When major decisions about love and money intersect at pivotal points in a woman’s life, a thorough consideration of both romantic and economic interests is essential. A Premarital Agreement (also called a Prenuptial Agreement or a “Prenup”) between intended spouses is entered into prior to the marriage. It seeks to define or modify the economic impact of marriage, both in terms of property entitlement and alimony. With premarital agreements becoming more and more commonplace, women shouldn’t just be asking themselves, “Should I sign one?” but also, “Do I need one?” The following scenarios illustrate why the conversation around women and premarital agreements needs to expand beyond the current dialogue.
Scenario One: Being asked to sign a premarital agreement. One of the most common reasons wealthy or professionally established people ask for a premarital is to limit their exposure to paying alimony to the person they are marrying in the event of a divorce. (A premarital agreement cannot limit a future obligation to pay child support, but it can limit or even waive the right to future alimony.) When making the decision to sign a premarital agreement, women need to consider very carefully if they will be signing a premarital agreement that will make them unable to maintain the standard of living they will enjoy during their marriage.
It’s very easy to get caught in the trap of proving you are not marrying him or her “for the money,” but fast forward 10 or 15 years down the road and think about the fact that your entire social circle and support system, and that of your children, is often built around a certain standard of living. To lose access to a private club, charitable board (that often comes with a minimum donation expectation), or vacation home that is the epicenter of your social life and the social life of your children, can be an enormous blow.
When you are 28 and shopping at H&M, it’s hard to imagine what it would be like to go from Ultimo back to H&M in your 40s. It is easy to pillory spouses who complain about a substantial change in their lifestyle resulting from a premarital agreement, when they remain relatively wealthy people. The media often have a field day with the “extravagant” demands of women going through high-profile divorces. Remember the Paul McCartney and Heather Mills divorce? Her requests for support to maintain the lifestyle she enjoyed while married to the former Beatle were splashed across the headlines and called “ridiculous,” “unreasonable,” “exorbitant,” and, for a while, earned her the moniker of the “most hated woman in Britain.” But when you really try to walk a mile in the Louboutins of a woman who can no longer maintain a lifestyle established over the course of many years, the harsh reality of losing a spouse and a support system and a social life, all at the same time is nothing to joke about.
Often, another significant underlying fear is the wealthier parent’s ability to garner preferred parent status because they can afford a first-class trip to Disney World while the other parent can only afford to go to the local water park on a holiday. Anyone being asked to sign a premarital agreement limiting their right to future support should think long and hard about what the future could look like under the terms they are being asked to agree to at the time of marriage.
Scenario Two: You are, or may become the “wealthy” spouse in need of a premarital agreement. On the flip side of Scenario One, surveys show wealthy or established women are much less likely to ask for a premarital agreement than their male peers. I have seen a significant rise in the number of professional women I represent who have less successful spouses and are shocked to learn they may have an obligation to pay alimony (called “maintenance” in Illinois). A spouse need not be unemployed or a stay-at-home parent to have the right to seek alimony. In fact, any time there is a significant disparity in a couple’s historical earnings, the lower earning spouse may have the right to seek alimony, irrespective of what the parties’ respective childcare and homemaking roles may have been during the marriage.
A spouse’s right to alimony is also determined without regard to fault as it relates to the
reasons for the breakdown of a marriage. For example, a spouse’s infidelity has no impact on his or her right to seek alimony (although cohabiting with a paramour would terminate the right to seek alimony in most instances). The future is impossible to predict, and the only way to hedge your financial risk in a marriage effectively is to do so with a premarital agreement.
Scenario Three: Getting off the fast-track and premarital agreements. Even for women who are not the financially advantaged spouse, there may be good reasons to consider a premarital agreement. Consider, for example, the actual economic cost of leaving the workforce in
order to have and raise children? Even women returning to work immediately after having children face economic costs, particularly when compensation is closely tied to specific production goals (e.g., sales or billable hours). Many women choose to take less demanding positions or go part-time while their children are young. (See “The Real Cost of Women Opting Out” By Kimberly Palmer, July 30, 2014, US News Money.) But for those who stay out of the workforce, even for a few years, it can be difficult (and sometimes impossible) to regain traction when seeking to reenter professional life, whether by choice or as a result of a change in circumstances, like divorce.
In Illinois, we have “maintenance” or alimony guidelines, and women often are shocked to learn of the limited duration of the maintenance guidelines given the length of their marriage. For example, a spouse divorcing after nine years of marriage would receive 43 months of alimony under the Illinois guidelines. That is not a very long time for a mother with two small children who has been out of the workforce for seven years to reestablish herself professionally.
Even for two-career couples without children there are reasons a premarital agreement that acknowledges the economic sacrifices required by the marriage may make sense. It is not unusual for one spouse’s career to take “priority” over the other spouse’s career, either short-term or throughout a marriage. Perhaps one spouse has a high-powered job with a great deal of potential that requires a couple to relocate multiple times over the course of the marriage. It is not unlikely that those repeated relocations might have a detrimental impact on the career trajectory of the spouse that is being asked to follow. While the negative impact of multiple relocations might be hard to measure, not addressing the impact on the career of the following spouse can lead to the buildup of significant resentment over the years and cause deterioration to the relationship.
Clearly, there are many situations in which we should carefully consider the long-term economic consequences of our decisions around love and marriage. One of these considerations can be whether or not a premarital agreement is a possible way to address concerns around these major life decisions. While trying to predict the future is often futile, creating some predictability around our future is never a bad idea.
Meighan A. Harmon, Senior Partner, Schiller DuCanto & Fleck LLP
Recently honored as one of the Top 50 Woman Attorneys in Illinois by Super Lawyers, Meighan A. Harmon, is driven by an inherent self-confidence and firm demeanor, with a compassionate side that puts her clients at ease during periods of great uncertainty.
Harmon focuses on complex family law cases involving the distribution of multi-million dollar estates, a complicated endeavor to satisfy. In determining how to navigate the divorce, Harmon first figures out what the couple wants out of it.
“You can see physical changes in people oftentimes as the veil of anxiety and depression that comes with the breakdown of the relationship…starts to lift,” she says. “My paradigm of divorce began to change from personal disaster to an event that could foster positive change for both individuals.”
After earning her J.D. at the University of Notre Dame, Harmon joined Schiller DuCanto & Fleck, the largest family law firm in the country, in 2001. Harmon is the firm’s youngest equity partner and serves on Schiller’s Executive Committee, responsible for positioning the firm’s vision and course of action.