In the realm of marriage, especially among affluent couples, the notion of planning for the possibility of divorce might seem unconventional. However, as family lawyers, we believe it’s a prudent approach.
Marrying with an awareness of the potential for dissolution, akin to starting a business, requires careful consideration of various aspects, from financial planning to family goals.
Understanding the Business of Marriage
Marriage is like starting a business. This analogy holds particularly true for wealthy couples. It’s essential to establish clear goals and strategies from the onset. This approach mitigates fears and disagreements that might arise later.
Key Premarital Discussion Points
For couples contemplating marriage, especially those with considerable wealth, several discussion points are crucial:
Income and Wealth Transparency
: Understanding each other’s financial standing, including income, wealth, and trust funds, is fundamental.
Cash Flow and Lifestyle Financing
: Discussing how cash flows and the extent to which borrowing might finance the lifestyle is vital.
The Role of Prenuptial Agreements
: While some couples might find open discussions sufficient, others might prefer to formalize these in prenuptial agreements. Prenups, although not a complete solution, offer a snapshot of financial assumptions and expectations, which may evolve over time.
Trusts as Part of the Marital Plan
: Trusts should be clearly defined in prenuptial agreements as separate property. Their management and use during the marriage need to be outlined explicitly.
Financial Planning Participation
: Both parties should be actively involved in financial planning. Concealing financial details can indicate underlying issues and might lead to complications in the event of a divorce.
Addressing Fear and Fairness
: In divorce considerations, fear of being wronged or manipulated is common. Focusing on creating a fair plan rather than fixating on specific financial figures is more productive.
Balancing Liquid and Illiquid Assets
: In case of divorce, especially in wealthy families, aligning liquid assets like cash with illiquid assets such as properties is crucial. Ensuring that both parties have the necessary resources for their future is a key consideration.
Do you want to create a prenuptial agreement?
A prenuptial agreement, or “prenup,” is a legal contract entered into by a couple before marriage that outlines how assets and finances will be handled both during the marriage and in the event of a divorce. Here are key considerations and the purpose of a prenup:
: High-Net-Worth individuals often enter a marriage with substantial assets. A prenup can specify which assets remain separate and how marital assets are to be treated.
: The agreement can clarify the handling of any debts, ensuring that one party is not unfairly burdened by the other’s financial liabilities.
Family Inheritance and Business Interests
: For those with family inheritances or business interests, a prenup can protect these assets from being subject to division in a divorce.
: The agreement can outline provisions for spousal support, providing clarity and expectations for both parties.
Read more: Financial Issues and Divorce in Singapore
Reviewing the Prenuptial Agreement
Changes in Circumstances
: Prenups should be reviewed periodically, especially if there are significant changes in financial circumstances, such as inheritance, changes in wealth, or the birth of children.
: Regular reviews ensure that the agreement remains legally valid and reflects the current wishes and circumstances of both parties.
: Over time, what was fair at the beginning of a marriage may change. Regular reviews can ensure that the agreement remains equitable for both parties.
Entering matrimony with an awareness of potential challenges, particularly for affluent couples requires a blend of open communication, legal foresight, and financial planning.
By addressing these factors proactively, couples can build a strong foundation for their marriage while being prepared for any eventuality.