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Prenuptial agreements aren't just for zillionaires (or even just for men) anymore. Here's why you need one, what you should ask for and what the courts will uphold.

On the romance scale, Jeffrey Cohen's proposal to Jackie Stewart ranked pretty high. Cohen, a 42-year-old corporate lawyer from Manhattan, flew out to meet her in Bangkok, where she'd paused in a yearlong round-the-world vacation. The night before they left the city, Jeff turned to Jackie as they relaxed in their elegant hotel room looking out on the river and popped the proverbial question. She accepted. Jeff knew that Jackie's favorite gemstone was ruby, a Bangkok specialty, so before leaving the city the next day, they visited a jeweler and picked out a beautiful ruby engagement ring.

The romance continued. For months after she returned to New York in December, Jeff would propose to her all over again: in Riverside Park, as they were walking down West 73rd Street, on a later trip to Costa Rica. "I haven't asked you yet today," he'd say. "Will you marry me?" The answer was always yes. But Jackie, now 40, was starting to think about the practical aspects of getting married. She found a place to hold the wedding, a beautiful penthouse on Fifth Avenue, with stunning views of the city skyline. She arranged to have her dress made. She found a rabbi to officiate. And oh, yes, one last thing: She told Jeff she wanted a prenuptial agreement.

After 18 years in banking, Jackie had accumulated some significant assets, including her 401(k) and a Manhattan apartment. Before she walked down the aisle, she wanted to make sure her hard-earned property would remain hers should the marriage fail. "I'm a banker," she says. "In my business we always say, 'Hope for the best and prepare for the worst.'"

But Jeff resisted. "Why would we need it?" he asked. He didn't have as many assets to protect, but more important, he found the idea of a financial contract governing their relationship off-putting. "I thought it would de-romanticize our marriage," he says. But Jackie was firm. "I just didn't want there to be any misunderstanding between us, and wanted to avoid a situation where you're holding a (financial) stick over somebody's head," she says. Jackie got help from an unexpected source: Jeff's lawyer, Arlene Dubin, was a true prenup believer -- she's even written a book about them, Prenups for Lovers.

After discussing it further with Jackie and Arlene, Jeff began to come around. He saw the practical side of the prenup. "I love Jackie, and she loves me," he says. "But marriages can and do end in acrimony. And on the remote chance that happens, it makes sense to have the distribution of assets codified." He even found a positive side to the prenup, reasoning that they'd come to more generous terms with each other if they settled on them in the glow of love. Plus, forging the agreement would mean giving the woman of his dreams something she really wanted -- what could be more romantic than that?

Do You Need a Prenup?

You do if:

  • You have much greater assets or earn far more than your partner -- Divorce courts usually award the poorer spouse anywhere from 10% to a full half of the marital property (including household income and possibly inheritances).
  • Your partner has substantial debt -- You could end up sharing the burden in a divorce settlement.
  • You have children from a prior marriage -- They need to be protected (and have their college tuition paid) if you die or get divorced for a second time.
  • You own part or all of a business -- An ex-spouse can claim a share, unleash an army of nosy accountants to perform a valuation or even force a liquidation.
  • You're planning to put your partner through school -- If your spouse earns that medical degree and then splits, a prenup will ensure that your contribution is rewarded.

The couple agreed to keep the property they owned before they married separate, but that any assets acquired by either of them afterward would be shared 50/50. They opened a checking account in both their names and signed the prenup on the dotted line just a few weeks before their August 2000 wedding. A month ago Jackie and Jeff celebrated their first anniversary. Has the prenup "de-romanticized" things, as Jeff feared? "Not at all," he says. "What's important is that I love Jackie very much, and she feels the same way about me. Having the prenup hasn't changed a thing between us."

Not too long ago the only people who signed prenuptial agreements were celebrities bound for three-minute marriages or aging (male) business titans with younger trophy wives. But in the past five to 10 years, it's become much more likely that a couple choosing to use a prenup consists of two professional adults, each with assets, who don't necessarily want to toss everything they have -- or will have -- into the communal marriage pot. Many of these spouses-to-be are marrying for the second or third time and already have children they want to protect financially. And increasingly, as in Jackie Stewart's case, it's the woman rather than the man who initiates the agreement.

There are no hard statistics, but family law attorneys agree that more people are walking down the aisle with prenups in their hands than ever before. In a poll by the Institute for Equality in Marriage, 16% of respondents said they had one in place. Couples who marry in their 30s and 40s are more likely than in previous generations to go this route. Prenups are spreading to unlikely places: Last year a group of Orthodox Jewish rabbis called for using prenups so women whose husbands won't grant them a religious divorce can get out of their marriages.

You'd have to be truly blinded by love not to admit the practical value of a prenup when half of all first marriages end in divorce and an even more depressing 60% of second marriages dissolve. But men and women who negotiate prenups today say they aren't necessarily pessimistic about the staying power of marriage. "It's not about preparing to fail," Canadian Dann Kingsley, 31, tells his fiancee. "Just like car insurance doesn't mean you're planning to crash." (His intended, Natalie Dugas, 27, is still thinking about it.)

