What to Do Before the "I DO"by Nihara Choudhri
What to Do Before "I Do" takes the potentially unromantic idea of a
The cake has been chosen, the reception hall reserved, and all the attire ordered. Creating a marriage contract is probably the last thing on your mind. However, by working with your spouse-to-be to design your particular marriage contract, you control the relationship and direct your future.
What to Do Before "I Do" takes the potentially unromantic idea of a prenuptial agreement and makes you see its importance to your relationship. Proper planning will answer questions such as-
Will your child continue to be cared for in the manner you wish if you pass away?
Is your fiancé's debt your responsibility?
Can your wife claim your premarital property in a divorce?
People often enter marriage with only a vague understanding of their partner's financial status. Even if you decide against a prenuptial agreement, after reading this book, you will realize how important it is to go into a marriage with your eyes wide open.
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Doing it Right:
Seven Rules for a Rock-Solid Prenup
If you and your spouse-to-be decide that a prenuptial agreement makes sense in your case, it is not enough simply to scribble your understanding down on a scrap piece of paper. Rather, you must follow certain established rules when negotiating and memorializing your agreement. This chapter explains the seven most important rules for a rock-solid prenuptial agreement. If you ignore these rules, you could end up with a prenuptial agreement that would never stand up in court.
Rule #1: Put your prenuptial agreement in writing and make sure you and your spouse-to-be both sign it. You might think it is unnecessary to have a formal prenuptial agreement in place, specifying each spouse's rights in the event of debt, divorce, and death. Why can't you and your loved one simply sit down and reach an understanding on your own without going through all the bother and expense of having lawyers put it in writing? The answer is simple. Most courts will not enforce a prenuptial agreement unless it is in writing and signed by both spouses.
Russ and his fiancé, Charlotte, were both musicians who shared a love of jazz and a strong distaste for lawyers. Before they married, they had a long heart-to-heart about the not-so-romantic practical side of marriage-death, divorce, debt, and money in general. Charlotte and Russ agreed that if they ever divorced, they would divide everything they earned while they were married equally between them. Russ and Charlotte also promised to rewrite their wills to leave their entire estates to one another. Neither Russ nor Charlotte discussed their agreement with a lawyer and they did not bother to write anything down. Both of them felt that their word was enough.
Charlotte rewrote her will, just as she had promised. But Russ never got around to rewriting his before he was tragically killed in a motorcycle accident. Charlotte learned from the lawyer for Russ's estate that his will made no mention of her whatsoever. Because the prenuptial agreement that she and Russ had agreed to was not in writing, there was no way for Charlotte to enforce Russ's promise to rewrite his will to leave her all his assets. Charlotte was therefore entitled to nothing more than her elective share of Russ's estate-which, in their state, was only one third of his estate. The remainder of Russ's estate went to Russ's parents, who were the only people named in his will.
Rule #2: Hire a lawyer to advise you on your prenuptial agreement and make sure that your spouse-to-be does the same. You might be tempted to save on legal fees and enter into a do-it-yourself prenuptial agreement with your loved one. Though you might consider this biased advice (since it is coming from someone who makes her living practicing matrimonial law), not hiring a lawyer for the purposes of your prenuptial agreement is penny-wise and pound foolish.
Lawyers serve several important purposes in the context of prenuptial agreements. Your lawyer will:
u explain your legal rights to you and help you understand how your prenuptial agreement will affect those rights;
u keep you from signing an agreement that is overly lopsided in favor of your spouse-to-be;
u provide you with bargaining power by negotiating better terms on your behalf;
u help you comply with the financial disclosure requirements (see Rule #3);
u make sure that you receive appropriate financial disclosure from your spouse-to-be; and,
u take all necessary steps to ensure that your prenuptial agreement will stand up in court.
Not only should you go out and retain a lawyer, but you should make sure that your spouse-to-be does the same. If your spouse-to-be cannot afford a lawyer, you should cover the legal bills yourself. (Trust me, this is a very wise investment.) The last thing you want is for your spouse to challenge the agreement down the line on the grounds that he or she did not understand the legal consequences of your prenup. You should make certain that your spouse-to-be hires a lawyer who is just as competent as your own, and that his or her lawyer is completely independent of you. For example, this would not be a good time to call in that favor from your cousin Bill, a criminal lawyer who happens to do a little family law on the side. Otherwise, your spouse-to-be could later claim that he or she did not have the benefit of independent legal counsel, since the lawyer you provided was biased in your favor.
