Prenuptial agreements—contracts that specify how assets will be divided if a marriage ends in divorce—are no longer just for the ultra-wealthy. That’s because even people of relatively modest means are searching for ways to limit the financial downside of divorce.

Prenups make particular sense for those who are remarrying later in life. Such people often have sizable assets to protect…little time to recover financially from divorce…and/or children from prior marriages to whom they wish to leave inheritances.

When couples without prenups divorce, their assets are divided according to the laws of their state. Most are “equitable distribution states,” meaning that courts consider a wide range of factors, including the length of the marriage and each partner’s job skills when divvying up assets. Nine states are “community property states,” in which property accumulated during the marriage is split down the middle. Either way, it’s a long, expensive and highly invasive process. Prenuptial agreements can be an effective way to avoid this mess—but only if they’re handled properly.

RAISING A TOUCHY TOPIC

Probably the hardest aspect of a prenup is that it’s tricky to tell the person you are marrying that you want one. Some interpret this request to mean that you are accusing them of marrying you for money and/or that you don’t expect the marriage to last.

You can redirect some tension by citing the demands of third parties as one of the reasons for your prenup request…

My business partners/major clients/creditors are insisting that I get a prenup if I marry so that they don’t have to worry about who will own my business down the road.”

A relative intends to leave me an inheritance, but he’s insisting that I get a prenup so that he can be sure the money stays in the family.”

My kids are having kids of their own, and I promised to help with future college bills. I owe it to them to get a prenup to ensure that the money is there when they need it.”

If your prenup proposal is met with great anger and hurt, consider yourself fortunate to have learned now, before the wedding, that your betrothed does not handle difficult money conversations well. Fortunately, this often is not a problem with remarriage—people who have been married before tend to understand that marriage is a tricky financial and legal coupling as well as a romantic one.

Warning: Don’t let the discomfort of this discussion cause you to postpone it. If you do not have the prenup in place before the wedding plans are made and the invitations have been mailed, your spouse later could claim that he/she signed the prenup only because of the embarrassment that canceling the wedding at that point would have caused. A court could rule that such a prenup was signed under duress and invalidate it. In fact, it’s best to sign the prenup at least six months before the wedding. And it’s wise to include a provision agreeing to revisit the terms of the prenup after five years to acknowledge that things change, such as finances, needs and physical conditions. This provision might direct that a court or independent arbitrator step in if the spouses cannot agree on new terms.

GET THE PRENUP RIGHT

Think twice about doing it yourself. A prenuptial agreement is like an insurance policy that protects the assets that you could lose in a divorce. You want that insurance policy to be one that you can depend on. Steven Spielberg reportedly tried the do-it-yourself prenup approach before marrying Amy Irving. His self-written prenup was not accepted by the courts, and he lost approximately $100 million.

Make a list of your assets before meeting with your attorney. Include all accounts and major possessions—lack of full financial disclosure could later invalidate the prenup.

You and your fiancé/fiancée each should list your life goals, then compare them. Discussions about a prenuptial agreement can leave the two of you feeling at odds with each other. Comparing lists of life goals and seeing all that you intend to accomplish and enjoy together can start healing those wounds so that you feel like teammates again.

Hire two lawyers. If you hire just one lawyer to draft your prenup, your spouse could later claim that this attorney represented your interests while he/she effectively lacked legal representation. The prenup could be invalidated if a court believes this to be the case.

Each person should select his/her own attorney. Ask lawyers you know who specialize in other legal areas to recommend an attorney with expertise in drafting a prenuptial agreement. If your intended asks for your help choosing, ask your attorney or the state bar to produce a list of the leading attorneys in the region who handle prenuptial agreements, then give your fiancé this list.

An experienced attorney might charge between $1,500 and $5,000 to arrange a typical prenuptial agreement, or even up to $15,000 or more if the lawyer is from a prestigious law firm. Typically, the wealthier spouse-to-be pays the entire fee for both lawyers.

Make it clear that your goal is a fair division of assets when you meet with your attorney. Courts sometimes invalidate prenups that are too one-sided, though typically only if the court considers the division of assets so skewed that no reasonable person would have agreed to it.

A prenuptial agreement usually specifies each partner’s “separate property”—the assets and items that will remain exclusively the property of one partner. It also explains how “marital property”—the couple’s co-owned assets—will be divided in the event of a divorce. The prenup also might specify that premarital debts are the responsibility of the spouse who incurred them.

The line between separate and marital property can be complicated. Be sure that your prenup is written in a way that your separate property does not accidentally become marital property.

Example: A widow remarries and asks for a prenup to ensure that her home remains in her family. This prenup should specify that the home will remain her separate property regardless of whether the new husband lives there and contributes to the home’s upkeep and regardless of whether the couple’s jointly owned funds are used to pay for expenses such as home repairs or homeowners insurance.

A prenup also might specify that certain items will go to the children or other relatives of either person. It might even say who gets the pets.

Take into account other legal agreements. The prenups of those who remarry should take into account obligations under prior divorce agreements. If certain assets and/or income already are promised to the ex-spouse, they cannot also be promised to the new spouse in a prenup—the original divorce agreement takes precedence.

Prenups also can play a role in estate planning. A clause in the prenup could waive some or all of each partner’s rights to the other’s estate. That’s particularly useful for older people who wed but wish to leave most or all of their assets to children from a prior marriage. The prenup must be coordinated with the terms of the will to be effective. Consult with an estate-planning attorney for details.

Consider including a sunset clause in the prenup, so it dissolves if the marriage lasts a certain length of time—perhaps 20 years—to reassure your future spouse that you are willing to share your wealth as long as the marriage lasts for a long time.