CAPITAL GAINS

Jane Bryant Quinn

Slicing Up Assets in Advance

It's one thing to write about prenups, and quite another to live through their making. Doing a prenup isn't for sissies.

From the magazine issue dated Jun 9, 2008

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There I stood, in Vera Wang's dreamy Madison Avenue shop, trying on a wedding dress. On either side, 25-year-olds, with their mothers, their bridesmaids and their 22-inch waists. In the center, me, trying to pull something white and swishy over my hips. Available wedding dates are few for brides of a certain age. You have to celebrate after your grandchildren get out of school and before your friends go away for the summer. So I'll be a June bride. I have two more weeks and am hustling to finish the paperwork.

Oy, the paperwork!

When my husband died four years ago, I hadn't expected love to come back into my life. It did, in the person of Carll and his children. Between us, we have eight. That raises the unromantic question faced by all parents who go to the altar, bringing families along. What do you do about the money?

If you do nothing, state law intervenes. When one of you dies, the other can claim a share of the assets, no matter what it says in your will. If you divorce (gulp), a court can divide the property in ways that seem fair. Couples wanting a different result have to draw up a prenuptial agreement—a legal contract defining the financial arrangement they prefer.

It's one thing to write about prenups, as I have before, and quite another to live through their making. Most decisions were easy. One, however, required us to dig into feelings that were hard to talk about. Embarrassing, even. Doing prenups isn't for sissies.

The easy things were our separate assets. Neither of us needs financial support. The prenup says that what's mine goes to my kids when I die, and what's his goes to his.

There's a twist with my retirement fund. You can leave an Individual Retirement Account to anyone you want. By law, however, some or all of your 401(k) or pension trust is earmarked for your spouse. A prenup can't change that. To free me to leave my pension trust to my kids, Carll has to sign a special waiver after we marry, not before.

So here's the nightmare (only an obsessive financial reporter could think this one up): I say "I do," waltz from the wedding ceremony to the party tent, trip on the dance floor, break my neck and breathe my last. Carll inherits the pension trust and can't give it back to the kids without paying a gift tax. They rebel. I haunt the lot of them.

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Posted By: rmgoodman @ 06/04/2008 12:18:14 PM

If the "Big Conversation" doesn't go well, read up on how to have a "difficult" or "crucial" conversation (strongly recommended!) and find a knowledgeable and skilled family mediator who can guide you through these talks. Good family lawyers should be used for consulting, advising, and reviewing final documents to ensure that all critical issues are addressed and agreements are enforceable. rina@transformingconflictllc.com
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Posted By: ostienk @ 06/02/2008 1:50:55 PM

One of the most unpleasant experiences in my life (by far) was negotiating my pre-nup. Because that is exactly what it is--a negotiation and anticipation of negative events. I'm a firm believer in contracts and pre-nups but I was unprepared for how awful I would feel during the discussion of the terms. You were totally right when you said it was embarrassing. For whatever reason, it just feels bad. In the end you've got to have 'em but it is really unpleasant getting to the end.
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Posted By: tctctc2 @ 06/02/2008 1:48:41 PM

I face similar issues, but don't understand your strong feelings about leaving a motherlode to your children. I want my children to be taken care of, but I'm not obsessed with the idea that they should get "everything." Why should they? I believe it was Warren Buffett who said that large inheritances give children a dis-incentive to create their own success. Or perhaps it's because I'm from a large family and expect my own parents' bequests to be limited and split seven ways. That's fine with me. Whether I'm dead or alive, I don't think handing my children large gobs of cash is the best thing that I can do for them. And if I love the person I'm married to - second spouse or not - what's so wrong with that person inheriting as well? I feel very much in the minority with this opinion as I hear a lot of people talking about those "greedy" second spouses... If they're so "greedy", why are we marrying them in the first place?