While everyone seems to talk about the high cost of weddings these days, few people discuss the potential costs involved in divorce, which can be exceptionally complicated and expensive for individuals with a high net-worth. One way to make sure both parties are protected is with a prenuptial agreement.
A prenuptial agreement is a written contract between two people prior to marriage. For those who own a lot of assets prior to marriage-whether it’s property, stocks, cash, etc.-a prenuptial agreement can be invaluable.
Battles in court over assets can take years and cost a fortune in legal fees and court costs, especially in more contentious divorces. A properly drawn prenuptial agreement can prevent divorce cases from getting out of hand.
Without a prenuptial agreement in place, one or both former spouses could end up losing personal assets to the other, such as family heirlooms. Individuals could also be forced to sell assets, such as the home they live in, and split the money. Or worse, as in the case of Simon and Chana Taub, a judge can order the couple to stay in the home together until all of the property issues are resolved.
In the drama of the Taub’s New York divorce, after Mr. Taub was kicked out the house by his wife, a judge granted permission for him to move back in with her as long as he built a wall dividing the three-story row house so they would not see each other. By the time all of the issues in the divorce were resolved, the former Mrs. Taub had spent $1 million in legal fees, and the couple had to sell their home and two other properties.
The cost of obtaining a valid prenuptial agreement is much less than the cost of fighting in court over property and other assets. It should be viewed as insurance, something the parties hope they will never have to use, but will ultimately save them money if they do end up needing it. Divorce is difficult enough for everyone involved, and a prenuptial agreement can make it a smoother and less painful process.