I Do...Want a Prenup

The royal wedding is just a couple days away, and it’s nearly impossible to log onto Facebook or wait in line at the grocery store without being bombarded with the latest headlines about Prince Harry and Meghan Markle. Attention has inevitably focused on the more glamorous aspects of wedding planning—the guest list, members of the wedding party, or the designer of Meghan’s wedding dress. While all that makes for exciting headlines, as a wealth manager, I was more interested in the news that Prince Harry has reportedly declined to sign a prenuptial agreement protecting his estimated $25 to $40 million net worth. While a very personal act, entering into a marriage is also a binding, legal agreement. Therefore, the decision about whether or not to sign a prenup is something I’ve counseled many couples and their families about over the years.

As unromantic as it sounds, a prenuptial agreement is an important risk management tool. A legal document, a prenup establishes provisions for property division if the marriage ends by either divorce or death. Every engaged couple should at least consider the merits of a prenuptial agreement, particularly if any of the following is true:

• You have a significant amount of wealth. This is typically the most obvious reason for wanting a prenup. Absent one, your state’s laws will determine how property is divided upon divorce, and your spouse will certainly be entitled to a portion of your wealth. Who can forget the $50 million that fellow Brit Heather Mills was awarded upon her divorce from Sir Paul McCartney? A prenup could have been quite helpful!
• You have children from a previous relationship. In the event that you pass away before your spouse, s/he will have near full control of your estate unless you specified otherwise in a prenup. If you’d like to leave part of your estate to your children and/or someone aside from your spouse, it can be particularly beneficial to specify those plans in your will and reaffirm them in your prenup.
• You own real estate that you wish to keep separate. Want to protect the vacation home that’s been in your family for decades? Listing it as separate property (versus shared or marital property) in your prenup will eliminate questions about who legally owns the home and whether your spouse is entitled to any of it. Luckily for Prince Harry, Queen Elizabeth owns most of the property in right of the Crown, so he doesn’t need to worry about the prospect of splitting up their cottage at Kensington Palace in the event of divorce.
• You own or have a stake in a business. Let’s face it, if your marriage ends in divorce, you’re not going to want your ex to become your business partner.However, that could happen to business owners who don’t have prenups in effect. Protect your company from division in the event of a divorce by including a waiver of interest in the business.
• You expect to receive a considerable inheritance. An inheritance is considered separate property even without a prenup. However, in order to keep it that way, you must prevent any inherited assets from becoming commingled with shared assets. Having a prenup in place that specifies that anything you inherit during your marriage will remain your separate property can help ensure your inheritance isn’t up for division in case of a divorce. With the Queen’s estimated private net worth of more than $550 million, there is a lot at stake for Harry in the event of her death.
• Your fiancé has substantial debt. If you balk at the idea of being on the hook for your ex’s debt long after your hypothetical divorce, then you should consider limiting your debt liability via a prenuptial agreement. In addition to specifying that all debt brought into the marriage remain separate, you may also want to stipulate that you and your spouse will not assume each other’s debts during the marriage and explain how any joint debt will be divided.

These tips would serve to protect both Harry and Meghan in the event of a divorce. Despite all the fanfare this Saturday’s wedding promises to deliver, marriages in Britain’s modern-day monarchy have certainly not all been fairytales. Who could forget Diana’s tearful tell-all or Fergie’s ocean frolics? Should the marriage go sideways, a prenup could help Meghan make out like Princess Diana instead of becoming the next “Duchess of Debt.”

Though you may not have a royal fortune on the line, starting your married life by having open discussions about finances could save you and your fiancé a lot of trouble in the long run. Regardless of whether you ultimately decide to sign a prenup, having these potentially difficult conversations on the front end will make your marriage stronger.

Still not sure whether a prenup is right for you? Contact a Balentine relationship manager to learn about additional financial considerations and recommendations for family lawyers who can walk you through the process.