Why are we discussing prenuptial and postnuptial agreements? I often tell people my best Estate Planning advice, more important than getting a good lawyer or doing a living trust or really anything at all, is this: Marry wisely. It is perhaps the most critical decision you will make. It amazes me how often people don’t think through the implications, or they don’t have the right people in their universe there to tell something is a bad idea. Too often, it is a bad idea. It’s just not enough to say marriage has a high divorce rate. For those previously married, the divorce rate can be as high as 80%.
But people marry hoping for the best. You don’t look at someone you want to spend the rest of your life in a manner that is suspicious. Marriage is a relationship of trust after all. At the same same, if you are a grown up and have lived and breathed for a few years, you don’t want to be nieve either.
Similar to Estate Planning
Prenuptial and postnuptial agreements are similar in some respects to Estate Planning. In the event of estate planning, you are trying to change lousy default circumstances, like the way you own your home or the state intestacy statute, into something that better fits your values. If you are Muslim, you want it to be done consistently with Islamic Inheritance. When it comes to prenuptial or postnuptial agreements, you are trying to get a set of laws, parts of the state Family code, not apply to you by creating your own rules.
There are limitations to this sort of agreement. Certain things may not be binding. That may include things like some support or child custody issues. But that does leave open lots of problem-solving opportunities.
Being married without being “married.”
It would be a mistake for me not to mention the possibility that you can marry in Islam without being married under state law. Couples do this all the time. Of course, you want to make sure that you have exactly the rights that you want from the marriage if things don’t work out.
Hafsa is 67 years old. She has been widowed for ten years. Hafsa also has three adult children as well as some property. She married Abdullah, a 70-year-old man who has been a widower for one year. He also has adult children. Adult children typically see marriages such as this as a threat. They would like to show that it is not a threat to them and that money has nothing to do with this relationship.
They both sign a “cohabitation agreement”establishes the relative rights and responsibilities of each person. It also makes clear that there would be no common property ownership, no community property, no joint bank accounts and so forth. They also do their separate Estate Plans that list each other as beneficiaries, but based only on the rules of Islam, meaning that if Abdullah dies first, Hafsa gets no more than ⅛ of his estate, and if Hafsa dies first, Abdullah gets no more than 25% of her estate. They make sure they keep their children in the loop as successor trustees in the event of either death or incapacity. You do this through an incapacity plan.
The benefits they have from doing this include:
There are no complications that come with marriage under the family code.
They protect the relationship with adult children.
Protection for themselves in the event of attempts at elder abuse or alienation from their families.
Inheritance is consistent with Islamic rules.
Starting out in life
Adil, 22, wants to marry Zarina, 21. Neither of them has any assets on their own and plan to rent an apartment together near the university where they both study. They both plan on being in well-paying professions when they graduate, however. Zarina’s parents Abid and Aisha, do have some substantial assets. Abid and Aisha would like to make sure that anything Zarina gets would be for the benefit of Zarina.
The parents do not want Zarina’s assets, including any gifts they give her, as well as any inheritances, co-mingled with Adil’s assets. Abid and Aisha are worried in the event of divorce, Adil may end up with with a significant amount of the family’s wealth. Zarina’s parents are also not wholly content with Adil just yet. They think the marriage is risky for Zarina and would like to do something to protect her.
Community property does not, by default, include gifts and inheritance. So if Zarina’s parents want to give something to her, it does not mean that half of it automatically goes to Adil. As a practical matter though, it often works out that way.
Abid and Aisha have a couple of different options. These are not mutually exclusive (they can do both):
To protect Zarina, it would make sense to encourage a prenuptial agreement. She and her family have more of an ability to negotiate the terms of any divorce before the marriage than they would after it has taken place. So they can address issues like support, mahar, and determine what property would be “community property” and what property would be separate.
They can do their estate plans, which may include a plan for both inheritance and gifting. An Estate Plan can be done to protect their daughter in the event of divorce, or in case there are efforts to exploit Zarina’s future wealth.
The Second Act
Firdaus and Alam are both divorced. Both want to marry each other. Both are wounded from their prior relationships. Neither wants to go through another painful divorce that costs them immense sums of money. They both have a child each from their prior marriages, but are still young and want to have more children if possible. They both have some assets from the time of their previous marriages.
Firdaus and Alam need to negotiate the terms of their marriage. There is no established way of doing this. However, they would likely want to keep their property separate, perhaps allowing from one community property account to share expenses.
To do a prenuptial agreement, and this would be the case in all situations, it is necessary to do it in a way to make sure it is enforceable. Prenuptial agreements are considered by the law to be presumptively coercive. Courts may be inclined to think whoever it getting the short end of the stick in a prenuptial agreement was essentially forced to sign away their rights. It is a paternalistic system. A prenuptial agreement is no ordinary contract.
Firdaus and Alam will need to get their separate attorneys who are independent of each other. They will need to negotiate an agreement as an arm’s length transaction. There will also need to be a waiting period to demonstrate they both had the time to read the contract. Preferably, there would be a record of redlined drafts.
Talking about it
Prenuptial agreements are difficult to discuss. The problem is that it goes against our ideals. There is generally a lot of hope and a whole lot of fear that the dream can quickly fade if you only bring up the possibility that the marriage may not work out.
I understand that. However, if you are getting married, know that your marriage will end. It is not a matter of if. You either leave your marriage horizontally or vertically. Don’t think of this sort of planning as only planning for divorce. It’s often about the same thing Estate Planning is for: taking care of those you love.