The combination of business and family today is more complicated than ever. In fact, in Robert Frank’s 2007 book,Richistan, he covers how young people from extremely wealthy families are sent to a special course where they learn, among many things, how to convince a fiancee to sign a prenup.
The key, we learn, is to explain that it’s something the parents want, not the young lover, but that it doesn’t even matter because that’s “their money,” and “we’re going to make our own money.” Lastly, “we’d want the same for our children.” By the time you’re done reading you think, it really does make sense to get a prenup. We’ll make our own money and its for the children.
Having said this, a prenup almost never makes any sense, so let’s explore it further.
How Much Money is Worth Protecting?
Personal finance expert Dave Ramsey used to tell people that if you’re getting a prenup, then you love your money more than you love that person. Since then he has changed his stance and noted that there are certain situations where a prenup makes sense.
Is your child getting married for a second time and there will be a blended family? If so, you may not want step grandchildren of the woman who later divorces your son (who you haven’t seen in years) to make off with what you’ve worked for.
Will the inheritance be more than $5 million? If so, and it is going to happen in the next few years, you may not want to risk ruining the company and costing many families their livelihood over a personal disaster, making the already hurtful breakup an event with compounding collateral damage.
Is the Prenup a Deal Breaker?
If the prenup is a deal breaker this raises many different kinds of questions. For example, does the couple understand that this is not about them, but the people who depend on the business? To clarify, it is not currently owned by either of them, and unless the spouse is looking to take an executive role, then he/she wouldn’t be entitled to ownership.
However, in the event of divorce, he/she may be entitled to alimony based on the success of the other, which they contributed to together. And, of course, the children would benefit from the thriving company in terms of jobs, personal wealth, and opportunity.
Money is involved, but it is not the central issue. Neither is trust. It is about protecting the people who depend on the business, and who will otherwise be out on the streets. As Louis Nigro, owner of Kleer-Fax, Inc., says, “there is a certain nobility in owning a business.”
And that is why it needs to be protected.
To speak with a lawyer today about signing a prenuptial agreement, contact us online or by calling 480-345-2652.