A premarital agreement is a legally binding contract between two people who intend to marry that determines the property rights of the surviving spouse upon the death of the first spouse and that may also determine property and support rights if the marriage ends in divorce.
Not so long ago the typical person considering a premarital agreement was older, had been widowed or divorced, and had children from a prior marriage for whom he or she wanted to provide at death.  A premarital agreement remains a useful planning tool for such individuals.  When there is a significant disparity in property and income between prospective spouses, the economically better-off partner may wish to limit his or her financial obligations, especially in the event the marriage ends in divorce.  Even when such persons are in comparable economic circumstances, each may wish to preserve their own assets and to avoid disputes with each other if marriage ends in divorce, or with the other heirs of the deceased spouse if the marriage ends in death.  Often, because of their ages, there is no expectation that the couple will have children together.

As premarital agreements have gained favor as a means to resolve financial and property rights in advance, more and younger couples entering into first marriages seek them.  There are no reliable statistics documenting this trend, or the reasons for it, but the author’s experience, coupled with an informal and unscientific survey of colleagues, suggests that the trend is real.  There appear to be several reasons for it:

• Today’s young adults will be the beneficiaries of the tremendous wealth built by their grandparents or great-grandparents:  the frugal children of the depression, the post-World War II period, and their own successful parents.  Sometimes wealth coming from the older generation is in the form of a family business in which the bride or groom is, or expects to become, active.  Parents, wishing to preserve their wealth in the family, urge their children toward premarital agreements.  The reality of this factor is borne out by the frequency with which the longtime attorney for the parents of the bride or groom is called upon to draft and negotiate the agreement.

• Many of today’s young adults had a front row seat at their parents’ divorce and now seek an alternative to the sometimes bitter fighting that sapped energy and resources from the family.  Some of these young adults witnessed the tensions that can arise over disposition of property after the death of a parent, or grandparent, who was married several times and did not plan for the allocation of property among the widow or widower and the children and stepchildren.

• Many young adults are delaying marriage until their early 30s.  Some of these more mature young people have established careers and have built up assets, often have acquired a home and retirement benefits, or have become wealthy as entrepreneurs.  A premarital agreement is one way for such persons to protect their premarital wealth as a separate asset.

• Premarital agreements have gained much wider acceptance generally.  The notion that a premarital agreement represents a lack of faith in the future of the marriage is fading.  More persons getting married are considering whether a premarital agreement is appropriate for them—and they are not for everyone—while still holding on to their belief in romantic love.

When a couple is young, they, and the attorneys who represent them, must recognize that the approach to formulating the specific terms of the agreement should not necessarily be the same as for a couple over 50 with independent assets and the means of supporting themselves.  There are several key factors that parties, and their attorneys, should take into account:

• The couple may have children together.  Children change everything.  Even if the couple assumes they will both continue to work fulltime, their plans may prove unworkable.  A child may be disabled or otherwise require an unusual level of parental attention.   The couple may discover, after a child is born, that having a parent at home suits both of them.  Or, the couple may realize that it is in their common economic interest that one career take a backseat.

• The younger the couple, the longer the timeline that must be taken into account.  A 30-year old couple getting married today may still be together in 60 years.  The number of unknowns in their lives is virtually impossible to contemplate and plan for in a contract.  Younger couples tend to focus on the possibility the marriage may end in five or ten years and on terms that may appropriate if that occurs.  They have much greater difficulty contemplating a 60-year marriage that ends in death and the terms that would be appropriate and fair after so many years.

• A corollary to the above is that any provision of the agreement that fixes the rights of the economically disadvantaged party at some predetermined level will likely be grossly unfair to that party if the marriage ends, whether by death or divorce, after 20 or 30 years.  He or she may develop health problems and be unable to work.  Inflation may erode the value of a fixed cash payment.  There are also risks for the wealthier party in fixing an obligation at a predetermined level.  If that party loses his or her wealth because of business reverses or bad investments, he or she will remain liable to meet the financial obligations established under the agreement.