What About Next Time? Prenups for Second Marriages

You are about to finalize your divorce, and hopefully have had a positive experience of planning for the next phase of your life.

Divorce is not necessarily a failure. You worked hard during your marriage, but now you have gotten to the next stage, hopefully unscathed but wiser. Think of it as a good thing.

You may not be thinking of getting married again, but it turns out that over 50% of divorced people do get remarried, and that statistic even holds up for people 65 years and older. Or you may already be in a relationship that’s possibly headed for marriage.

So, you might start thinking now (or when you start getting close to someone again), “Should I get a Prenup?”

Most of you married the first time without a prenup. You started out with little in terms of assets, you were beginning your career, and contemplating a family. Prenups were not on your radar. Nor should they have been. For most people starting out, the financial aspect of the new “joint venture” is very important: it provides security along with points of connection between you and your spouse. This financial security can give a sense of great satisfaction when entered into and also add to the other satisfactions of marriage.

But a second marriage is different.

You are now established financially. Your children are grown, or on their way to being so. You believe that the “second time’s a charm,” but are aware of the statistics for second (and third) marriages – they are somewhat more likely to fail (I shouldn’t use that word!) than first marriages. You think you’ve learned how to sustain a marriage, but who knows?

Here are some things to think about:

1. Be considerate of your future spouse. Think about his or her long-term needs. Even in many second marriages, financial- as well as emotional support is necessary.
2. Think about your children from your prior marriage. Do you want to leave money to them when you pass? Do you want to provide gifts to them during your lifetime to help them establish themselves rather than waiting until you have passed away, in which case your children may already be middle aged?
3. You should familiarize yourself with the possibilities of providing for your new spouse and your children by using trusts which can be helpful in balancing the needs of your spouse with your wishes to benefit your children.
4. Be aware of the advantages of providing for spouses using retirement accounts and other assets. If your children are the beneficiaries of your retirement accounts, the funds will need to be withdrawn within 10 years of your death and will be fully taxable to them.
5. Think about how you and your new spouse will be supporting yourselves.
6. What if you are retired (or will soon be) and your spouse is younger and still in the workforce? Will you be able to enjoy retirement with a spouse that still may want to work?

These issues should be discussed prior to your remarriage, and possible solutions agreed upon. When people enter into prenuptial agreements, hopefully they will have addressed these issues and incorporated their mutually agreed upon solutions into their agreement.

For instance, you and your spouse may decide that you will give a “floor” amount of assets to your new spouse when you die, such as “not less than 50%.” Or perhaps the agreement will say that you set up a trust fund that benefits your spouse during their life, with whatever is left over going to the children of your prior marriage.

You can even make decisions in a prenuptial agreement about what to do if your second marriage ends in divorce.

It is possible that your new spouse will need spousal support at that time. If you and your future spouse had waived spousal support in your prenup, the knowledge and worry about the waiver could lead to the dissatisfaction of your spouse who might feel financially unprotected. This is one of the ways prenups can actually lead to divorce.

Another important decision to make when considering a prenup, is the process by which you would enter into one. If you were to start with two attorneys, one representing each of you, often the negotiation becomes adversarial, with one recommending that their client provide the least possible for the new spouse, while the other would be asking for what they consider to be a more equitable split financially to offer more financial security for their client. It can become nasty very quickly, and that deeply affects the clients who wish to marry.

I’ve found that a great initial step to getting a prenup is to strongly consider doing so through mediation.

The parties would choose a mediator – best to choose an attorney fluent in marriage and finances, usually that’s a divorce attorney. A collaborative attorney/mediator is generally a good choice. It’s probably best to stay away from litigators for this type of work.

The mediator will facilitate discussions with both of you about the role finances will play in your second marriage. You will make decisions together that benefit both of you and feel right for your marriage and your particular situation. I find this to be one of the most beneficial approaches to use to enter into a prenup in your second marriage.