Mar­riage is an eco­nomic con­tract


“Fam­ily money stays in the fam­ily and should be passed down from gen­er­a­tion to gen­er­a­tion,” she says. “Why should those busi­nesses that my grand­par­ents and my par­ents built on good old-fash­ioned hard work be given to some­one who mar­ries into a fam­ily?

“Any in­her­i­tance or trust funds should go to my kids and com­pletely by­pass my hus­band.”

Her boyfriend knows the sto­ries of her rel­a­tives’ strug­gles as they built busi­nesses, so “he un­der­stands and re­spects” her prenup think­ing, she says.

For bet­ter or worse

Spe­cific data about the of­ten-com­plex con­tracts don’t ex­ist, mainly be­cause prenups fall into the area between fam­ily law and es­tate plan­ning, so there is no sin­gle trade group con­tin­u­ally track­ing trends, says Steve Hart­nett, as­so­ciate di­rec­tor of ed­u­ca­tion for the Amer­i­can Academy of Es­tate Plan­ning At­tor­neys.

But a num­ber of fac­tors are fu­el­ing the prenup bump. At a broad level, they have gained more ac­cep­tance as a fi­nan­cial-plan­ning tool.

Per­sonal-fi­nance ex­pert Suze Or­man en­cour­ages ev­ery en­gaged cou­ple to get one to pro­tect their cur­rent and fu­ture as­sets as well as to shield them­selves in case a mate se­cretly runs up mas­sive credit card debt (which could dam­age both part­ners’ credit scores).

Elizabeth Gil­bert, au­thor of the block­buster tome Eat Pray Love, re­cently made the case in her new best seller, Com­mit­ted, for why she and her hus­band got a prenup.

“Mar­riage is not just a pri­vate love story but also a so­cial and eco­nom­i­cal con­tract of the strictest or­der,” she says. “If it weren’t, there wouldn’t be thou­sands of mu­nic­i­pal, state and fed­eral laws per­tain­ing to our mat­ri­mo­nial union.”

More than one-third of adults — 36% — said prenups make smart fi­nan­cial sense, ac­cord­ing to the Harris sur­vey. When Harris asked that same ques­tion in 2002, 28% said so.

In a re­ces­sion, peo­ple want to hang onto the as­sets they have, so they in­creas­ingly look to these pacts as an op­tion, says Robert Nachshin, co-au­thor of the prenup guide I Do, You Do ... But Just Sign Here.

Also, as mar­i­tal trends change, so do at­ti­tudes. Many cou­ples are ty­ing the knot at an older age, so those folks — as well as those en­ter­ing a sec­ond or third mar­riage — are bring­ing more as­sets into the re­la­tion­ship than, say, a 23-year-old would have.

And of course, prenups are an ex­tremely pop­u­lar topic on the In­ter­net (par­tic­u­larly on wed­ding, news and celebrity sites). The gritty de­tails of ac­tor agree­ment was to pay her $25,000 a year. He had the right to drug test her, and if she was clean, she was able to get $25,000.”

The wife stayed off the drugs, and over the last 10 years she re­ceived $250,000.

Some prenups ad­dress is­sues such as adul­tery, fre­quency of in­ti­macy, lim­i­ta­tions of weight gain, the sched­ul­ing of house­keep­ing and pro­vi­sions for pets, says at­tor­ney Eskind Moses.

Those clauses may seem un­nec­es­sary to some folks, but nail­ing down what is im­por­tant to each in­di­vid­ual — be it the own­er­ship of a ski house, re­tain­ing the rights to an an­tique tea set or de­ter­min­ing who keeps Fido — is vi­tal to do be­fore the mar­riage laws kick in, say pro-prenup lawyers and fi­nan­cial ad­vis­ers.

Trunk agrees that it’s im­por­tant to out­line ex­pec­ta­tions when it comes to as­set di­vi­sion, but she says these agree­ments are about emo­tional se­cu­rity as much as mon­e­tary se­cu­rity: You can’t fully in­su­late your­self against mar­i­tal heart­break, but at least you can pro­tect your as­sets.

