Though it may seem counter-intuitive, preparing a prenuptial agreement or “prenup” actually can be very good for a relationship. It can help to place a couple on the same page, forcing them to address the future, their attitudes towards money, and how their financial affairs are going to be managed.  

Of course, the process of preparing a prenup by definition is almost always uncomfortable. At a point when everything should be a bed of roses, you’re preparing for the worst. Unfortunately, statistics say that the majority of couples will divorce. 

If you have substantial assets, or if you have high income, it’s smart to consider a prenuptial agreement. 

A complex and thorough process

A prenup is not a “fill in the blank” form. Preparing a prenup is a far more extensive process than most people realize. The Uniform Premarital Agreement Act defines how a prenuptial agreement is crafted. It sets out the basics in terms of the minimum amount of protection necessary, what the standards are if you were to go to court, what makes it enforceable, and other requirements of that nature. Then there’s the case law interpreting the Act, which gives counsel guidance in terms of what will be a solid, enforceable prenup and what will not. 

Part of the reason that this is such an extensive process is that if a provision in the agreement is defined as “unconscionable,” either at the time of execution or at the time of enforcement, then the provision, and in some circumstances the entire prenup, will not be upheld. However the time of enforcement of the prenup could be 30 years down the road and the circumstances of the parties may have changed. We may know what unconscionable is now, but how can we possibly know that far into the future, or even five years down the road?

Given this element of uncertainty, you simply can't make a prenup iron clad.  The best approach is for both parties to do the most thorough job possible disclosing evaluations of their net worth, including all their assets and debts. 

Transparency, honesty

Couples need to prepare themselves for being very transparent, very honest and ready to disclose their entire financial lives.  Things may well come up that one partner may not even have known about while there were dating. ("I didn’t know you had $280,000 in a 401K.  Well yeah, I had another job before we met.")  Everything has to be disclosed and reviewed.  

Prenups can take care of not only what people bring into the marriage, but also assets that accrue during the marriage. For example, if one spouse has a paycheck that would typically be community property, but wants it to remain separate property during the marriage, you can provide for that in the agreement.  

There are also specific requirements to waive spousal support. For one, each side must have an attorney. There are a number of safeguards that go into this waiver. Most importantly, there should be full disclosure regarding income and a sampling of tax returns to bolster that disclosure. 

Since you want to take all the necessary precautions to make the agreement as enforceable as possible, it is advisable to work with a Certified Family Law Specialist to craft the agreement. You may also need to consult with a CPA and/or valuation expert. This is not an inexpensive endeavor. But being thorough and getting good legal advice to do it right will make a world of difference down the road.