How does babby prenup?
September 16, 2020 5:47 AM   Subscribe

We're planning on getting married in the near future and think we'd like to set up a prenuptial agreement. How much prenup and lawyer do we actually need?

We've put out feelers for actual legal advice from actual lawyers but have gotten some very different responses. We got a recommendation for a colleague of a colleague of a friend whose fees started at $7,500, which seems high (unless you're a RHONY-to-be). A second lawyer we found online charges $1,500 but the intake forms were a mess and it felt like the guy was just filling in prenup MadLibs with us.

YANOL but maybe you can provide some perspective on what we should be looking for and thinking about during this process. All the details that might be relevant below, now how do we turn these points into an actual document? We're in New York so bonus points if you can recommend good lawyers in the NYC area. Throwaway email:

Person A
- Private sector job making a little over $100k
- No student loans or other debt
- $1M in the bank, much of it inherited from grandparents in a trust
- Additional family money (i.e. probable inheritance) in the $2-4M range

Person 1
- Public sector job making a little under $100k
- $90k in student loan debt, on track for PSLF forgiveness in 3-4 years
- $100k in the bank in various savings and retirement accounts
- Any potential inheritance would likely be <$1M and split with siblings

General plans
- We plan to combine finances and consider earnings/assets/debts acquired after marriage as joint property.
- We're hoping to purchase a home and start a family in the next year or two. Person 1 has the uterus but doesn't expect to leave the workforce for an extended period of time.
- A's family money has always been intended to help with life's big ticket items and will probably be tapped for some wedding expenses and a healthy down payment (in lieu of using other savings, borrowing from retirement accounts, etc). Our understanding is that any money taken out and used this way would become joint property, which is fine.

Concerns in the unfortunate event of divorce
- A's remaining family money should stay with A and their family. 1 is fine with that but would like to make sure any children they might have are accounted for.
- 1's student loan debt should stay with 1.
- If not for A's family money, A and 1 would be contributing far more equally to major purchases. 1 would like to somehow have some acknowledgement of this "lost opportunity" to contribute to joint assets and to build equity.
- Everything else could probably be divided evenly.

1. Are the amounts of money here significant enough to warrant a prenuptial agreement?
2. Is the idea of 1's "lost opportunities" something that even be defined in a prenuptial agreement?
3. Several of our concerns are pretty standard, for instance, many states already consider inheritances and premarital assets/debts to be separate property by default. We'll be consulting with real lawyers, of course, but if we're satisfied with how New York divorce law addresses our concerns, do we really still need a prenup?
4. Are there other things we should consider including in a prenuptial agreement?
5. What is the actual process of preparing a prenup and how much should it cost? Neither of us have much experience working with lawyers. What should we be looking for in a lawyer? Should we expect to have extended discussions with the lawyer or is it mostly sending documents back and forth? Feel free to go into as much detail as you can stand!
6. Does anyone have a recommendation for a lawyer (or two) in the NYC region?
posted by anonymous to Law & Government (15 answers total) 1 user marked this as a favorite
I'm not quite understanding your "lost opportunities" point. If y'all are using A's inheritance for a down payment, etc., and that becomes joint money at that point, aren't you both building equity with that? Maybe you are referring to something else and I'm not quite following.
posted by sillysally at 7:03 AM on September 16 [3 favorites]

Yes, they are high enough to support a pre-nup. Thought experiment: If Person A keeps that $1m, and it grows at 7% a year and stays married for 10 years: $2 mill. in 20 years $4m.
Along with other assets, that pretty significant. If person A gets divorced in 10 years, they lose $1m, which sends them right back to square 1 which is a still a good square, but you get the point I'm trying to make?

I think even if states consider inherited money (already inherited I mean, not future) as personal assets, they generally consider the gains to be marital property. In that case, 10 years married, Person A keeps $1m but splits million #2 gains, or gets $500k.
posted by The_Vegetables at 7:44 AM on September 16

First, I think you need two lawyers or each of you needs a lawyer to represent each's own interests.

