Prenups: The Business Contract for Your Most Important Partnership
Like any experienced business person, you know that not all partnerships work out the way you hoped they would. Customers pivot, investors change their market outlook, even co-founders can part ways. That’s why you spend on expensive legal dollars to think through all possible scenarios and draft iron clad contracts to ensure everyone can walk away amicably if things go sideways.
So why take a different approach with your romantic partnerships? At the end of the day, who you marry is arguably one of the most important business decisions you can make and deserve just as much diligence and structuring as every other partnership you enter.
The Modern Relationship
For centuries, relationships were purely a transaction. Whether done to keep the family name alive or gain property and livestock through dowries, marriages of the past focused on survival. Now, modern love and satisfaction are at the forefront of marital decisions. Psychotherapist Ether Perel connects this to Maslow’s Hierarchy of Needs, with early models of relationships focusing on the basic physiological needs of humans. Today, most couples strive to reach self-actualization or feelings of purpose and fulfillment. With dual income couples becoming the norm, it’s important to consider the complexities to a lifelong commitment. Love can often be important, and financial security is a facilitator of that love. In this day and age, our modern relationships requires a modern approach.
Stop the Stigma
Widely considered a taboo topic, prenups are still thought by many to be a proclamation of doubt or suggestion of a future divorce. This fear of prenups is partially rooted in a misunderstanding of their purpose. Prenuptial agreements are legal contracts set prior to marriage that cover how assets and important decisions are handled during marriage and divided if divorce or death occurs. These documents are there if you need them and will remain untouched if you don’t. They also can cover decisions around future assets and earnings — for an entrepreneur or business executive, this could likely impact your financial situation decades after your wedding day. While not always measured as the most frequent source of conflict, one study found that money-related conflicts were more recurrent and problematic in marriages than non-money issues. Removing the stigma and discussing finances before marriage is one of the best ways to prevent future conflict.
Why It Matters
The benefits of prenups are innumerable. Whether it’s existing assets, earnings on future business growth, or even custody of children, these agreements can protect you and dramatically impact the rest of your life. We’ve all heard horror stories about divorces or custody battles that lasted years. Let’s avoid that. If you sign a prenup, it will be the go-to resource during and after a divorce. If you don’t sign a prenup, some states such as California, Texas, and Arizona have laws that say almost everything will be split 50/50 — even if you earn a lot more than your partner. Before marriage, take time to think if you’re willing to roll the dice and potentially lose a large portion of your earnings or time with your kids. It’s better to experience a little discomfort thinking about this now instead of risking legal trouble and serious consequences down the road.
Deeper than Divorce
While it’s important to protect yourself in case of divorce or death, prenups can actually set the foundation for a healthy and long-lasting marriage. This process gives you a chance to talk with your partner about your fears, relationship with money, values, goals, children, extended family, and more. If you’ve been waiting for a reason to talk through these foundational elements of a partnership, now is your chance. The only negative outcome of this process is it could reveal that you’re not actually on the same page — something we recommend discussing regardless before making such a life-altering decision. Creating a prenup is a tool, like pre-marital counseling, that will benefit you for years to come.
If you’re ready to start the prenuptial process, educate yourself about your own financial profile and state laws, get a lawyer to draft the agreement, and consider using a service like Hello Prenup that will keep the process smooth. Remember, getting on the same page about current and future scenarios is the best way to set yourself up for a successful marriage and ensure you’re legally protected — just like you would do in any other business partnership.
