Contractual Solutions for Common Issues in a Prenup
There are many reasons for creating a prenuptial agreement. With each consideration, a thoughtful lawyer will find a unique solution just for you. The following is a list of the more common scenarios, and some ideas for how to solve some dilemmas.
Often time there is a large disparity of assets between parties. If you’re the “monied” spouse to be, consider a one-time signing amount upon marriage to the less monied spouse as part of an overall plan. Note that I said “overall” plan, meaning, you and your lawyer are considering your contract in the short and long term.
There’s a sweet spot, though, in providing for the needs of your beloved, and, inadvertently creating an incentive for divorce soon after marriage. The purpose is to balance some of the financial inequities, not to create an unintended windfall for the less monied spouse.
Life insurance is another excellent option to equalize or balance the ledger when there’s a significant disparity in income or assets. As a savings vehicle, it can provide for living expenses, ongoing maintenance of property expenses, protect entrepreneurial interests, address health & financials – short and long term, payment of college debt, guarantee child support and spousal support, and insure payment of taxes on your estate.
As a general rule, parties may want to consider determining an amount as a lump sum settlement in the event of divorce, particularly in the case of infidelity, or, as a way to establish your own terms for “fault” in the break-up of the marriage. This is a fairly common issue.
One of you may have a history of alcohol or drug use. If you have a concern about substance abuse, a sobriety clauses can be included that provides for periodic drug or alcohol testing, setting out a division of property in the event one party decides to file for divorce due to the other party’s violation of the sobriety clause.
There may be an issue of temporary spousal support in the event of divorce, especially if one of you has not worked during marriage. This amount can be stipulated in advance. Consider either a set amount or a percentage of income of the working spouse.
You might also consider creating a trust for one’s own benefit with pre-marital assets. Trusts are still the sacred cow in law land. When drafted properly, they’re very difficult to break
If you’re having difficulty with your beloved accepting the concept of a marriage contract, consider a “sunset clause” – a time when the contract will expire on its own. For example, maybe you choose to have the prenup automatically retire after ten years of marriage.
You could also consider a clause called an “escalator” or “staircase agreement.” This is a graduated lump sum amount based on the number of years in marriage. You negotiate and choose an appropriate amount.
Finally, there’s one newer type of clause that’s evolved since the social media boom. That is, to make sure that your social media posts are limited in scope, and, that you won’t share any of your confidential information with the rest of the world online. In my opinion, this is a great option to include.