Planning for the contingency that a marriage may end in divorce is not romantic, but if the statisticians are correct, approximately 50% of all present marriages will end that way. The number of second marriages ending in divorce is an even higher percentage. If you were entering into any other business enterprise with a failure rate that high, you would certainly want to protect yourself.
I recommend that you start working on your prenuptial agreement 6 months before the marriage. Make sure you have your own representation separate from your spouse to have a better chance that the agreement will be enforceable.
Prenuptial agreements can have some unusual clauses:
- A “sunset” clause making some or all of the provisions ineffective after a number of years. Jack Welch (former Chairman and CEO of General Electric) and ex-wife Jane Beasley had a contested divorce when this clause was activated.
- The stay-at-home spouse negotiates for a monthly dollar amount for leaving her job to travel and be with her husband or becoming a stay-at-home mother, or asks for a lump sum to compensate for lost career time and/or lost retirement savings.
- A “signing” bonus can be awarded to one spouse immediately after the wedding and is hers to keep even if the marriage doesn’t outlast the honeymoon.
- An “escalator clause” is used to provide the less affluent spouse with increasing amounts of money the longer the marriage lasts. Donald Trump’s divorce from Marla Maples was just before the five-year mark. Tom Cruise split from Nicole Kidman just before their tenth wedding anniversary. The timing on these divorces may have been less a matter of coincidence than avoiding a key condition in their prenuptial agreements.
- There should be a clause that states that if any provision of the agreement is invalidated, the rest of the agreement remains valid.
- Some agreements include a clause ensuring the laws of the state in which the couple were married prevail if they get a divorce in another state. The nine community property states have different statues regarding divorce.
- A business valuation formula or method of valuation may be included and used in the event of divorce.
- A clause that requires a sharing of yearly income for each year of marriage. Michael Strahan, the New York Giants football star was recently ordered to pay 20% of his yearly income to his ex-wife for each year they were married.
An enforceable prenuptial agreement is the blueprint for the divorce. Think before you sign. Make sure you discuss the division of assets AND the division of income.
Read more about prenuptial agreements in Chapter 11 of Kathleen Miller’s book Fair Share Divorce for Women.