Five Rules for a Midlife Prenup

A middle aged person going to the altar probably wants to protect his or her assets – and children – with a prenuptial agreement.

When a person marries in midlife – whether it’s the first marriage or the fourth – a prenuptial agreement is a good idea because by middle age, a person accumulates some wealth – a 401(k) retirement plan and IRAs, a home and perhaps a business. And he or she may have children from a previous marriage. All of these factors make a prenup extremely helpful.

Simply put, a prenup spells the division of a person’s financial assets – including real estate, cars, savings and investments – when the marriage ends, either in divorce or with the death of a spouse. A prenup can indicate who will be responsible for outstanding debts. It can even determine who will get custody of the pets.

Without a prenup, if the marriage falters, all manner of things can happen that the decedent never wanted. If a spouse does not have a prenup and can’t come to an agreement during divorce proceedings, state laws dictate the division of the assets. That means that in community property states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – the surviving spouse probably gets half of everything. But in other states, the court splits the assets depending on factors such as how long the couple is married and what they accumulated together. Without a prenup, the laws of the jurisdiction determine the division of the estate. A woman might have to pay alimony. And the new life partner may have debts that the other person could be responsible for paying. When someone dies without a prenup, his or her spouse might be able to legally claim up to half of the assets.

More and more boomers heading to the altar visit lawyers, who often charge a few thousand dollars to draw up a prenup. Some couples even use the agreement as a blueprint for managing finances during their marriage.

“Over the years, the knee-jerk negative reaction to asking for a prenup has dissipated,” says Arlene Dubin, a matrimonial attorney at Moses & Singer in New York City and author of Prenups for Lovers: A Romantic Guide to Prenuptial Agreements. “Prenups are now part of our culture.”

Kerry Hannon, who has written about personal finance for Forbes, Money, U.S. News & World Report and USA Today for nearly three decades, recommends a prenup for people who fall into one or more of these categories:

  • They are bringing $100,000 or more in assets to the marriage
  • They have children from a prior relationship
  • They own or co-own a business
  • They earn a hefty salary (or are likely to do so in the future)

Prenups are not romantic, and although more common than ever, asking a potential spouse to sign a prenup can still be dicey. “Whoever brings it up is considered to be extremely unromantic,” says Olivia Mellan, a psychotherapist and money coach. Resentments, anger and the fallout of painful former relationships can pollute the whole prenup process.

Hannon recommends five rules for an ironclad agreement:

  • Each partner should each hire a lawyer. This will ensure that both have an advocate.
  • Full disclosure is vital. Both spouses must come clean about all finances, including assets, income and debts.
  • Both must be willing to sign the document. Most jurisdictions require two witnesses and they must sign the prenup well in advance of the marriage so neither partner can say it was done under duress. Two or three months before the wedding date is ideal.
  • Agree on any waivers in advance. If, for example, a spouse wants to leave his 401(k) to his children, his spouse needs to turn over his or her rights to the money by filing a waiver with the plan trustee after the wedding. Be sure the prenup includes an agreement to file the waiver. (IRA proceeds always go to the named beneficiary, regardless of what is in a prenup or will.)
  • Adult children should be included in the discussion. “Kids have a funny way of thinking that their parents’ money is already theirs and can’t help feeling suspicious about a new spouse horning in,” personal finance columnist Jane Bryant Quinn wrote in an article about her own recent prenup.



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