A few years ago a friend of mine was asked to sign a prenuptial agreement. I remember thinking that she acquiesced a bit too quickly and probably didn't think through how the contract would affect her if she ever gets divorced. I imagine she worried that if she started questioning the document she would never walk down the aisle. I'm sure she's not the only one who didn't know how to handle a situation that was once reserved for Hollywood royalty and wealthy socialites.
What should you do if your intended asks for a prenuptial agreement? I decided to ask Marlene Eskind Moses, the president of the AAML for some advice.
Hire a Lawyer
Don't waste your time calling Mom for advice if your fiance presents you with a prenuptial agreement. Instead, contact an attorney right away who can review the document for you.
Your lawyer can walk you through all the legalese and help you review your intended's finances. This is done through a full and complete financial disclosure of your fiance's assets. The thinking here is that if you are waiving your rights to his or her money, you should at least know what you are giving up, says Moses.
A prenuptial agreement can also be used to your advantage, says Moses. In the contract you can -- and should -- make demands for future support should you two go your different ways. In addition to how much money you want, you can also stipulate if you desire a house, car, or anything else that you feel is fair. Plus, you can negotiate that your partner sweetens the pot as your marriage lasts longer.
Plan for Retirement
Thirty six percent of divorce attorneys cite a rise in prenuptial agreements that include pensions and retirement benefits, according to the AAML. If you're not going to have access to your spouse's 401(k) and other nest egg accounts, you had better add some provisions to the contract to make sure you're not eating cat food in your golden years.
Purchase Life Insurance
Finally, you need to think about estate planning. Some people ask for prenuptial agreements because they plan to leave all of their money to their adult children from a previous marriage. Or other folks have all of their money tied up in a family business and the assets won't transfer to a spouse. If you're in one of these situations, it can make sense for you to request that your partner buys a large life insurance policy that can support you when he passes away.
The funny thing about prenuptial agreements is that they plan for a future many of us can't predict. Moses says she's seen plenty of spouses who have their fortunes flip-flop. For example, she recalls one spouse who tried to protect a small business that eventually went belly-up and the other partner turned out to have the more prosperous career. But the prenup never mentioned support or alimony for the one whose venture failed before they split up, she says.
It just goes to show you that if your fiance does ask you for a prenup, you just might end up being the one who's grateful he requested it in the first place.
Would you sign a prenuptial agreement?
Stacey Bradford is the author of The Wall Street Journal Financial Guidebook for New Parents.
My Cousin's Wedding Cake image courtesy of Flickr, CC 2.0.