Between news coverage, soap operas and family drama, everyone has preconceived notions about premarital agreements and prenuptial agreements. Here are a few of the most common myths, debunked.
Myth 1
Prenuptial agreements are only for wealthy people, my fiance and I are not rich and so we don't need an agreement.
You may not be rich, but you definitely want to have a successful marriage. Honest discussions regarding how the two of you will approach finances will ensure that there won't be any surprises once you are married. Talking about financial issues in advance insures that you handle money with minimal conflict during your marriage as well as in case of divorce.
Example 1
You may become rich in the future. Your education, ideas and talents may one day become more valuable than they are today. You need to think about how you'd handle the division of a business, inheritance, patent, book, song, or copyright in the event of a divorce.
Example 2
Second and third marriages can bring conflict between children from prior relationships and new spouses. Clear discussions about finances in a divorce or premature death situation help everyone avoid conflict later.
Myth 2
Prenuptial agreements are designed to simply protect the wealthier spouse and strip the other spouse of all of his or her rights.
Fact
Prenuptial and premarital agreements should be designed to protect both spouses. Premarital agreements which are unfair and completely one-sided are probably not enforceable in court. The agreement must be fair. The basic requirements for premarital agreements to be enforceable are: signing the agreement must be voluntary, it can't be unfair when it's signed; each party needs to make a full disclosure of your assets and debts. (California Family Code Section 1615. Most states have similar laws.)
Premarital agreements can be designed so that everyone's needs are met.
Example 1
With a premarital agreement, you will know in advance how your assets and debts would be handled in the event you divorce. You're negotiating the property settlement while you're both in love with each other and you won't be at the mercy of your spouse's generosity or lack of generosity at the time of a divorce.
Example 2
If you need your agreement to be enforced by the court, you'll be glad that you made it reasonable from the beginning (and therefore enforceable). For example, by providing a reasonable support structure for your spouse in the premarital agreement, in the event of a divorce, this agreement defines the support's limits, terms, amount and duration. If you left it up to a court, you would have no control over any of the terms.
Myth 3
Premarital Agreements Aren't Romantic.
Fact
Jessica Simpson didn't think they were romantic, either. And, there's nothing romantic about fighting about money once you're married because you never discussed how you'd handle your finances. Clearly, premarital agreements are touchy subjects, but consider this quote from the Nolo Press book Prenuptial Agreements: How to Write a Fair and Lasting Contract (Nolo Press 2004):
"While a prenuptial agreement may not seem like a very romantic project, working together to consider and choose the terms of a prenup can actually strengthen your relationship. Learning how to deal respectfully and constructively with each other about finances is a benefit in itself. [A prenup can help you] converse with each other about the important financial matters that are sure to arise in marriage."
Myth 4
Premarital Agreements must deal with every issue that might come up in a divorce.
Fact
You can include as many issues or as few issues as you wish. Because premarital agreements are private contracts, you can make them as detailed as you want.
Example
If the only thing you want for your premarital agreement to accomplish is to protect your pre-marital property, you can limit your premarital agreement to that issue alone.
If the only thing you want for your premarital agreement to accomplish is to outline what would happen in the event of your death you can limit your premarital agreement to that issue alone.
If you want your premarital agreement to cover almost every issue that might come up in a divorce except one or two issues (like spousal support, or contributions to a pension during the marriage, for example), then you can have the agreement cover everything except the issues you want to exclude.
If you want your premarital agreement to cover every issue, you can do that, too.
Myth 5
If we don't get married, my live-in mate won't have any claims to my income or property.
Fact
You could risk your income or assets by living together without marrying.
Palimony is a spousal support substitute for alimony or spousal support for people who are not married. Palimony claims are difficult to prove, but that doesn't stop some people from trying.
Also, if you have an oral or written discussion about how you will own property, share income, assets, debts, etc., it's possible to make a claim that contract law applies (as opposed to family law), and that property should be divided even if it's only in one person's name, or only one person paid the bills. There are also real estate partition laws that can dictate how property is divided, forcing an involuntary sale at auction.
If you are going to live together without getting married, you'll want a cohabitation agreement. It's better to decide who contributes to and owns property before you buy things rather than afterwards.
Example
Remember actor Lee Marvin (The Dirty Dozen and more than 60 other movies)? In the 1970's, his live-in girlfriend, Michelle Triola, brought an sued him alleging they had an oral agreement that Lee Marvin agreed he would provide for all her financial support for the rest of her life. (Marvin v. Marvin, 18 Cal. 3d 660 and 122 Cal. App. 3d 871; 176 Cal. Rptr. 555; 1981 Cal. App. LEXIS 2132)
The court ultimately agreed with Michelle. Lee Marvin had to pay her a substantial sum, plus the attorneys had to be paid. Taken in this perspective, a premarital agreement or cohabitation agreement is a bargain.
Conclusion
A carefully crafted premarital or prenuptial agreement can cement your relationship, prompt you to have the hard discussions that engaged couples need to have, and insure that your finances are handled the way you each intend in the event you were to divorce or pass away prematurely.
