Not long ago, I went to my son’s pre-prom party at a friend’s house. Nervous kids were mingling with their dates and parents, snapping pictures before climbing onto buses and limos. There was a lot going on, food and drinks, chatter about colleges, pictures on the cascading staircase.
I couldn’t help but look around and think, “Wow, now is the perfect time to talk to these kids about prenups.”
Truth be told, that may not have been the ideal time to raise the issue with them, but my instincts were not so far off. I tell my clients to talk to their kids about prenups around the time they start dating. If you wait until the wedding plans are announced, your child may be reluctant, and the fiancé may be offended.
Here are four reasons why you should have this conversation before college.
Prenups are a good thing, not a bad thing. The reality is about half of all marriages end in divorce. I had a client who recently updated her estate plan, and was surprised to learn she was recently divorced. The divorce was super easy in her case because she just pulled out the prenup and was able to follow its terms. Clearly she was glad she had one, and it had been her parents who had encouraged her to do it.
Demystify the concept. Talk to your kids when they are young so the concept of having a prenuptial agreement isn’t foreign to them when they do get engaged. Kids need to be familiar with what a prenup can do. Ultimately, they may decide they want one on their own, or their fiancé may ask them for one. Many of my clients raise the issue with their kids themselves and encourage them to sign a prenup.
Protecting your wealth – and your kid’s future wealth – is important. Kids need prenups if they stand to inherit significant wealth, or if you have already begun to transfer wealth to them through a gifting program. They also need prenups if they have started to build up their own assets. It is not uncommon for couples to marry later in life, well into their 30’s when they may have retirement accounts, brokerage accounts and real estate. My clients often express concern that they do not want their kids to think they are wealthy or to know how much they stand to inherit. Be real. Your kids are smart. They pick up clues from your lifestyle – prep school, vacation house, fancy trips, expensive cars, etc. They may not know the exact amount of your net worth, but they have an idea.
It isn’t a commentary about their future spouse. Talking to your kids about a prenup before they are in a serious relationship takes all of the emotion and potential bad feelings out of the equation. It’s more factual. If you wait until they are heavily involved with someone, raising the issue of a prenup may be interpreted as a sign you do not like or trust your future in-law. And if that is the case, then you definitely want them to have a prenup.
The earlier you talk to kids about prenups, the better.
Find an opportunity during their later high school years for an initial discussion. You may want to relay a story in the news about a famous person getting divorced and then segue into what a prenup could have done. Or you may want to do something more formal with your lawyer or wealth advisor.
Some clients will have their children sit with me to get a tutorial on estate planning and to introduce the topic of a prenup. This also gets kids used to having advisors.
You will not be around forever and they need to know the right people to speak with.
At the end of the day, look at educating your kids about prenups as a critical part of their adult education.