Honey, I think we need a prenup
January 1, 2022 | View PDF
If you ain’t no punk
Holler “we want prenup!
We want prenup!”
It’s something that you
need to have
‘Cause when she leave
She gonna leave with half.
- Kanye West
This month’s column is about prenuptial agreements. If you read the news, you probably think that is something a billionaire uses to keep his fourth wife from getting half of his fortune, but it’s more than that. Bear with me.
Most people get married without a prenup, and that’s fine. Not everyone needs one. There are laws which provide for those situations. The divorce laws cover property division and alimony when people split up, and the inheritance laws address the rights of surviving spouses and heirs.
But sometimes those laws don’t adequately address a particular situation. This is more common with older couples getting married, since they may already have significant assets they earned before the marriage. They may have children from prior relationships to whom they want to leave some of their assets when they are gone. And if they are approaching, or beyond, the end of their working years, they may be worried about losing assets they were relying on for retirement.
Older couples are much more likely to need prenuptial agreements, than younger ones. So let’s talk about what is needed for a prenup to be valid.
Alaska does not have any statute regarding prenuptial agreements. The only “law” on the subject is a few Alaska Supreme Court cases. We can parse out, from those few cases, some basic requirements.
The agreement must be objectively fair; It doesn’t have to be exactly what a judge would have done in a contested case, but it can’t be overly one-sided. There also has to be full disclosure of assets, debts and other relevant financial circumstances between the parties. It should not be done at the last minute, right before the wedding. Neither of the parties can have been under duress. And finally, each party should have his or her own attorney to negotiate the terms.
The recent case of Andrew B. v. Abbie B. is an almost perfect example of what not to do. The night before a destination wedding, when the bride was intoxicated, the groom suddenly presented her with a prenuptial agreement. It was a remarkably one-sided agreement, and she had no opportunity to consult with an attorney. On top of that the agreement itself was sloppily written. The couple eventually split up (who would have seen that coming?), and it is pretty likely the agreement will be thrown out completely.
So it needs to be done right if you’re going to do it at all. But it can be worth doing. While the divorce laws do address premarital and inherited assets, and allow them to be kept separate, those situations can be messy. For instance, one of the parties comes into the marriage with a rental property, and the rents from that property cover all of the expenses. But during the marriage the owner-spouse wants to refinance the mortgage, and the lender insists that the spouse sign off on the new mortgage. Does that mean that the property is marital property if they divorce? There is not always a clear-cut answer.
And prenuptial agreements are not just about divorce. As I have mentioned in previous columns, the laws prevent you from completely disinheriting your spouse. The spousal elective share laws, the statutory probate allowances, presumed joint ownership of household goods, and the pretermitted spouse law give the surviving spouse a lot of rights, regardless of what the will says, how the assets were acquired, or whether there is a probate case.
Unless, that is, you have a prenup. The spouse can waive those rights in the agreement.
There are at least three things which should be covered in a prenuptial agreement, and two of them are divorce and death. But the agreement should also address how income and expenses will be handled during the marriage, otherwise the couple will inevitably end up undermining the agreement.
Which brings us to “The Joy Luck Club”.
In this novel and movie, one of the vignettes involves a couple who agree that they will share all of the marital expenses equally, and each of them can do whatever he or she wants with their respective leftover funds. The problem is, the husband’s earnings are much higher than the wife’s, and their lifestyle is fairly expensive. The result is that after paying his half of the expenses, the husband has plenty of money to go off on vacations by himself, and otherwise enjoy the good life, but the wife doesn’t even have enough to go out to lunch with her friends. They have an unhappy marriage because they had not thought through how all of this was going to work in practice.
So if you are contemplating marriage and think you might need a prenup, talk to a lawyer to see if you really do. Whether you do or not, talk to your intended about how you are going to handle finances during the marriage.
One final note: I couldn’t resist starting this column with the song “Gold Digger”. Please don’t go look up the rest of the lyrics. They’re terrible, and besides that the song completely misstates the law. You can’t address child support in a prenuptial agreement. Apparently legal accuracy is not a requirement for a popular rap song.
Kenneth Kirk is an Anchorage estate planning lawyer. Nothing in this article should be taken as legal advice for a specific situation; for specific advice you should consult a professional who can take all the facts into account. Then you can make it to a Benz out of that Datsun. Hey, I told you not to look up those lyrics.