Couples getting married today are older and more educated than ever before. Their individual income is greater, and their assets have more value.  As a result, both men and women are coming to the table and starting their lives together already owning their own home, investment property, inherited assets, and retirement accounts.

Most people who are planning their future lives with their beloved are still somewhat concerned about the possibility of divorce.  Given the divorce rate (30 to 40% for college-educated individuals above age 25), this is a valid and reasonable concern.  As most of us know, the adversarial divorce process contains many financial and legal pitfalls for the unprotected:  claims for spousal support and legal fees by the “non-monied” spouse, fishing expeditions and intrusive discovery requests, not to mention subpoenas, aimed at family businesses, professional partnerships, inherited property, etc.

So, despite the fact that it is not the most romantic notion, the idea of “Divorce Insurance” is a practical one that is recommended by most financial and legal advisors.   Wouldn’t it be great if you could somehow protect yourself from the financial fallout of a broken marriage?

In New York State, a prenuptial or postnuptial agreement is the closest thing to Divorce Insurance.  With this negotiated legal document, a bride or groom with assets and income can protect themselves, and effectively take separate property and spousal support issues off the table in the event of a separation or divorce.  A prenup can cover every single financial issues in a marriage, EXCEPT for child support, and it can be very effective in limiting financial exposure from an angry, sometimes unreasonable spouse.

The prenup negotiation has other benefits too. It helps to open up communication before the wedding day regarding financial budgeting, savings and debts, and plans for big-ticket purchases, like a house. It is always a good idea to discuss these things with your partner before you make a lifelong commitment.  As a lawyer who drafts many prenups for the wealthy, (and increasingly, the not-so-wealthy), I find the process of negotiating these agreements between couples to be relatively smooth and amicable. Why? Individuals planning a wedding tend to be fair and generous.  The exact opposite impulses are present when a divorce is being contemplated.

Prenups and postnups are also an effective tool for estate planning. Most of these documents limit the inheritance rights of the parties, to protect separate property assets and businesses, not to mention children of a first marriage.

Virtually everyone above the age of 25 getting married (or with a family business, inheritance, or real property) should look into tools to protect themselves and their families. Just like with life insurance or car insurance, you hope you will never need divorce insurance.  But just in case, it’s good to have.  Some caveats to ensure that the document holds up in court:  1. It is important not to wait until the week before the wedding to sign it. 2. You must disclose all of your assets and debts, income and expenses as part of the process. 3. It is important to have a separate attorney representing each party.


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