Prenuptial Agreements: Navigating Financial Conversations Before Marriage

Prenuptial agreements should be a couple's decision, not a parent's imposition, ensuring both financial security and relationship harmony.

### Navigating Prenuptial Agreements: A Guide for Parents
* 🎉 Congratulations to MJ's child on their upcoming marriage, especially given their **impressive six-figure net worth** at just **28 years old**.
* 👨 It's crucial for parents to approach the topic of prenuptial agreements delicately, as **imposing their will can strain relationships and hinder the couple's independence**.
* 📜 A prenuptial agreement serves to outline the **terms of asset division** should the marriage end, but it should be a **mutual decision made by the couple** rather than a parental mandate.
* 🏡 The complexities of asset ownership, particularly in community property states, can make these conversations even more significant, as they affect **how assets are treated in the event of a divorce**.
* 💼 MJ's child should be educated about the **origins of their wealth** and the potential implications of marriage on their **financial future**, especially if **family legacy assets** are involved.
* 🤔 It's important to frame discussions around prenuptial agreements as **educational rather than controlling**, fostering a healthy dialogue about **financial responsibilities and risks**.
* 💔 Ultimately, while prenuptial agreements can serve as a **risk management tool for those with significant assets**, the focus should remain on the couple's **wishes and the goal of a lasting marriage**.

[Music] I've got the question queued up from MJ. It says, My 28-year-old kid is getting married in December. Congratulations! I know, first of all, congrats, and has a six-figure net worth. I want to make them get a prenup before they get married, but I'm wondering what money the money guy thinks. I would hate to see their financial future slip away due to a messy divorce. Wor well, okay, so first thing I'll say, MJ, the child, your child is 28 years old, and I think the question was phrased, 'I'm thinking about making them get a prenup.' Before we even talk about prenups at all, I do think it's very—and look, I want to be very transparent here. I have not yet navigated being the parent of a child getting married, so I don't know what the psychological thing—I have not experienced that. But I have been in rooms and sat with families where parents try to influence and put their

will on their kids, and oftentimes when it's done in not like a warm, loving, happy, nice manner, it doesn't end up well. So when I think about a prenuptial agreement and a couple thinking about entering into marriage with one of those in place, it seems like that should be a decision that the couple makes unless a decision that the parents are going to force on the couples. I just want to put that piece out there because I do think you have to be careful, especially going into marriage, that you try to control and meddle too much in there because ultimately you want this couple to kind of like, you know, get married and get out of the nest and fly and thrive on their own without having mom and dad having to like dictate the decisions they make. So with that brief aside, then becomes okay, what do you guys think about prenuptial agreements? So for those of you who are not familiar, this is an agreement that two parties enter into before they get

married. That basically lays out if this marriage were not to last, if this marriage were not to work, this would be what we were going to agree to be the terms upon the dissolution of this relationship. I mean, there's other stuff that goes into it, but that's kind of the general idea. So, when it comes to prenuptials, right, me, I've got some thoughts that I'm happy to share, but I'm curious to know if you have anything like right top of mind that you want to throw out there, MJ. The first mistake was made is that your child actually has six figures net worth. You know how much easier this is if everybody just gets married broke? Yeah, it's true. That's true. That joke is actually what leads to the answer is that it's the complications that make this conversation important. And I agree with everything you said. This needs to be more of an Inception thing, an education thing, versus exerting your will upon your adult adult

child um so here's the complications that come to my mind. What I've dealt with as a financial adviser. If you live in um a community property state, that muddies the water a little bit on even assets that you bring into the marriage. If now, if you live outside of the community property State, you know like I know Georgia um when we were there Tennessee to as far as I know. These are states that what you brought into the marriage, especially like retirement accounts or assets that were given or inheritances from family members. A lot of times those assets get treated, you know, separated if you're if the marriage ever did dissolve. But community property States kind of they muddy up that water. Source of funds is also important, you know, like I know I've dealt with a situation where a young couple got married um. Family wealth on one side where um the daughter was getting married and the the father um had kind of come to me and said hey, you know, this is the money we set. I want to make sure this is protected.