When each spouse-to-be has his or her own independent lawyer, it is much more likely that their agreement will stand up in court. Having ?separate and well-qualified lawyers ensures that each spouse-to-be will understand what he or she is signing (because it is a lawyer's obligation to explain the consequences of each and every term of a prenuptial agreement) and will also have the opportunity to negotiate for more favorable terms before signing the agreement.
Alexis was a very well-endowed young woman (her trust fund was larger than the gross national products of some developing nations). When Alexis announced her engagement to Joshua, a man who considered his friends and family to be his greatest riches, Alexis's family immediately demanded that the commoner sign a prenuptial agreement. Joshua said that he would gladly sign anything in order to put their minds at ease, but Alexis insisted that he hire a lawyer to look over the agreement and negotiate on his behalf. So Joshua begrudgingly retained a lawyer and Alexis paid the bill.
Joshua's lawyer looked over the agreement proposed by Alexis's family and carefully explained the terms to Joshua. Joshua was surprised to learn that the agreement essentially provided that Joshua would get nothing in the event of a divorce-not even spousal support-even if they were married for twenty years. While Joshua was not troubled by this (since he felt in his heart that he and Alexis would never part ways), he was very hurt by the provision that left him with nothing in the event that Alexis died.
Joshua discussed this with Alexis (who had left the details of the agreement to her lawyer) and the two agreed that the provision was incredibly unfair. Alexis instructed her lawyer to redraft the agreement to provide that Joshua would receive half of her entire estate in the event of her death, with the other half going to charity. Alexis's family was not pleased, but Alexis and Joshua were comfortable with the arrangement. Joshua was grateful that he had a lawyer to translate the agreement into plain English for him. Had it not been for the lawyer, Joshua would have signed away all of his rights without even realizing it.
Rule #3: Provide your spouse-to-be with the complete details of your personal finances and ask for the same in return. Comprehensive financial disclosure is perhaps the most important prerequisite to a valid prenuptial agreement. This is because you and your spouse-to-be need to have a thorough understanding of one another's financial situation before you can negotiate the terms of your prenuptial agreement in fairness. For example, you probably would not agree to waive all spousal support claims if you knew that your soon-to-be spouse was a millionaire and not the starving artist he claimed to be. Or you would not agree to be jointly responsible for all debts incurred during the marriage if it turned out that your spouse had a secret gambling problem and had already accumulated tens of thousands of dollars in casino debts. The fact of the matter is that unless you and your spouse-to-be provide one another with thorough details of your personal finances, your prenup will not be enforceable.
You and your spouse-to-be should each disclose:
u your income;
u your assets and liabilities; and,
u any other pertinent financial information, such as an expected inheritance or a financially significant impending business deal.
Should you be concerned that your spouse-to-be might share some of this information with friends or family, you could ask your lawyer to have a confidentiality agreement in place before handing over your financial disclosure statement. A confidentiality agreement can provide that your spouse-to-be may only share your financial disclosure statement with certain people, such as his or her lawyer and accountant.
?If you fail to provide your spouse-to-be with complete financial disclosure, a court could later invalidate your prenuptial agreement.
Jordan was a newspaper reporter whose specialty was unraveling white collar crime stories. His own personal finances were in impeccable order and he was only too happy to provide his fiancé, Alicia, with a download of his Quicken files when it came time for the two of them to enter into a prenuptial agreement. Jordan's Quicken files provided Alicia with incredibly detailed information about his personal finances-down to how much money he spent on hot dogs and magazines each month. The only thing missing from Jordan's files was any mention of his small savings account in the Cayman Islands, containing close to a million dollars. Jordan had amassed these riches through bribes from businessmen who were willing to pay almost anything to keep their names off of the front page.
Alicia knew nothing of this Cayman Islands account or Jordan's illegal bribery scheme. From what she could tell from his Quicken files, Jordan was nothing more than a humble newspaper reporter who managed to save just a few hundred dollars per month in his 401(k) account. Because Alicia felt sorry for Jordan since he worked so hard and appeared to make so little, the couple entered into a prenuptial agreement providing that Alicia would actually pay Jordan spousal support in the event of a divorce. Jordan filed for divorce a few years later, fully expecting to collect a few extra dollars each month from Alicia. To Jordan's shock, Alicia moved to nullify their prenuptial agreement. (Jordan had left a statement from his Cayman Islands account in his pocket on a day when Alicia was taking in the dry cleaning.) The court held their prenuptial agreement null and void since Jordan had failed to provide Alicia with full financial disclosure. (The court also alerted the district attorney to Jordan's illicit money-making activities.)
