Prenups—Why They Might Make More Sense Than Ever

Photo by FPG/Hulton Archive/Getty Images

When Jim and Loretta Lentz of Beech Grove, Ind., decided to tie the knot back in 1990, they weren’t some young couple just starting out. Jim was 58 and Loretta was 61; each had individual savings and retirement income in addition to a lifetime’s worth of possessions. Both also had adult children from previous marriages.

The Lentzes were focused on making a life together, but they also considered what might happen after one or both of them died. They decided to leave nothing to chance. “We wanted to make it easy for our families,” Loretta says.

So in addition to having wills, the Lentzes sat down with an attorney and drew up a prenuptial agreement. In it, they disclosed not only their assets, detailing who owned what in the relationship down to the antiques and family keepsakes, but also their plan for evenly splitting household expenses.

Although some may see a prenuptial agreement as a harbinger of future marital strife, that hasn’t happened with the Lentzes. Instead, celebrating their 18th wedding anniversary this month, they say that a prenup has given them and their families peace of mind. “I’d strongly advise it for everyone,” says Jim. “But especially for older people starting second marriages, it’s a good idea.”

The number of second and third marriages—and even later first marriages—is growing as boomers swell the 50-plus population, experts say. Members of that population also head households that control 72 percent of the nation’s net worth.

Indeed, prenuptial agreements are more than just a way for a wealthy person to protect against the possibility that a prospective spouse is scheming to fleece him or her in a divorce—a scenario satirized in the 2003 movie Intolerable Cruelty, which starred Catherine Zeta-Jones as a conniving serial divorcée and George Clooney as her unsuspecting mark. An estimated 20 percent of couples entering into second marriages negotiate such agreements, and while there aren’t reliable annual statistics, experts say that the demand for prenups is growing, particularly among older couples who enter marriage with such assets as real estate and retirement savings.

Prenups might be particularly important now as the economic turmoil shrinks the retirement savings pie. “That’s going to create more stress around the subject of inheritances, which already tend to be the elephant in the room for adult stepfamilies,” says Grace Gabe, M.D., a psychiatrist who interviewed scores of older remarrying couples and their adult children for her 2004 book Making Adult Stepfamilies Work: Strategies for the Whole Family When a Parent Marries Later in Life, cowritten with Jean Lipman-Blumen. “We’ve found that the families who were most successful in dealing with the problem of financial conflicts were those who went to the trouble of working out prenuptial agreements beforehand.”

Popping the prenup question

Anyone considering a prenup should think carefully about how to talk about it with a potential mate. Raising the idea “can be a relationship-buster,” Gabe warns. “We had couples in our study who went to the brink because of it, where one person said, ‘We must have a prenuptial,’ and the other said, ‘If that’s the way it is, the marriage is off.’ ”

Indeed, in a 2007 survey by the legal information firm Thompson West, 41 percent of the respondents said they most likely would refuse to sign a prenuptial agreement if asked by their partner, the same percentage as those who said they would probably agree. (The remaining 18 percent were not sure what they would do.)

When broaching the subject, “you don’t want to sound adversarial,” Gabe says. Sit down with a prospective spouse and begin with a discussion about individual responsibilities and commitments to families and how the marriage will require a balancing act between those things and responsibilities to each other.

“Then get your spouse-to-be’s opinion,” Gabe says. “It may be that he or she has been thinking about these same issues.” Once a couple start discussing how they’re going to use their incomes and assets and take care of their expenses, they can make a more comfortable transition to creating a legal document that puts their decisions in writing.

That prenup might help save the marriage down the line. Working out an agreement requires couples to fully disclose the details of their finances to each other, Gabe says, and that process shines a light on important economic issues—such as whether a spouse-to-be is quietly helping to support an adult child—that eventually might explode into conflicts.

Prenups are forever

A prenuptial agreement is different from a will, says Paul Rabalais, an attorney in Baton Rouge, La. A will governs the distribution of assets after death; a prenuptial agreement primarily delineates the assets that each person in a marriage owns and the couple's financial obligations to each other. (A third type of legal document, an advance health care directive—commonly known as a living will—gives instructions about medical treatment in the event that a person can no longer make those decisions because of illness or incapacity.)

Because a prenup is, unlike a will, signed by both parties, changes in the agreement must be approved by both parties. That can make a prenup a better way to resolve certain issues, such as working out an acceptable balance between protecting the wealth that will go to their heirs and providing for whichever partner survives longest.

“I have a lot of clients saying, ‘I want to leave my house to my kids, but I want her to able to stay there after I die,’ ” says attorney James L. Melchers of Kenner, La. “You can put the right of habitation into a will, but a lot of times people feel more comfortable putting it in a prenup, because that’s more of a commitment, a binding contract, compared to a will, which you can always change.”

Prenups “can cover just about anything, and they do,” says attorney Kimberly Johnson of Naples, Fla. “Who’s going to pay the bills—that’s a big one.” Planning finances if a spouse’s health deteriorates is another critical issue for prenups. “It’s one thing to cover someone’s country club fees,” Johnson says, “but it’s another thing to have to pay for their nursing home care out of your savings.”

Conversely, a prenup can also protect assets, should a spouse enter a long-term care facility. Johnson says that it’s important to avoid a situation like that of a man who ended up paying for both his own nursing home care and his wife’s expenses in an assisted-living facility. “He’d started out the marriage with substantially more assets than she had,” Johnson says. “But eventually, his assets became far less than hers. A well-written prenup could have prevented that.”

Potential pitfalls

Setting up a prenup can have complications. For one, laws governing prenuptial agreements vary from state to state, and in New York they vary from county to county, warns Long Island lawyer Stephen J. Silverberg, the incoming president of the National Academy of Elder Law Attorneys. Given that complexity, it’s crucial that the agreement be drawn up by an attorney with special expertise in prenups and elder law—or preferably, two of them, one representing each spouse. New York state, Silverberg says, actually requires anyone who is waiving the right to claim part of a spouse’s estate after death not only to put it in writing, but to be advised by his or her own lawyer.

Prenups also have limitations. Even if a couple has a prenup that separates their assets, for example, the government still will count all of the assets together if one of the spouses applies for Medicaid or Veterans Administration benefits, according to Alice Reiter Feld, an elder law attorney in West Broward, Fla.

All in all, though, most experts say that the advantages of prenups outweigh the potential problems. And for their part, the Lentzes say the prenup they signed long ago has given them peace of mind in spades. “I can’t even remember all the provisions,” Loretta Lentz says, “but it’s good to know it’s all there.”

As painful as it may be for marriage-minded older people to consider, about one in four of all such marriages ends in divorce. Perhaps it’s not surprising that with so much on the line—including assets such as home equity, stocks and bonds, inheritances and even divorce settlements—so many people look to prenuptial agreements to protect them or their dependents in the event that things don’t work out exactly as hoped.

Patrick J. Kiger is a freelance writer in Takoma Park, Md.