and I know the future son-in-law came to me because here I am trying to be the middleman. I'm the financial planner for the adult children, but I'm also the financial planner for the parents. The son-in-law wanted access to the assets, which I thought was kind of... my Spidey senses were giving me a little trouble off of that. Because I didn't mind sharing, Hey, these were inherited assets. This is family source assets. I think you need to realize the assets y'all are building as a couple will be there, but this money was money that was kind of set aside. It had a legacy. It had some desires to it. So, I, you know, in that situation, I think it made a lot of sense because of the complications. And then the other thing I've often dealt with, now your son's 28, or I can't remember if you said son or daughter, but 28 years of age.

that's different than where I've seen. This is usually second marriages. Um, you know, you're getting this is a second marriage or maybe there's children from previous marriages, and you're trying to make sure that those earmarks for desires outside of your life are also respected. All these things are the complications that lead to having this conversation while you're in the unicorn and rainbow stage of meaning. Everybody's in love and everything's happiness. I can see why having these productive conversations is very powerful now versus waiting for things to all heck to break loose and feelings to get hurt, and then now you're trying to unwind this. It gets really ugly, gets very expensive. Um, so that's how I'd handle it. But MJ, my advice to you is this is more of an education moment with your adult child, is that walk through, Hey, where did these assets come from? Now, if your child created these assets themselves because they're very successful, it's ultimately their choice.

I think the only way you have any standing, even in this conversation, is if this was some family legacy money that was set aside or, you know, invested. And you feel like because you set this up, y'all can have that conversation, but it still needs to come from a point of the heart of education, not imposing your will. Because, I mean, think about Romeo and Juliet and all the other great family tragedies of the world. Whenever the parent forbids somebody, I mean, that's the oldest story from time, is that you're actually going to probably solidify that you're the enemy or villain of this storyline versus if you educate and explain where this is coming from. If it's coming from a positive place, I think you'll get to a much better place. If you are trying to create legacy assets, or a lot of times it's noble and say, Hey, I want to make sure that my assets ultimately passed down to my grandchild, there are other ways to do that besides prenuptial agreements.

could obviously have some sort of trust structure or something like that as part of your estate planning that is different than the prenuptial agreements where we generally see those happen the most often is exactly what you said: someone who's had their own success, built up their own wealth. They enter into marriage with that, and then it becomes a risk mitigation strategy. You have to think about what's the risk that's inherent in my financial situation and which of those risks are we comfortable offloading. Because the great news is if you get married and you never get divorced and it's till death do us part, it will not have mattered whether you had a prenuptial agreement or didn't have a prenuptial agreement because everything went the way that it was supposed to. And you should go into marriage thinking that; you should go into marriage planning for this being the Long Hall type thing. But if you are someone who's older or you do have resources, then just like you would do risk management in any

other areas of your life, you would approach it from a risk management standpoint, but it's a decision for the bride and groom, less so the father or mother of the bride and groom, yeah.

The TRUTH About Prenups

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A parent is considering urging their 28-year-old child, who has a six-figure net worth, to get a prenup before marriage.

The speaker emphasizes the importance of allowing the couple to make their own decisions and warns against parental control.

Prenuptial agreements are meant to protect both parties' financial interests before entering into marriage.

Prenuptial agreements outline the terms for asset division in case of a marriage dissolution.

The complexity of individual net worth and state laws, such as community property vs.

separate property, can complicate these discussions.

It's essential to approach the topic with education and understanding, rather than exerting pressure on the couple.

The financial planner is trying to mediate between the adult children and their parents, addressing the son-in-law's request for access to inherited family assets.

The planner emphasizes the importance of understanding the legacy and purpose of these assets while also acknowledging the couple's future financial contributions.

Having open and productive conversations about financial matters during a happy phase can prevent complications and conflicts later on.

Setting up family legacy money should come from a place of education and understanding, rather than imposing will.

There are alternative ways to create legacy assets, such as trust structures, instead of relying solely on prenuptial agreements.

Marriage should be approached with the mindset of it being a long-term commitment, while also considering risk management for those with resources.

Wedding decisions are primarily the responsibility of the bride and groom, rather than their parents.

Approaching wedding planning from a risk management perspective can be beneficial.

Ultimately, the couple should make the final decisions regarding their special day.