Second, as I have told the story before, my grandfather used to tell me, "Augie, sometimes I cannot afford a bargain." $7,500 seems like a lot, but only if you assume nothing will go wrong with the document in a divorce. I think that is not a good assumption. I am not saying to go with the most expensive lawyer, but I am saying that when it comes to potentially millions of dollars that are trying to be protected, $7,500 is not that material of a number.

You're not breaking new legal ground here, but you do want to get it right. I can speak from experience when I tell you that even the most amicable divorce can go sideways when (relatively) large sums of money are involved.

I am in NY, but because of my experience, I cannot recommend an attorney that I have confidence will get it right. I do know that every attorney that I know is going to be expensive if you think $7,500 for a ironclad document protecting millions of dollars is expensive.
posted by AugustWest at 8:20 AM on September 16 [5 favorites]

There's a great podcast called Life/Death/Law by California attorney Liza Weiman Hanks. Her first episode was about prenups. She cannot be the attorney you need but the episode might help you do more thinking about the issue before you find the attorney of your dreams. Good luck!
posted by Bella Donna at 8:49 AM on September 16

I married someone with debt; we both owned small businesses. We lucked into a lawyer who was sensible. He talked with us about the way the law treats marriage financially. We agreed, in a simple document, that his business and his debts and my business were not to be treated as marital property. Over time, books will hlep.we had a child, I sold my business, used the proceeds as a down payment on a house. We typed up a simple document saying where the assets for tha down payment came from, and that if we divorced, that would be taken into account. We did divorce, that document saved the house for me, allowing me to support our child when my ex- provided no support.

Read some layperson books about marital law, the state website may be of use. Do-your-own-divorce Talk about your assets, debts, what's fair, what your financial goals are. Talk about the finances of having kids. Try to get an understanding of what you want in an agreement. Find an experienced family lawyer who can provide further advice, and draft said agreement.
posted by theora55 at 11:25 AM on September 16

You'll need one lawyer to draft and represent one person and a separate lawyer to represent the other person. I think most of these questions are best left to the lawyers you find and yes, if there is inheritance and debt, a prenup is a completely fine idea, even if you think you like New York law. Judges are not robots in applying the law and the prenup helps set forth what your agreement is no matter what the law and the judge might do and it's helpful.

The process could be something like one consultation about what your concerns are, reviewing a draft document that hopefully addresses those concerns and asking followup questions, having opposing counsel do the same with your partner, and both of you signing the documents after questions are answered and any changes are made. In case it is helpful, in a much cheaper legal market, my friend-of-the-family price was $1,500, if I recall correctly. I would not expect that in New York, although $7,500 seems high. If it makes you feel better, it's way more expensive to fix things where there's no prenup and there should have been.
posted by *s at 11:48 AM on September 16 [1 favorite]

IANAL, but have looked into this. New York State law is pretty straightforward on this sort of thing. The things you "bring into the marriage" generally speaking are not considered "marital property" subject to a split in a potential divorce, this includes both assets and debts. "Family money" inherited by one spouse during the course of the marriage is also usually not considered "marital property." Unless these things are commingled with marital property. Examples of commingling would be putting non-marital money into a a joint account, using non-marital money to purchase a home, putting marital money (i.e., money earned during the marriage or held in a joint account) into the same account as non-marital money, using marital money to make payments on non-marital property, consolidating debt during the marriage, etc. The trust money is likely not reachable. There are ways this can become more complicated, of course. Memail for a recommendation in NYC.
posted by slkinsey at 2:55 PM on September 16

Could you get a local referral from the firm that handled the trust? They build goodwill and foreshadows continued success with the trust.
posted by childofTethys at 7:56 PM on September 16

Several of our concerns are pretty standard, for instance, many states already consider inheritances and premarital assets/debts to be separate property by default. We'll be consulting with real lawyers, of course, but if we're satisfied with how New York divorce law addresses our concerns, do we really still need a prenup?

There is a chance one or both of you might not live in NY in the event of and at the time of a divorce, so you could be subject to other state laws, so yes I would still get a prenup if it's something you want to do.

