Getting married this summer? Now is the time to prepare and sign your prenuptial agreement.
For years, most of my prenups involved marriages of one wealthy party and one not-so-wealthy.1 Next came established business professionals whose colleagues and business partners insisted on prenups for the company’s higher ups.2 Lately, many of our clients are millennials, zillenials and Gen Zers.
With their parents’ generation fraught with divorce, younger generations want to protect their marriage and themselves from the marital discord of financial secrets and surprises.3
And with people living longer, those in second marriages or late-in-life marriages want a prenup to protect their children from a prior relationship, their established wealth and their ongoing livelihoods, especially if their partner brings substantial debt to the marriage.4
All of these people realize that prenuptial agreements can literally get your partner and you on the same page about finances and long-term goals. But be wary of the haphazard prenup. As shown below, Colorado law has strict rules for these agreements.
Hiring a lawyer for a well-crafted prenup makes sense for the following 7 reasons.
1. Preparing a Prenup Involves Skills and Practices that Help Divorce-Proof Your Marriage.
Disagreements about finances are a leading cause of divorce.5 I think this is the MOST important reason you should have a prenup: to AVOID having money issues cause divorce. A well-written prenup can be an inoculation against this risk.
If your partner and you can meet and discuss finances in a rational way BEFORE you are married, there is less likelihood of financial misunderstanding down the road. Preparing and negotiating a prenup involves important practices like the art of compromise, honestly sharing financial information, planning for long-term goals, and considering fairness in saving and spending money. A good prenup means neither party is entering the marriage with hidden debt, false expectations, or an uncompromising attitude. This makes for a stronger marriage.6
2. A Prenup Must be Prepared in Advance; NOT Rushed on the Eve of Marriage.
If you call my office the day before marriage for a prenup (and, yes, people have done this), I will turn you down. You cannot procrastinate.
In Colorado, both parties need to make “adequate financial disclosure” to each other before signing the prenup. See Uniform Premarital and Marital Agreements Act (UPMAA) (effective July 1, 2014), C.R.S. § 14-2-301 et seq.; C.R.S. § 14-2-309(1)(d) (requiring adequate financial disclosure; C.R.S. § 14-2-309(4) (requiring that both parties have a reasonably accurate description and good-faith estimate of value of the property, liabilities, and income of the other party.
Both parties must have the opportunity to consult with counsel (their own attorney) before signing the prenup. If they do not have an attorney, they must waive the option in writing. See C.R.S. 14-2-309(2) (both parties need the opportunity to consult counsel before signing a prenup.)
These things take time.
A prenup cannot be rushed through or signed under duress. C.R.S. § 14-2-309(1)(a).
This means you should start the prenup in advance of the marriage; NOT the day before marriage. Now, in May, is the perfect time to get things started so your prenup is signed, sealed and delivered before the wedding celebrations begin.
3. Prenups Can Protect the Income and Assets You Bring to the Marriage.
The reason prenups were considered only for the wealthy is that prenups can help protect the things you bring to the marriage such as a home you own, accounts you funded, and your future higher income from being divvied up or owed after a divorce.
But even if you are NOT a billionaire, you may not want to risk handing over what you have built up over the years to your divorcing spouse.7 In fact, as a divorce attorney, I know that most of my clients are shocked at how Colorado law steps in to divide up assets, sometimes even to the point of shutting down marital businesses and forcing the sale of the marital home. See C.R.S. § 14-10-113 (Colorado’s equitable distribution statute giving judges broad authority to fairly and finally divide assets and debt in divorce regardless of how various marital assets may be titled or bought with marital assets).
Knowing that Colorado is a no fault divorce state8 where your partner can have an affair, move to another county, refuse to help with chores and finances then divorce you for any reason or no reason, you may want limits on paying alimony, referred to as maintenance in Colorado, after divorce. You may not want your spouse to suddenly divorce you and get half the appreciated value of the house you brought to marriage. You may want to share more and more of your wealth the longer you are married, while keeping things separate early in the marriage. Often, a well-written prenup can help accomplish these things.
4. Prenups Can Protect Your Business.
Savvy business owners sometimes require a prenup of their partners and co-owners. Entrepreneurs and business owners who have been divorced realize how a contested divorce can disrupt a business operation, the divorcing spouse suddenly getting access to financial information and even a share of the business or, in some cases, voting rights. Having a prenup can make clear how the business interests will be protected and kept relatively private going forward.9
5. Prenups Can Protect Your Extended Family.
When parents donate a down payment on a marital home, they may not realize their money and perhaps even that home will be split with their child’s spouse shortly after the marriage. Yet it is common for the spouse to argue the money was a gift to the marriage leading to a disruptive, and often hurtful, debate on the issue. A prenup could prevent this type of misunderstanding, conflict and acrimony. A prenup can also address the inheritance of children brought into the marriage. In fact, for people with children from a prior relationship, it is common to combine the prenup with a well-crafted estate plan to protect both the new spouse and current children. A prenup can help ensure the extended family conflict is minimized in the event of death or divorce.10
6. Do-It-Yourself Prenups Can Create More Problems Than They Solve.
Colorado law is specific on the technical requirements of a prenup. A noncompliant prenup risks being thrown out of court as unenforceable. Do it right or do not do it at all. An attorney can help you draft an enforceable prenup compliant with Colorado law. See Uniform Premarital and Marital Agreements Act (UPMAA) (effective July 1, 2014), C.R.S. § 14-2-301 et seq.; see also IRM Zander, 480 P.3d 676 (Colo. 2021) (court found the prenup unenforceable as it was not properly signed); IRM Blaine, 480 P.3d 691 (Colo. 2021) (transfer deed was NOT a properly-signed prenup under the UPMAA).
7. Prenups are Less Expensive Than You Might Think.
At Andersen Law PC, we offer a relatively low retainer to prepare your prenup. We will negotiate with the other party or their attorney if they have one. We can even arrange for a notarized signing with archival quality paper and digital copies to both parties and counsel. When you consider the tens or even hundreds of thousands of dollars that NOT having a prenup could cost you, preparing a well written prenup with the help of counsel just makes sense. See Bethlynnandersenjd.com
Call my office Andersen Law PC at 720-922-3880 or my cell at 303-808-4794 for a free consultation to get you in the right direction when it comes to your prenup.
Sources:
1 The following article is interesting although I cannot forgive the author for confusing Audrey Hepburn with Katharine Hepburn: 20 Famous Prenuptial Agreements that Shaped History – Discover Walks Blog
2 The Business Owner’s Guide To Prenuptial Agreements
3 The young and wealthy are getting more prenups. Here’s why Millennials Embrace Prenups—but Through a Very Different Lens Than in the Past – WSJ
4 Prenups Aren’t Just for the Wealthy Anymore – Newsweek
5 https://psycnet.apa.org/record/2012-24306-007 How Money Issues Predict Divorce (& How to Prevent Them) | Psychology Today
6 17 Conversations to Have About Money Before Getting Married The importance of a pre-marriage ‘money date’ – Journal of Accountancy
7 Prenups Aren’t Just for the Wealthy Anymore – Newsweek
8 C.R.S. § 14-10-106
9 The Business Owner’s Guide To Prenuptial Agreements Pros & Cons of Business Owner Prenups – Delap Wealth Advisory Protecting Your Business With A Prenup
