakNuptials2016 said:

FI is 9 years older than me and has done quite well for himself, which has actually inspired me to get better with saving money too!

long story short- he would like a prenup and I don't disagree. he has a house, money, stock investments, cars, a boat, etc, etc.

I'm willing to sign one because obviously we don't plan on divorcing so it should never come into play. however, if we do divorce there is no chance of a 'take him for all he has' situation.

if you plan on a prenup that is fine but don't sell yourself short. I absolutely plan to have a clause about children and something along the lines of 'if we're married 10 years and have kids then he cheats, he has to support us' like alimony only more because he would be at fault for the breakup. it's something to explore with your lawyer and maybe you want to talk to the lawyer without FI there but have a conversation with FI about it as well.

If you live in a no-fault state, then that clause will be thrown out by the courts. Kids are already accommodated for by the child support laws. You cannot dictate child support in any way in a prenup.

You really need to talk to a lawyer about all of this.

No fault or not, you can still make provisions for certain conduct like adultery. The pre-nup essentially allows you to "re-write" the divorce laws, which means you can write fault back in by making alimony depending on behavior. Ultimately, it's just a contract.

But it kind of defeats the purpose. Trying to prove adultery is time consuming and expensive. One of the main points of a pre-nup is to avoid drawn out and expensive divorce proceedings.  

Novak

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