Five Reasons to Consider a Prenuptial Agreement

By Attorney Maria C. Baler

As Alfred Lord Tennyson said in his poem Locksley Hall: “In the spring a young man’s fancy lightly turns to thoughts of love”…and an estate planner’s thoughts turn to pre-nuptial agreements.  With spring comes the start of wedding season.  Although estate planners are romantics at heart, they also know that not all couples live happily ever after.  

A prenuptial, or premarital, agreement is a contract between two people who are planning to marry, by which they agree in advance to a division of their assets in the event of divorce or death.  Although some skeptics think that pre-nuptial agreements are only for the wealthy, here are five reasons you might want to consider a pre-nuptial agreement if you are headed to the altar.

1. Protect Inherited Assets

In dividing a married couple’s property in the event of divorce, all property the couple has brought to the marriage or acquires during the marriage is considered, including any assets a member of the couple may have inherited during the marriage.  Massachusetts, like some other states, also allows a judge to consider the opportunity of each party to acquire assets and income in the future, including any inheritance a party may receive in the future.  A prenuptial agreement is probably the easiest and best way to protect inherited assets from being considered when dividing assets between divorcing spouses.  The agreement can provide that any assets a party inherits during the marriage or may inherit in the future should not be considered during property division in the event of the couple’s divorce.  For many couples (and their parents), a prenuptial agreement that is narrowly tailored to protect inherited assets may provide peace of mind that family wealth will not be at risk if the marriage does not work out.

2. Protect a Family Business

If an owner or a member of a family business is getting married, this often (or should) raise concern about what will happen to that person’s ownership interest in the family business in the event of a divorce. Will a judge award an interest in the business to the ex-spouse?  What will that mean to the family’s ability to continue to operate the business or make business decisions if the ex-spouse has a say in how the business is run?  This can be a messy situation, and one which a prenuptial agreement can address.  The parties can agree in advance that the party with the ownership interest in the business will keep that interest in the event of a divorce.  This will go a long way to providing security for the other business owners and ensure the business can carry on without interference, regardless of how long the marriage lasts.

3. Protect Children from a Prior Marriage

Prenuptial agreements are not just for first marriages, and in fact may be even more important for those who have been married before, and who may have more assets to protect and perhaps even children from a prior relationship.  Marriage confers certain rights on your spouse under the law, including the right not to be disinherited at death.  However, a prenuptial agreement can waive those rights, if appropriate.  For example, if two people who have children from prior relationships decide to marry, they may enter into a pre-nuptial agreement that prevents the new spouse from claiming any interest in the estate of the deceased spouse, so that the deceased spouse is assured that his or her assets can be left to their children at their death, without the threat of interference from the surviving spouse.  This can be especially important if the children of the deceased spouse are minors, and may need those assets for their support and education.  It can be equally important for older children who may be nervous about their potential inheritance being disrupted by a parent’s new spouse.  A pre-nuptial agreement will not prevent the couple from leaving assets to each other at death if they wish, but will prevent the surviving member of the couple from disrupting the deceased’s estate plan after the fact.

4. Address Long-term Care Concerns

A pre-nuptial agreement can make it clear, especially for couples who marry later in life, that each member of the couple is responsible to pay for their own care costs, including any long-term care expenses, rather than their new spouse bearing any responsibility for those expenses.  Often, couples will consider purchasing long-term care insurance to insure against the possibility that care costs will reduce the assets they may otherwise be able to leave to their children.    Keep in mind that if qualification for public benefits, such as Medicaid benefits, is necessary, a prenuptial agreement’s provisions will not be honored, and Medicaid will consider the assets of both spouses in determining eligibility for benefits.  However, if the marriage is terminated (and in some circumstances, divorce is a long-term care planning choice), the pre-nuptial agreement may prevent the Court from allocating assets in conflict with the agreement.

5. Protect Special Assets 

Perhaps one spouse has a home they painstakingly restored prior to the marriage.  In the event of a divorce, that spouse may want to be sure they are able to keep the house, rather than having it go to their spouse or sold so that the value can be divided between them.  Maybe the other party has a partial ownership interest in a ski condo, or a valuable antique car.  A prenuptial agreement can address these special assets, and allow the parties to agree in advance how those assets would be treated and divided in the event of a divorce.

Whatever the motivation for creating a prenuptial agreement, the agreement must be created in a way that will ensure it will be enforceable if the parties divorce.  Massachusetts courts have established very clear parameters that must be followed for a premarital agreement to be enforceable if, and when, the time comes for the agreement to do what it was created to do – protect assets.  First, when creating and negotiating a prenuptial agreement, it is mandatory that both parties have their own attorneys to ensure each party understands how the terms of the agreement benefit and obligate them. Second, in order to be enforceable, Massachusetts courts have held that a prenuptial agreement must be fair both at the time the agreement is signed and at the time it is sought to be enforced.  Third, each party to a prenuptial agreement must fully disclose his or her assets, including anticipated inheritances, to the other party.  Full and complete disclosure of assets is essential to the agreement’s enforceability.  Finally, prenuptial agreements must be entered into freely by each party, without coercion or influence from the other party or outside influences.  For this reason, courts have found that the agreement must be entered into far enough in advance of the wedding that neither party feels coerced into signing.   

Consider a prenuptial agreement if your assets or circumstances are such that you want added assurance that no matter how matters of the heart may go, your assets and your children will be protected.

Maria Baler, Esq. is an estate planning and elder law attorney and partner at Samuel, Sayward & Baler LLC, a law firm based in Dedham. She is also a former director of the Massachusetts Chapter of the National Academy of Elder Law Attorneys (MassNAELA), and the immediate past President of the Board of Directors of the Massachusetts Forum of Estate Planning Attorneys. For more information, visit www.ssbllc.com or call (781) 461-1020. This article is not intended to provide legal advice or create or imply an attorney-client relationship. No information contained herein is a substitute for a personal consultation with an attorney.

April, 2022

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