Indiana prenuptial agreements

Nothing seems so unappealing to a prospective bride and groom as a prenuptial agreement. True love sneers at the thought of such materialistic matters as property and protecting it from a bad match. Contemplating such things seems akin to admitting the marriage is a failure before speaking the vows.

For some, if not most, marriages these thoughts are not wrong. For others, not having those thoughts can be worse than wrong. This writer articulates a very good reason why prenuptial agreements may be beneficial to a marriage:

While the mention of a prenuptial agreement may seem negative or too personal, bringing up the topic with your wealthy clients may open a healthy exchange about their financial goals while also strengthening their impending marriage. Most people would imagine that negotiating a prenup is potentially divisive, but, in fact, it may be the best way to evaluate a couple’s goals on money and property while eliminating misunderstandings that could cause a future conflict. It also complements a couple’s estate planning efforts.

The common presumption that one needs property for a prenuptial agreement is correct. Also correct is the common preconception that prenuptial agreements are for when things go wrong in the divorce. I suggest putting these two ideas together; if things go wrong is there any property you do want future spouse not to have?

Let me also introduce another player in this domestic play. Children from a prior marriage. You may not want the property for yourself but for your children. Again, from Ms. Hirshman:

Despite its negative reputation, there are times when a prenuptial agreement may be advisable—for example, when husband and wife are marrying late in life and each brings substantial assets to the relationship. A spouse who owns a business or may be expecting an inheritance might use a prenup to direct those assets to his or her children or grandchildren in the event that the marriage is cut short by divorce or death.

Keeping in mind that divorce and death would put each individual’s assets at risk, it is reasonable to suggest that divorcing without a prenup is somewhat akin to dying without a will. If explicit instructions from each spouse are absent, the courts will apply their own formulas for deciding who gets what—formulas that will probably not sit well with either party or their heirs.

One can disinherit children but not a wife. A prenuptial agreement can preserve assets for one's children. Let us also remember that children from a prior marriage can disrupt a second (or a third or a fourth) marriage. I know of circumstances where a prenuptial agreement eased those tensions.

Implied above is the presumption that prenuptial agreements interest only those previously married. I do find that most people previously married are less inhibited about prenuptial agreements and have the assets to lower those inhibitions even more. However, another trend needs taken into account. This is from U.S. News & World Report:

The current boom in prenups makes perfect sense. "Couples are looking at marriage like a business contract for several key reasons," says Dubin. First, they are getting married later in life than previous generations, often in their mid-30s. By then, they have accumulated some wealth in 401(k) retirement plans and IRAs and often a home or a condo. "People are shocked when they realize that an IRA in their name is really a marital asset," she says.

For those wondering about Indiana includes in the marital pot, take a look at my post here. Those previously married know what goes into the marital pot. As the quote above makes clear, newbies get what might be called sticker shock.

So what does Indiana law allow you to do with a prenuptial agreement? You determine your rights to:

(A) buy;
(B) sell;
(C) use;
(D) exchange;
(E) abandon;
(F) lease;
(G) consume;
(H) expend;
(I) assign;
(J) create a security interest in;
(K) mortgage;
(L) encumber;
(M) dispose of; or
(N) otherwise manage and control;property.

That list includes dividing property upon:

(A) legal separation;
(B) dissolution of marriage;
(C) death; or
(D) the occurrence or nonoccurrence of any other event.

While the prenuptial agreement can modify or eliminate spousal maintenance (on maintenance, see my post here), the agreement cannot adversely affect the right of a child to support.

I never suggest that the parties write their prenuptial agreements. Lawyers can get in enough trouble with prenuptial agreements. However, I think the client must be involved in the drafting process and the following advice from the U.S News and World Report article is sound:

Writing a prenuptial agreement isn't cheap. It will cost you anywhere from $1,000 to tens of thousands, depending on how complicated it is. To save some bucks, you might draft an agreement ahead of time. You can hire a mediator for a fee typically below what you'd pay for a lawyer's time. Or you can write a preliminary pact together with help from a guidebook such as Equality in Marriage's The Commitment Conversation($10). Then you can meet with your lawyers to fine-tune the document.

I would comment that "cheap" is relative. For things may go wrong with the marriage and then the costs can skyrocket as the division of the property is left to the discretion of the trial judge. The California Divorce and Family Law Blog has a few other suggestions, also.

As with many things, the real question is whether an ounce of prevention is worth a pound of cure - a prenuptial agreement offers a tool for dealing with the financial underpinnings of a marriage as much as protecting assets from a golddigger. As such, it is worth considering by those in tax brackets well below Sir Paul McCartney.