The Separate Roles of Love and Money

November 29th, 2011

For older couples contemplating marriage, something in writing has come to mean more than a Valentine’s Day card. The prenuptial agreement, entwining love with money, has become almost as essential a document as the marriage license, say lawyers who draw up such agreements.

“Increased longevity means that more couples who are in their 60’s, 70’s and even their 80’s are marrying for the second or third time, and they want to make sure that their assets go to their own children and grandchildren and nowhere else,” said James C. Kahn, a partner in the White Plains law firm of Kahn & Kahn, which specializes in matrimonial law. “It may not be romantic, but it’s a fact of contemporary life to put something in writing, and most older couples deal with the issue realistically.”

Putting something in writing is not confined solely to older couples, though. Younger couples are also signing prenuptial agreements, especially when one of the partners has considerable assets and the other has none, said Joseph A. Scutieri, who is also a partner in Kahn & Kahn.

“It’s usually the parents of the one who has the assets to protect who insist on the prenuptial agreement even though it puts a tremendous strain on the young couple,” Mr. Scutieri said. “When you start out a marriage with the assumption that there will be a divorce, it can be the kiss of death.” ‘The Timing Was Awful’

Nevertheless, Mr. Kahn added, many parents still think it is worth the risk. “A typical example is with one of our clients who is a successful businessman with a string of retail outlets,” Mr. Kahn said. “He put his son, the one who is getting married and who is in his 20’s, into his business and signed over one of the company’s retail units to him. The father, who wants to protect the company, insisted that the son’s fiancee relinquish any claims to the business by signing a prenuptial agreement just in case the marriage doesn’t work out.”

Mr. Kahn continued: “The girl came to us for advice on the eve of the marriage. The timing was awful. She was very upset. What should she do? We advised her against signing the prenup because we felt that it was not in her best interest. But she was so upset and fearful of the consequences and the thought of postponing the wedding and all the other complications that she signed anyway. What was especially troubling to me was the time frame. By signing the prenup, she literally waived her rights away throughout the entire life of the marriage. I felt that marriage was off to a bad start.”

But when older couples are involved, a prenuptial agreement can actually increase the chances that the marriage will be successful, said Susan Pollet, a lawyer who has her own practice in Chappaqua and specializes in family, labor, and employment law. “By discussing finances openly and outlining their positions, especially regarding their adult children, older couples work out the particulars upfront amiably before they get a formal written agreement,” Ms. Pollet said, adding that in order to draw up a sound financial agreement, “it is absolutely essential that each of them have their own attorney.”

Even when there are no children to take into consideration, older professionals who have accumulated substantial assets want to make sure that their assets are protected before they enter into marriage, said Denise S. D’Ambrosio, a lawyer in the White Plains office of Hall, Dickler, Lawler, Kent & Friedman.

“With one out of two marriages ending in divorce today, people with means who are thinking about marriage are very cautious about shifting their assets to joint ownership,” Ms. D’Ambrosio said. “I have clients in their late 40’s, for example, who are getting married for the first time who are using a prenuptial agreement just as they would an insurance policy or as a good financial planning device. They have a lot to lose and they have seen people who have had their entire marital wealth reduced to almost nothing through the legal costs of divorce. So naturally, they are cautious.”

Mr. Scutieri added that divorce has increased during the last five years, especially among middle-aged people. “The recession is taking its toll, especially in Westchester, where corporate cutbacks have hit middle-aged couples who have had to alter their lifestyles drastically,” he said. “Money problems lead to fighting and eventually divorce, even though financially, couples would be better off not divorcing.”

An added benefit of a prenuptial agreement, said Jean Carlson, a financial planner in Mamaroneck, is that it gives a couple an opportunity to work out their financial future before marriage.

“Prenuptial agreements are not only for the rich,” Ms. Carlson said, adding that average-income people also need them. For those with average incomes, for instance, their largest asset is probably their pension or their home, and that leads to questions. How will pension money be divided? Does each partner own his or her own home? How will the property each spouse brings to the marriage be held? What about property acquired or money earned after the marriage? Will that be considered separate or marital property?

Couples about to marry for the second time would be well advised to plan for the marriage just as they would plan for retirement, Ms. Carlson said. “They should sit down and review such things as insurance policies, individual retirement accounts, and pension options. And they certainly should make out new wills.”

Some couples avoid the whole procedure by choosing to live together without being married.

Mr. Scutieri said: “There are numerous elderly couples who decide not to get married for various reasons. One of them is that they want to keep both of their Social Security benefits. Their total benefits would be reduced should they marry. There are also those who don’t marry for fear of the future. They know they would be financially responsible for paying the bills if their new spouse, for instance, had to go into a nursing home. For example, in Westchester, good nursing homes cost about $4,000 a month and a half-million dollars worth of assets can vanish quickly when the state is dunning a spouse for payment.”

And then there are those romantics who prefer not to sully relationships with talk of money. Take the couple aged 68 and 70 that recently sold their individual houses in Scarsdale and decided to live together.

“We are both very well fixed,” said Dan P., a retired executive who insisted on anonymity. “I am a widower. My companion has been divorced and widowed. She has four children and six grandchildren. I have two children and three grandchildren. We have had a very close relationship for a number of years, ever since our respective spouses died. We have been on a number of trips together, but we only recently decided to live together.”

Although the couple had seriously contemplated marriage several times, he said, they eventually decided against it. “It got much too complicated,” he said. “When we started discussing assets, it began to sound like a cold business deal. We stopped before any real harm was done. Society is much more permissive today, and at our age who cares if we get married or not? A few people have criticized us, but our children haven’t. I think they are relieved.”

The couple, who share expenses, rent a condominium in Rye Brook. “But we have looked at a vacation house we like in Maine where we spent last summer,” he said. “We are seriously thinking of buying the place as equal partners. It has enough bedrooms for all our visiting children and grandchildren, who seem to get along surprisingly well.”