Greg was engaged to Rachel, the only daughter of John, a wealthy business owner. A few days before the wedding, Rachel’s family lawyer called. He wanted to meet, as soon as possible, about a “pressing financial matter”.
In the attorney’s office, a thick prenuptial agreement was put in front of Greg. He was instructed to “sign it or the wedding checkbook will close forever”. After reading through the first pages, and getting terse responses to his questions, Greg refused and walked out.
Rachel phoned minutes later in tears. “Is it true what daddy said?, she asked. “That you are after my money and have called off the wedding?”
Ah the prenuptial agreement. A topic that generates significant stress in wealthy families everywhere.
A pre-nup makes sense. Most people agree that pre-wedding assets should remain separate after marriage. Statistics show that half of marriages end in divorce. So it’s a predictable issue that arises as children of wealthy parents develop serious relationships, yet it is still difficult to navigate. Why? It is an energy-rich combination of youth, romance, family money and intergenerational relationships, all intensified by a ticking “days ‘til the wedding” clock. Add them together and you have the perfect environment for off the charts whacked out emotion. Not the best scenario for sound decision making when great decisions are paramount.
So what’s a parent to do? My goal here is to provide four ideas for putting the pre-nup in place without putting relationships in peril.
Lesson One: Put yourself in the couple’s shoes.
Remember those days? You were young but increasingly independent and self-sustaining. You wanted to be treated as an adult and huffed and puffed when it didn’t happen. You were in love. And the last thing you wanted was someone to throw cold water on your flames and get you to look closely at reality. This is how a pre-nup can feel to the Next Generation. Also, remember, your “child” is legally defined as an adult and deserves to be treated with respect.
Lesson Two: Get it done early.
Start giving your children more information about family assets each year, carefully and with judgment, starting in their teens. To begin, tell them the stories of how the business began or how family holdings were accumulated. Underscore the principles that have been a foundation for success. Remind them of the benefits the family has received (e.g. education, travel, comfort) in order to help them respect family assets as something to protect. I firmly believe that children can handle more truth at a younger age than we give them credit for.
As they get older, teach them the logic behind a pre-nup. Pass along to them articles about family lawsuits and best and worst case scenarios. Help them to understand that no relationship is guaranteed to last forever. Confirm your belief in their ability to choose a spouse wisely and to work through any difficulties, but make it clear that pre-nuptial agreements are 1) a part of the family principles and 2) a benefit to everyone, including the future in-law.
The worst possible pre-nup scenarios happen in the 11th hour. Nobody wants to have the discussion, so it is avoided and procrastinated and pretty soon the wedding is tomorrow. As a rule, a pre-nup should be signed at least 30 days prior to the wedding.
Lesson Three: Send a messenger and blame him/her for everything.
If you represent the wealthiest side of the couple, you have the highest interest in assuring that a pre-nup is in place well in advance of the ceremony. So drive the process, but send someone else to complete the task. Your primary goal is to make the new family member feel welcome, cherished, appreciated and respected.
In my experience, there is no better time to use a trusted attorney. And make certain that she politely advises the fiancé to seek qualified independent legal counsel so as to make the process fair, professional and reasonable.
If the fiancé calls to question the process or document, acknowledge the awkwardness of the situation, blame the attorney and kindly suggest that he/she give her a call. Underscore that the intent is not to hide or avoid any details, but to make a sensitive issue less emotional.
Lesson Four: Be transparent.
Remember, there is a fifty percent chance that you will be spending holidays and vacations with this person for the next 20 or 30 years. It is vital to ensure that the wedding goes off as a true celebration.
Don’t hide family assets in the pre-nup process. Don’t “mis-remember” things that can hurt you in the future should the pre-nup become a guiding document for a divorce settlement.
The purpose of a pre-nuptial agreement is to clarify expectations and protect family wealth in a reasonable, less emotionally driven manner. Too much emotion hijacks our brain, literally, and makes us respond to reasonable things in unreasonable ways. Perhaps the greatest benefit of a pre-nup done well is that it minimizes the emotions that surround love, family and money and paves the way for a wedding that celebrates the beginning of a new family.