“It’s about every­one feel­ing se­cure in a re­la­tion­ship,” she says. “You can’t have a con­tract for your heart, but you can have a con­tract for the rest of this stuff.” Den­nis Hop­per’s and golf aces Tiger Woods’ and Greg Nor­man’s prenups have all been hot top­ics.

When love doesn’t con­quer all

The all-en­com­pass­ing bliss that usu­ally comes with a lov­ing re­la­tion­ship of­ten drowns out any thoughts that the mar­riage won’t work.

“Peo­ple are hope­ful,” Or­man says. “They want their re­la­tion­ship to last. ... It’s just nat­u­ral that they don’t think they’ll need a prenup. Never in a mil­lion years do they think (di­vorce) will hap­pen.”

In 2008, the di­vorce rate was about 50%. Among mar­ried Amer­i­cans, the me­dian du­ra­tion of their wed­ded life in 2008 was 18 years, ac­cord­ing to Pew Re­search Cen­ter’s anal­y­sis of gov­ern­ment data.

Given those odds, “Hope is not a fi­nan­cial plan,” says Or­man, who urges that ev­ery cou­ple get a prenup. “The time to plan for a di­vorce is not when you’re in a state of hate,” she says.

Among the di­vorced, 15% say they re­gret not hav­ing a prenup in their most re­cent mar­riage, ac­cord­ing to the Harris poll. Men are more likely than women to have this re­gret, at 19% vs. 12%. Nearly 40% of di­vorced Amer­i­cans also say they would ask their sig­nif­i­cant other to sign a prenup­tial agree­ment if they re­mar­ried.

Di­vorce me­di­a­tor Ma­ri­etta Ship­ley of­fers more prenup wig­gle room than Or­man. She says they may not be for every­one but are “ab­so­lutely es­sen­tial if peo­ple are get­ting mar­ried for the sec­ond time or have chil­dren or have wealthy par­ents.”

Fi­nan­cial, le­gal and mar­riage ex­perts do agree on one front: Be­fore get­ting hitched, cou­ples should sort through is­sues such as credit card debt, dis­crep­an­cies in each per­son’s wealth and the pos­si­bil­ity of fu­ture in­her­i­tances. Ship­ley ad­vises the mar­riage-bound to not only share life­long dreams but to also re­view each other’s credit re­ports.

En­gag­ing in those talks also shows that a cou­ple is ca­pa­ble of “fi­nan­cial in­ti­macy,” Or­man says.

“If they’re not open to do­ing that, we have a se­ri­ous prob­lem com­ing down the pike.”

Sweet­heart deals and bit­ter feel­ings

Gil­bert says in Com­mit­ted that draft­ing her and her hus­band’s “exit strat­egy” was tense, un­com­fort­able and dreary work.

Madi­son, Wis.-based en­tre­pre­neur Pene­lope Trunk, en­gaged to a farmer, says she un­der­stands that each per­son in a re­la­tion­ship has as­sets to pro­tect. In her case, it’s the shares in her ca­reer man­age­ment busi­ness. For her fi­ancé, it’s valu­able farm­land.

But even with that un­der­stand­ing, they have had many fights and have bro­ken up and rec­on­ciled, as they try to “mud­dle” through mak­ing their agree­ment.

They’re still sort­ing it through, but she is hope­ful that they’ll get to a res­o­lu­tion. “In the end, I just want to marry him,” she says.

Some prenups touch upon more sen­ti­men­tal top­ics, such as who keeps the heir­loom sil­ver­ware re­ceived as a wed­ding present.

Prenups can even out­line what is ex­pected of a spouse’s be­hav­ior.

“I had a client who was will­ing to pay his wife a spe­cial amount each year pro­vided she didn’t do co­caine,” says prenup guide au­thor Nachshin. “The

Suze Or­man: “Hope is not a fi­nan­cial plan.”

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