ó Young couples going into their first marriage with
barely enough money between them to pay the rent donít
usually have much to lose by combining their assets as
they build a family and plan for the future.
marriages can be more complicated when they occur later
in life. Thatís when both spouses may have children
from past relationships as well as separate assets theyíve
acquired over the years. And, it could get more
complicated if one spouse has significantly more assets
than the other.
question is, do couples in a second or third marriage
throw all their assets into the same pot because they
are in love and trust each other to do the right thing?
Or do they separate their assets and risk potential
alienation by holding back?
financial planners say the phrase "prenuptial
agreement" shouldnít be a deal breaker.
you start out early and you have very little and you
acquire your assets together, then justifiably, they
should be shared. But thatís not true when you come to
the marriage with assets," said Robert Fragasso,
chairman and CEO of Fragasso Financial Advisors in
you come to the marriage with assets, those assets that
you come with should be held separately," Fragasso
said. "However, those assets built during the
marriage should be put together. Thatís my
scenario comes up often in his work, he said. As a
financial adviser he recommends keeping assets going
into the marriage separate in order to protect the heirs
of both spouses. One case he is familiar with, he said,
is a perfect illustration of that point.
couple remarried when the man was in his early 60s and
the woman was in her late 50s. They combined their
assets and neither took advantage of the other, so
things worked fine. The man, who had substantial assets,
died first and all of his assets went to his surviving
wife. She lived for another decade and when she died,
she left everything to her own children, leaving the manís
children in the cold.
of that money was (the deceased husbandís) and it
should have been shared among all of the children from
both families," Fragasso said.
analysis by the Washington, D.C.-based Pew Research
Center in 2013 found four in 10 new marriages included
at least one partner that had been married before.
researchers concluded there are two reasons for the
increase in remarriage. Divorce rates in the U.S. have
climbed since 1960, which means more divorcees are on
the market for remarriage. Americans also are living
longer, which gives divorcees, widowers and widows more
time to get in and out of more marriages.
R. Williams, a partner at the Pollock Begg law firm in
Pittsburgh, said he drafts a lot of prenuptial
agreements, especially for people going into second and
third marriages because they are more established and
financially secure. A prenuptial agreement allows both
parties to identify exactly what each of their assets
are at the time of marriage, that way they can prove
what they brought in if a divorce becomes necessary.
law says for a prenuptial agreement to be enforceable
there needs to be a full and fair disclosure of all
assets and liabilities, which means if one spouse has a
Swiss bank account and it gets found out, it could
invalidate the prenup," said Williams, who
specializes in family law. "Also there can be no
duress, meaning you canít ask someone to sign a prenup
10 minutes before the wedding and you canít threaten
them with violence if they donít sign.
a matter of best practices when Iím drafting a
prenuptial agreement I advise my client that his or her
fiancee should receive independent legal advice, and in
some cases Iíve even provided a list of other
attorneys who can work with their fiancee on the
document I prepare."
of the benefits of a prenuptial agreement is that it
often works hand in hand with an individualís estate
planning instruments, such as life insurance, wills,
trusts, retirement plans and beneficiary designations.
When assets are kept separately in a marriage, the
prenuptial agreement can protect surviving spouses as
well as the heirs of the deceased spouse.
spouse who comes into a second marriage with more assets
than the other spouse can use a prenuptial agreement to
set up a trust that will pay interest income to the
surviving dependent spouse for as long as he or she
lives. When the surviving spouse dies, the money from
the trust is then distributed to the children of the
first spouse who passed away, said Lisa Turbeville, a
divorce financial analyst and owner of Watermark
Financial in suburban Pittsburgh.
type of strategy is more commonly used with higher net
worth couples where at least one of them have been
married before," Turbeville said.
same type of strategy to provide protection to heirs can
also be done through a will, Turbeville said. However, a
will is restricted to death while a prenuptial agreement
covers the possibility of a divorce as well as estate
agreements have a negative connotation," she said.
"I try to approach prenuptial agreements as an
estate planning tool rather than a divorce planning
tool. That makes it more palatable to people
understanding the importance of it and agreeing to sign
one, particularly in second marriages."
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said he is aware of situations where a couple, both with
substantial assets, put everything they have together
and it worked out. But, from what he has personally seen
over four decades of managing wealth, those are unique
cases. "More so," he said. "Iíve seen
it not work out.
agreements have been accused of taking the romance out
of a relationship," he said. "But Iíll tell
you what really takes the romance out is when somebody
tries to take advantage of the other spouse who comes in
with more assets. I would say they are better off taking
the risk of a little initial romance lost."