Few people may have raised their eyebrows when Donald and Marla Maples Trump announced their separation after a brief marriage, but some were skeptical of the reason stated in the headlines: economics, not another woman.
By parting now, “The Donald” would have to pay only $1 million, plus alimony and child support for their young daughter, Tiffany, according to the couple’s premarital agreement, the new preferred terminology for a prenuptial agreement. If they stayed together and parted a few years later, however, Maples’ share would have been much more.
Premarital agreements have become routine for the wealthy, but they’re also becoming more common for other people as well.
Widower Fred Rosen, who owns Sam’s Wine & Spirits in Chicago and will remarry next month, signed one because of his family business.
“My two sons helped build the business so I want them to retain the legacy,” he said. “There are other assets for my future wife and for my daughter, who doesn’t work in the business. Although I don’t want to think about the possibility of divorce, in this (day and) age you have to make provisions.”
Other people who are frequent candidates for a premarital agreement, according to Donald Schiller, a matrimonial lawyer with the Chicago firm of Schiller, Du Canto & Fleck, include younger spouses who get married for the first time and have inherited wealth; non-working spouses who want a guarantee of funds since they are increasingly getting less alimony; those who want a future spouse’s holdings to be disclosed since these agreements require an accounting; and those who want to leave their surviving spouse less than the one-third they’re entitled to under Illinois law,
Before you consider such an agreement, decide whether you really need it, what type of attorney should draft it, how much you’ll have to pay, what should go into it and whether it can be contested.
Finally, know that even raising the issue of writing a premarital agreement may stir strong emotions and cause problems, sometimes even break an engagement.
“If that’s the case, the relationship probably would fall apart eventually,” says David Mattenson, an attorney with the Chicago firm of Kantor & Mattenson.
Nevertheless, many experts recommend premaritals as a realistic necessity because half of all marriages end in divorce, and because they help encourage the discussion of money matters in a calm, rational atmosphere.
“Some couples never know how the other feels about money management until after they’re married, which can create problems if their attitudes and actions differ. It’s a way to be sure each side is comfortable with the other’s point-of-view,” says Emily Card, a Santa Monica, Calif., attorney and author of “Managing Your Inheritance” (Times Business, $15).
Andre Katz, a Chicago attorney with the firm of McDermott, Will & Emery, adds still another reason for a premarital agreement. “It can mean a potentially less litigious divorce. If you don’t have to haggle over every penny, you might not have to wait two years for a divorce to go through,” he said.
If a couple decides to proceed with the agreement, experts advise that each retain separate counsel, preferably a family or matrimonial lawyer. Lawyers charge a range of prices depending on where they are based and the agreement’s complexity, which, in part, depends on the couple’s financial situation and the reasons for the premarital agreement. Card pegs the cost at between $1,000 and $2,500, Katz at between $1,000 and $5,000 and Mattenson at anywhere from $600 to $15,000.
Some books and software programs are available to provide do-it-yourselfers help, but Schiller considers that route dangerous. “If the agreement isn’t properly done, it’s easier for the law to declare it invalid,” he says.
Before they sign, couples need to be sure that any assets that are going to be covered have been appraised. And it’s better to overestimate rather than underestimate values, says Mattenson. “If you underclaim its value, the other side can say the premarital agreement was unfair, and they might use that to declare it invalid,” he says.
To avoid any suggestion of coercion, some lawyers recommend having the couple videotape their decision, with a court reporter present to take down any statements, Katz says.
The impact of the agreement in case of divorce varies. If the couple lives in one of the nine community-property states, assets acquired during the marriage are divided evenly unless a premarital agreement states otherwise. If the couple lives in one of the 41 equitable-distribution states such as Illinois, assets are divided fairly but not necessarily equally. Factors that come into play are the assets that the couple accumulated during their marriage, assets that each brought to the marriage and the length of the marriage.
Under a premarital agreement, payment can be provided in a lump sum, by a percentage of assets, a combination of the two, or some formula based on the length of the marriage. Katz prefers a lump sum to a percentage. “You never know what’s going to happen,” he says.
Child-related provisions are never included in premaritals because states don’t permit agreements to limit a child’s support or custody, Schiller says.
If changes need to be made in a premarital agreement during the course of a marriage, the document can be amended, as long as both parties agree and sign. One side may decide to waive entitlement to certain retirement benefits, but that can be done only after the marriage.
“You can’t cancel a spouse out of their rights unless you have a signed waiver, in accordance with federal law,” Katz says. “You can put the waiver in the prenuptial, then have the spouse sign it after the wedding.”
Are premarital agreements ironclad? No. “Anybody can take anybody to court,” Mattenson explains. “Usually they’re overturned if they were procured by fraud or if either side made material misrepresentations. I know of a case where a woman was handed a 70-page prenuptial at the rehearsal dinner. When the marriage failed, the judge threw it out, saying she had signed under duress.”
But Schiller says premaritals are set aside less often. “Lawyers are writing fairer, tighter agreements. Of course, that doesn’t mean you can’t try (to contest it),” he adds.
