Albert and Victoria were interested in marrying as they had cohabitated for many years, but they had not tied the knot. Both were retired – Albert was widowed and Victoria’s former relationship ended in divorce. Albert and Victoria had separate assets, with Albert’s estate being the larger of the two. Albert wanted to enter into a prenuptial agreement with Victoria before taking his vows. Victoria was offended at the idea. They had been through multiple sets of attorneys – mostly divorce lawyers – unable to come to an agreement that would then open the door to a beginning of a new stage in their lives.
So they continued to cohabitate, both wanting to marry but at a standstill as far as the nuptial agreement went.
“You’re looking at the prenuptial agreement all wrong,” I suggested when they came to visit. Both of them seemed puzzled at my thought. I continued, “You’re looking at it the way a divorce attorney would look at a prenuptial and not the way an estate planning attorney would look at it.”
“What do you mean?” Albert asked.
“So far, you’ve described a scenario where Albert’s attorneys were trying to give Victoria as little as possible in the event of a divorce or Albert’s death. At the same time, it appears that Victoria’s attorneys were trying to do the exact opposite – get Victoria as much as possible in either event.”
“Isn’t that to be expected?” Victoria asked.
“I suppose so,” I added, “but it’s no surprise that when you come at a situation from opposite ends of the spectrum, it’s harder to agree where the middle is. What if we started at a point that you both consider the middle and work from there?”
Albert and Victoria seemed to like that approach.
“So let’s look at the reasons you’re wishing to enter into a nuptial agreement first, and see if we can work into what you both might consider a fair middle ground.” I said.
During our discussion I discovered that they both had valid concerns about the future of their relationship. Albert wanted a life companion that would be there for him “in sickness and in health, ‘til death do they part.” He was concerned that when the going got tough, Victoria would bail. Without a nuptial agreement she might take half of what he owned in that event, and she wouldn’t have lived up to their bargain.
Victoria was worried that even if she was there until the end, there was nothing that would prevent Albert from leaving everything to his children, and nothing to her. While she recognized that Albert’s children should be entitled to as much as half of his estate at the time of his death, he had promised her that he would be there financially for her in her elderly years.
I began by asking, “What would both of you living up to your promises look like?”
Albert and Victoria described a scenario where they stay together until the end. If Albert died first, Victoria would want the income from half of his estate, along with a life estate in the home where they resided together. She would expect Albert’s estate to dip into principal if she needed it for important emergencies such as health, maintenance and support – if her assets were insufficient for those purposes.
Albert agreed with Victoria’s thoughts.
My next question got tougher. “So let’s look at what the penalty should be if either of you doesn’t live up to your promise of ‘til death do us part.’ What happens if you get divorced before that time?”
After some discussion it was agreed that there would be a sliding scale starting at 10% and moving its way up to 35% of the estate for Victoria if they got divorced. The scale would be based upon the number of years together. It didn’t rise to 50% because that was the amount agreed upon if they lived up to each other’s promises. There had to be some kind of penalty for the failure to get to that point.
Provided they stayed together to the end, Albert agreed that Victoria would get a life estate in the residence plus a marital trust for fifty percent of the value of his estate excluding the residence if she survived him. The remainder of his estate would be distributed to his children. He was willing to put this promise into the nuptial agreement, draft a new will and trust to evidence his promise, and attach it to the agreement as an exhibit.
In order to have a valid nuptial agreement, both sides had to be represented by separate attorneys, and that’s what we did to actually draft the agreement. But before we got to that point, this initial meeting was critical. What I tried to do was change the way that Albert and Victoria viewed the nuptial agreement. Rather than it be an adversarial zero sum game process, I tried to turn it into a more detailed understanding describing each other’s expectations surrounding their marriage.
During the course of our one meeting we were able to come to a middle ground that made them both happy. I don’t think that middle ground could have been achieved had we not talked about the reasons that they wanted to get married, what they felt their expectations were of one another, and how meeting those expectations should be rewarded (or penalized) if they were met or not.
Albert and Victoria were both relieved and thankful once we got this emotionally trying mess out of the way. I hope that if you find yourself in a similar situation, you can look at it like Albert and Victoria were able to – and come to a reasonable middle ground.
© 2018 Craig R. Hersch. Originally published in the Sanibel Island Sun.