Divorce Law

 

Prenuptial Agreements are important for any couple, regardless of the amount of money each has or each plans to make in the future. However, prenuptial agreements or pre-marital agreements as they are also called are “crucial” for couples entering into high net worth marriages. In fact, in the event of a high net worth divorce, a prenuptial agreement can reduce complications involving finances. It can also protect assets while ensuring that both spouses are financially secure and protect children’s access to assets in the event of spouses entering into a second or third marriage.

Proper Drafting of a Prenuptial Agreement
Prenuptial agreements are governed by the state laws in which the parties reside. Both parties should be represented by an attorney and in many states, representation for both parties is required for the agreement to be valid.

It is extremely important to work with an experienced family lawyer when drafting your premarital agreement, as any hint that the agreement was not entered into voluntarily by one of the parties, or that the agreement is unconscionable, can result in a court deciding that the prenup is not enforceable. Especially when it comes to high net worth marriages, it is essential that you take all the necessary steps to show that your spouse entered into the prenuptial agreement understanding the financial implications.

Further, in addition to making sure that the court will enforce the prenup in the event of divorce, the language contained in the premarital agreement can drastically change the outcome of your divorce settlement. Prenuptial agreements can have a big impact on divorces in which much of the wealth was accumulated during the marriage. The agreements are also very important when the parties have their own business or several businesses.

The divorce of Amazon Founder, Jeff and Mackenzie Bezos is a very good example of why a prenuptial agreement is necessary. Instead of setting forth in detail how the company would be affected and the parties assets would be divided in the event of a divorce, there was great concern about Bezos’ voting position in Amazon. There was further concern among Amazon shareholders that the Bezos’ would have to liquidate a substantial position in Amazon again, lessening the voting position of both Mr. and Mrs. Bezos. If a prenuptial agreement would have been prepared, the parties’ position with respect to assets received during a divorce as well as the effect on Amazon due to the founder’s divorce would not have been a concern.

What is included in a High Net Worth Prenuptial Agreement
First, it is important to understand what can and cannot be included in a prenuptial agreement. Couples can contract about the disposition of property, spousal support, and other assets or debts in a prenuptial agreement. They can also contract about where money is to go toward college accounts or in trusts for children or others. However, the parties cannot contract about child support in the event of divorce.
When coming to an agreement about how assets will be divided, the following are some tips to ensure that you have an enforceable and workable agreement:
• Being open about wealth and financial assets before the marriage;
• Drafting the premarital agreement with sufficient time before the wedding such that the other spouse does not feel pressured;
• Both parties are represented by their own lawyer;
• Encouraging the other spouse to engage in active negotiation before signing; and
• Being willing to make concessions about terms in the prenuptial agreement.

High net worth divorces can be extremely complicated, but a prenuptial agreement can help to protect parties in the event of a divorce. If you have questions about preparing a prenuptial agreement or filing for divorce, contact the Law Office of Robin J. Gray at This email address is being protected from spambots. You need JavaScript enabled to view it. or by phone at (484) 769-5855.

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9.1Robin Jean Gray IIUSA