Rule #4: Do not force your spouse-to-be to enter into a prenuptial agreement. Your prenuptial agreement will only stand up in court if you and your spouse-to-be both enter into the agreement voluntarily and with a full understanding of the consequences of the agreement. If you coerce your soon-to-be spouse into signing a prenup, you will likely end up with an unenforceable prenuptial agreement and a very unhappy spouse-to-be. Putting unacceptable pressure to enter into a prenup by emotionally or physically abusing your spouse-to-be until he or she breaks down and signs the agreement allows the court to throw out the agreement. Refusing to marry your loved one without a prenuptial agreement in place, however, is perfectly acceptable behavior.
Rachel came from a very conservative Catholic family that was very well respected in her community. She considered herself to be quite a good girl and had never given her family reason to be anything but proud of her. All of that changed after her fiancé, Parker, popped the question. Rachel broke a rather important rule one Saturday afternoon and she soon learned she was pregnant with Parker's child. Rachel pleaded with Parker to move up the wedding date. Parker agreed on one condition-that Rachel would sign whatever prenuptial agreement Parker presented. Rachel signed the prenup without even reading it and the two were married in time for Rachel to claim that her baby was born just a few weeks early.
Rachel never looked back at the prenuptial agreement until years later, when Parker filed for divorce. She realized that she had signed away basically all her rights to everything Parker earned during their marriage. If the agreement were enforced, ?Rachel would hardly be able to support herself. So Rachel hired the best lawyer in town and challenged the prenuptial agreement, claiming that Parker forced her to sign it. Rachel won, and walked away with half of everything Parker earned during their marriage, plus spousal support.
A prenuptial agreement must be a two-way street. Either you must both enter into it voluntarily or you must take your chances without one.
Rule #5: Take care of your prenuptial agreement well in advance of your wedding. Do not wait until after you have paid the deposit for the caterer and sent out all your wedding invitations to pop the next big question. When all the wedding arrangements have been made, there is a great deal of pressure for even the most self-assured bride or groom to sign whatever legal document the other proposes just to make it to the big day. You do not want to put your spouse-to-be in the awkward position of considering a prenuptial agreement when friends and family have already purchased plane tickets and wedding gifts.
The better approach by far is to bring up the issue of a prenuptial agreement well in advance of your wedding. This way, you and your spouse-to-be can both focus on the nitty-gritty terms of the prenup without worrying whether the negotiations will delay the wedding. If you do not give your spouse-to-be enough lead time before the wedding to consider the significant legal and financial issues raised by a prenuptial agreement, your spouse-to-be could later challenge the validity of your prenup by arguing that he or she felt pressured to sign the agreement.
Amelia had envisioned her wedding day ever since she was a little girl. When Caleb proposed, she pulled out her archives of Bride magazine and began the much-awaited task of planning her big day. Amelia agonized over whether the floral arrangements should include lilies or roses; attempted to color-coordinate her invitations with her wedding favors; and tried on no fewer than two hundred wedding gowns before settling on the perfect one. Amelia had already sent out hand-calligraphied invitations and completed their wedding registry when Caleb first raised the issue of a prenuptial agreement.
Caleb suggested that Amelia should receive a lump sum payment of $20,000 in lieu of her share of marital property and spousal support if they ever divorced. This sounded fair enough to Amelia (whose daddy had always paid all the bills for her). She was too wrapped up in wedding planning to focus on what she viewed as legal mumbo-jumbo. Moreover, since she had already told all her friends and family about her upcoming nuptials, she had no intention of doing anything that would rock the boat and jeopardize her chances of a dream wedding.
Fast forward ten years. Caleb had become a very successful real estate developer and Amelia had become a consummate homemaker and devoted mother. She had long since forgotten about the prenuptial agreement she hastily signed as a young bride-to-be when one day-out of the blue-Caleb served her with divorce papers and a check in the amount of $20,000. Amelia was horrified. She had grown accustomed to living in the lap of luxury and she had taken care of the house and the children while Caleb was working his way to the top. There was no way that $20,000 would enable her to support herself for even a few months.
Amelia retained a lawyer to challenge the prenuptial agreement. She presented evidence that she signed the prenup just a few weeks before the wedding and was too concerned about the potential embarrassment of a canceled wedding to be able to negotiate the terms of her prenup in earnest. In essence, Amelia claimed she felt she had no choice but to sign the agreement. The court agreed with Amelia, and she ended up walking away with half of the millions that Caleb had earned during their marriage.
