The Houston Chronicle
June 23, 2003

Prenuptial contract necessary, not for faint of heart
By Shannon Buggs

SOMEONE you trust and respect asks you to join him in a legal and financial partnership that has a 50 percent chance of failing but could be the most rewarding experience of your life.

What do you do?

Ask an attorney to look over the partnership papers to make sure if the venture fails, you won't have to declare personal bankruptcy?

Seems reasonable and logical, but it's the last thing most people do when faced with such an offer.

Rather than call lawyers, they call caterers.

Stripped of romantic love and emotional attachments, marriage proposals are offers to merge two financial entities into one.

When the deal is done, the couple and witnesses sign a marriage license - a contract that bestows legal privileges not available to single people, allows states and nations to treat the newlyweds as one taxpayer and can be dissolved only by a court of law.

But instead of mimicking corporations and spending part of the engagement baring assets and liabilities to each other, most couples use that time to plan a party.

I should know: I spent more time looking for my bridal gown (maybe 60 hours) than I did reviewing my intended's investment portfolio and finances (about 10 hours).

Understanding it, however, doesn't make it right. Those numbers should be reversed.

But knowing many couples don't spend even 10 minutes talking about their finances, it's an accomplishment if they set aside 10 hours to discuss money matters.

So, I challenge everyone planning to make a lifetime commitment to someone else to take an hour a week for 10 weeks - well before the ceremony - to plan your financial lives together.

If you don't know how to get started, visit www.equalityinmarriage.org and download a free preview version of the the Commitment Conversation, a 28-page booklet that jump-starts this critical discussion. You can order a $ 15 printed copy of the full guidebook online, as well.

However, if one of you has a child or children, a business, inherited wealth, a career you will put on hold during the marriage and/or an outstanding tax bill, then each of you should hire an attorney.

You're going to need skilled legal professionals to help you turn that conversation into a formal prenuptial agreement.

Prenups are private legal contracts that define the financial dimensions of a relationship.

While prenups have long been popular with celebrities and tycoons, folks without fame and fortune often dismiss them as litmus tests for gold diggers or signs a marriage will fail before it starts.

But that perspective has been changing as an increasing number of people marry for the second, third or more time.

A prenup can be a blueprint of how assets are shared and divided during a marriage, in case of a divorce or after a death.

Parents often use them to make sure that when they die, the inheritances of children from prior marriages won't go to a new spouse or a new spouse won't be kicked out of a home by adult stepchildren.

Business owners use them to make it clear that, while married, the income generated by the company will be shared by both spouses, but that the business will not be divided if they divorce.

Couples that plan for one person to quit working to raise future offspring use prenups to acknowledge career and earning sacrifices the stay-at-home spouse will make and arrange for adequate financial maintenance during the marriage and after, if it comes to that.

Someone with burdensome tax debts can use a prenup to shield a spouse from that mess by stating in a prenup that everything each person owns before and after the union remains separate property.

That is especially important in Texas, California and the other seven community property states that assume all income, debts and possessions accumulated during a marriage are shared equally by married couples. Unless otherwise specified in a written agreement, community assets and liabilities are split 50-50 in a divorce (SEE CLARIFICATION).

A prenup can be as detailed or as spare as you want it to be.

It's best to sketch out just the broad outlines of your financial life together, so you don't have to update the prenup by filing postnuptial agreements, says Debbie Cox, a board certified estate planning and probate attorney who now works as a wealth adviser at J.P. Morgan Private Bank in Dallas.

If the concept of seeing a divorce attorney before you get married weirds you out too much, sit down with a probate attorney who has experience in setting up marital trusts and premarital agreements.

You can find a listing of estate attorneys in Texas and other states at www.actec.org, the Web site of the American College of Trust and Estate Counsel.

Don't avoid this. If you and your true love can't talk about money or your lifestyle expectations for your marriage, then you probably shouldn't be getting married soon.

"If you can't talk about it now," Cox says, "then you will be fighting about it later."