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Rethinking the Prenup

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My interview with Divorce Corp documentary director Joe Sorge on the idea of requiring financial disclosure of assets and liabilities BEFORE marriage:

ROBERT PAGLIARINI: One of the things I’ve been thinking about for some time is essentially forcing every soon-to-be-married couple to have a prenup. When people think of prenuptial agreements, they often think they’re only for the wealthy. And for the most part, that’s typically the case. Prenuptial agreements can be $10,000, $20,000, $30,000, $60,000 or $100,000 to create in some cases. For the average person, they think, “That’s absurd. I don’t have enough money to do this. Why even consider it?”

But I think there could be a case made for some sort of statutory obligation. When you sign that marriage certificate, there’s already been a disclosure of your assets as well as plan for what happens in case of a divorce. Shouldn’t you talk about these issues upfront and beforehand, rather than waiting until you’re already married? It’s almost too late at that point.

JOE SORGE: I agree, and I think that’s a very good idea. I really think that people who are considering marriage should have the benefit of some type of counselor who’s seen it all and understands these issues. They can walk them through some of the possibilities that might happen in the future, and advise them, “If you feel this way, then I recommend that we put this provision into the agreement or we check this box. Or if you don’t feel that way, then we won’t check that box.”

Listing one’s assets is obviously a part of that. I think that probably needs to be done every year so that it’s clear. When assets have been comingled, they’re now marital; if they haven’t been comingled, they’ve been kept separate. That gives full disclosure to both sides. The way we operate in America today is that neither party really knows everything that’s going on in the other party’s life or in the other party’s finances. If finances are important to you, you need information. So by having the obligation to disclose the assets in one of these documents on a yearly basis, it will bring up the discussion.

People are going to say, “Joe, you’re crazy. That doesn’t promote a healthy relationship.” But I argue the reverse. I say that if the marriage is only about love, and it’s about love and family and all that, then you don’t really care about these things. But if you do care about these things, you shouldn’t be ashamed of bringing it up. I mean, everybody needs a roof over their head. Everybody needs a way to pay for their food, clothing and transportation, and we need to talk about these things.

Unfortunately, our culture today is based on a culture where the percentage of divorces was less than 5%. At that rate, we didn’t need to talk about these things, because everybody stayed married for life. But the sad reality of modern day America is that 53% of marriages end up in divorce. We need to talk about these things. The majority of Americans who get married need to talk about these things because our system is not doing a good job at settling it retrospectively.

ROBERT: I totally agree. I think the idea for many people is that if they start talking about their assets and a prenuptial agreement, it’s somehow going to harm the relationship. Like you, I would argue it’s just the opposite. If you can talk about your finances openly and talk about “What if this happens?” or “What if that happens?” I think it is very conducive to a stronger relationship, because many of my clients are what the family lawyers term the “out spouse.”

The out spouse is the spouse that really wasn’t involved in the finances. They didn’t pay the bills, they didn’t do the taxes, they weren’t involved with the investments or the attorneys, and when they get divorced, they are the “out” spouse. They’re not used to or don’t have the skills to handle their own finances. It’s really tragic, because you’ll have grown adults with a lot of money, and they just don’t have the practical skills or the knowledge to deal with this.

I think if there were discussions before the divorce, these annual discussions about looking at their assets, looking at their income, that they were required to have, they would be much more knowledgeable, and I think the relationship would be better off as a result.