Rule #6: Make sure that your prenuptial agreement is fair to your spouse-to-be. Both to ensure the enforceability of your prenuptial agreement and for the sake of your upcoming marriage, make sure that your prenup is fair to your spouse-to-be. Do not ask your loved one to sign away basically all his or her property rights in order to have the privilege of being your spouse. Just remember, you love your soon-to-be spouse and you owe it to him or her to strike a fair deal. If your prenup is totally lopsided in your favor, a court may very well overturn your prenup in the event it is ever challenged. Courts do not like to enforce agreements that are fundamentally unfair to one side.
Spencer and his business partner, Marisol, had built up a tremendously successful interior design company together. Spencer and Marisol had each invested $30,000 of their own money into the business and they had worked side-by-side on their most important projects. One night, while debating over carpet samples, sparks began to fly and Spencer and Marisol went from business partners to life partners.
Spencer proposed within weeks. He explained to Marisol that he would not be able to continue working with her so closely in the event their romance fizzled, and so he asked her to sign a prenuptial agreement providing that the business would be his to keep in the event of a divorce. All Marisol would get would be a reimbursement of her $30,000. Marisol was normally a tough negotiator, never paying even a penny more than necessary for custom upholstery or wall-to-wall carpeting. But the stars in her eyes kept her from thinking straight on the issue of her prenup, so she went ahead and signed the agreement.
Spencer turned out to be the most loyal and devoted of husbands. Marisol, however, soon began to feel bored with the monotony of monogamy. She began to experiment with men half her age and soon ended up filing for divorce. Spencer handed her a check for $30,000 and presented her with papers handing over the entire business to him, per the prenup. Marisol balked and hired a lawyer, who challenged the prenuptial agreement as unconscionable. The judge agreed with Marisol-it was tremendously unfair for Marisol to have to give up the fruits of all her hard work to Spencer just because their marriage had not been as successful as their business.
Rule #7: Update your prenuptial agreement regularly during your marriage. Do not consider your prenuptial agreement as written in stone for all the years of your married life. Instead, you should revisit your prenuptial agreement regularly to make sure that its terms still make sense in light of the circumstances of your life. A prenuptial agreement that works well when you are in your early years of marriage and still getting to know one another's hidden quirks might not fit well after you have had two children and your spouse has given up his or her career to be a full-time parent. If fairness alone does not move you to update your prenuptial agreement from time to time, concerns about the continued enforceability of your prenup most definitely should. Courts are increasingly considering whether the terms of prenuptial agreements are fair as of the time of the divorce when deciding whether or not to enforce them. When circumstances have changed a great deal between the time the prenup was signed and the time of a divorce, courts recognize that the terms of a prenup may no longer be just or appropriate.
Kirsten and her husband, Noel, had signed a prenup providing that they would each keep their earnings in separate bank accounts during their marriage and that their respective earnings would count as separate property in the event of a divorce. Five years into their marriage, Kirsten and Noel had grown to love and trust one another so much that they no longer maintained separate accounts. They had even taken out a mortgage together, on which they were jointly liable. When Kirsten learned she was pregnant, she decided it was time to talk to Noel about renegotiating the terms of the prenup. Kirsten was concerned that she would be left with hardly anything in the event of a divorce, particularly since her own earnings would likely decline when she prioritized mothering over her career.
Noel agreed that it was time for a change. He wanted to make sure that Kirsten would feel secure enough about their financial arrangement to spend as much time as possible with their new baby, even if that meant quitting her job or taking a part-time position at a less prestigious company. Noel proposed that he and Kirsten divide equally everything that the two of them earned during their marriage and that the couple would continue to maintain joint bank accounts for the duration of their marriage. Because Kirsten's share of Noel's marital earnings would amount to a significant sum, Kirsten agreed that she would not seek spousal support in the event of a divorce. Kirsten and Noel were both happy that their agreement reflected the new reality of their marriage.
Meet the Author
Nihara K. Choudhri, Esq. is a graduate of Columbia Law School. She is the author of The Complete Guide to Divorce Law (Kensington Books 2004), and the divorce law expert for ivillage.com.
When she's not busy writing and lawyering, Nihara spends her time chasing her toddler son, Aman, through Central Park. She and her husband, Trin, have been married for seven years-and they hope to be blessed with seventy more wonderful years together,
Nihara has a few simple words of wisdom for soon-to-be-newlyweds:
Plan for every possibility, but hope for the very best-and may the joys of married life exceed even your wildest expectations.
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