I read a great article on this once, I can't find it now, but also remember that the prenup is not just to protect the wealthier spouse - it's to protect the less wealthy one too. Your plans now are for Person 1 to not stay home with any future kids, but circumstances could change, or they could be out of the workforce for other reasons, chosen or forced upon them. You want Person 1's student loans to be their responsibility, but also remember those loans are probably what got Person 1 able to contribute their future income to the marriage. If person A was out of the workforce, would their trust support them/half the marriage, or would Person 1's income? If it were Person 1's income, is it still fair that they keep all of their trust when Person 1 has been supporting them? There are a lot more things to think about along these lines, but just a few starting points to remember that you should both have your own lawyers, and the prenup is to protect BOTH of you.
posted by sillysally at 8:21 PM on September 16 [1 favorite]

As a point of information, can someone decipher "babby" for me? Acronym or just another inside joke I am missing? I have googled. Thank you.
posted by alwayson_slightlyoff at 11:30 PM on September 16 [1 favorite]

alwayson_slightlyoff, it's from Yahoo Answers: How is Babby Formed at Know Your Meme; 2008 Virginia Heffernan NYT piece (brief excerpt here).

OP, I'm also confused by the 'lost opportunities' concern -- the family home should be in both names, with partners building equity equally.

4. Are there other things we should consider including in a prenuptial agreement?

Person 1's "$90k in student loan debt, on track for PSLF forgiveness in 3-4 years" & the plan to "... start a family in the next year or two. Person 1 has the uterus but doesn't expect to leave the workforce for an extended period of time"

could come into conflict. Pregnancy, as a medical condition, may cause Person 1 to spend more time than planned out of the work force. The eventual child/children might have specific needs early on, and the parent making less money tends to be the one to take time away from their career to provide care. One qualifier for public-service loan forgiveness is full-time employment. Talk over putting something in the pre-nup about the student loan debt, should the PSLF derail because of unexpected family-related circumstances.
posted by Iris Gambol at 12:04 AM on September 17 [3 favorites]

From the OP:
Thanks for all the replies so far! We have several new things to consider already...

To clarify the "lost opportunities": In an extreme and simple example, if for some reason we purchased a house entirely with A's family money, one could make the case (pre or post nup) that 1 should have no claim to the house. But if we hadn't purchased family-money-house, we probably wouldn't be sitting around twiddling our thumbs, we could've bought a house that both partners would have an 50/50 claim to. That 50% claim is what is meant by "lost opportunity". Basically, 1 would like it acknowledged that they aren't coming into the marriage with nothing, that choosing to use A's family money isn't necessarily without cost to 1*, and that cost should be taken into account in case of divorce.

A more general add-on question: Running alternative scenarios like this family-money-house or all the possible employment variations or medical issues gets super convoluted and super exhausting really fast. Do prenups for "normal" people typically get so specific? We were originally hoping for something simpler, like what theora55 described.

* Sort of like how the courts can account for a stay-at-home parent's delayed career opportunities, reduced retirement contributions, and non-financial contributions to the marriage.
posted by loup (staff) at 11:38 AM on September 17

Thank you, Iris Gambol.
posted by alwayson_slightlyoff at 7:27 PM on September 17 [1 favorite]

Andy Izenson is a Brooklyn-based lawyer whom I occasionally worked ‘against’ - as the reviewer for the second party, when I was doing some family law and prenups. They are good people and the firm does a lot of great work.

I have often wished that at the very least everyone getting married would have a thorough legal consultation to understand the significant legal relationship they are creating. I think you should at least meet with a lawyer who inspires confidence and let that guide your decisions about a prenup.
posted by Salamandrous at 3:57 AM on September 18

Above I linked to a podcast about prenuptial agreements from Liza Hanks, who is a family and trust attorney in California. She talks about how creating trust or agreements around money is an opportunity to embrace your values as a couple and as individuals. This doesn’t have to do with the prenuptial agreement but early on in my marriage, I made more and my spouse made last, and we paid rent proportional to our income. I mention this only because one way of trying to make the agreement more helpful would be to identify the principles that matter to you rather than trying to foresee every possible situation. Good luck!
posted by Bella Donna at 6:51 AM on September 18

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