Conceived and carried out correctly, prenups don't have to be antagonistic or punitive. Dealing with the financial nitty-gritty, happy prenup owners say, is a healthy way to get communication flowing -- in all areas. Why not get the hot-button issues aired now rather than later? To Marcy Syms, it wasn't about communication. For her, a prenup was simply the prudent thing to do. Back in 1985 she was already the president and COO of her family's business, New Jersey-based clothing retailer Syms Corp. Syms believes that anyone in her position "absolutely must have a prenup, to keep the business in the family." When she brought up a prenup with her fiance, a Wall Street analyst, it was "very well received," she says. "I knew he'd think it was the intelligent thing to do."

Unfortunately, the marriage ended three years later. But it was the prenup that kept the process civil, Syms says. "The whole thing went very smoothly. While the marriage didn't work out, the divorce did -- because we stuck to the terms of the prenup."

For many would-be spouses, however, this subject still carries a volatile emotional charge, especially when it's first put out on the premarital table. One way to get comfortable with the idea -- or make a certain someone else more comfortable -- is to realize that the goal of a prenup isn't always to stop one spouse from getting their grubby paws on the other's goodies. The agreement should protect both spouses by guaranteeing they'll be compensated fairly.

If Gigi Villanueva, 34, and her husband, Juan Carlos Fishberg, 53, split up, she gets a percentage of the value of the Hudson Rehabilitation Medical Center's net worth. Her husband started the business, situated in West New York, N.J., but she's worked as chief operating officer there for the past four years. "The challenge in this was to balance our interests," she says. "He wanted to protect his business, but I deserve my fair share."

Even after you've negotiated the emotional minefield, there are plenty of legal and logistical pitfalls that you must avoid. Dave Reed, 37, owns a high-tech manufacturing business in Rancho Santa Margarita, Calif. One day before his wedding -- two hours before the rehearsal dinner -- Reed and his fiancee hastily finished their agreement and got it notarized in the Mail Boxes Etc. store near their home. "A little last-minute, don't you think?" the notary asked with a sneer.

The really dicey part came after the wedding. Reed basically put the prenup out of his mind -- including the clause he agreed to in the car outside Mail Boxes that voided the agreement in six months (he thought they'd renegotiate it before that time). So when they divorced six years later, the whole document was invalid. "If we hadn't been so rushed at the end," he says, "this probably never would have happened." Reed estimates that taking his eye off the ball this way cost him a cool million.

So you can see that prenups are a handle-with-care proposition. How can you and your betrothed pull this off successfully? First thing: Though there are online and do-it-yourself kits available, each of you really needs your own lawyer, one who knows your home state's property and prenuptial laws backward and forward. Those laws vary considerably, but in most states, in order for your prenup to be valid and enforceable, it will likely have to meet these standards:

Full disclosure
You must both fully disclose your assets. Your lawyer can help you draw up a list of items and their value, which is generally attached at the end of the agreement.

The Uniform Premarital Agreement Act of 1983 prohibits agreements that are "unconscionable" -- carrying out the terms can't leave one of you destitute, for example. And what's fair when you sign has to remain fair when you split up, or a judge may overturn the prenup.

No coercion
Both parties have to fully understand what they are signing and do so freely. When coercion is cited, the timing of the agreement is frequently a factor. Shoving a prenup under your intended's nose the night before the big wedding and saying, "Sign it or else," for example, is not only bad manners, it's coercion, according to many courts.

Okay. You've got the disclosure, fairness and timing parts under control, and you're ready to move forward. What should you ask for, what should your prenup actually say? We'll get to that. But first, you need to know what not to ask for and what prenups shouldn't try to cover.

Some couples write -- and the media eagerly report -- all kinds of wacky clauses into their prenups, stipulations that extend into every aspect of married life. A New Mexico couple, Rex and Teresa LeGalley, signed a much publicized prenup a few years ago decreeing, among other things, that they would have sex three to five times a week, always pay cash, not leave anything on the floor overnight and turn off the lights promptly at 11:30 p.m. (wake-up time was 6:30 a.m.).

The problem with these "creative" clauses -- and even such family decisions as which religion the kids will be brought up in -- is that they're unenforceable. "You can't expect a court to get involved in these very personal, private agreements," says Violet Woodhouse, a family law specialist and author of Divorce & Money. Probably the most important provisions that don't belong in a prenup: child custody or support arrangements. Should it come to a divorce, experts say, these agreements will be upheld only if the court feels they're in the best interest of the child.

So what does belong in a prenup? Here are the major points you need to address:

This is the biggest of the biggies, deciding how the assets will be divided if you split up. Remember that in addition to your savings and investments, home, furnishings and cars, "property" also means your retirement plan, your earnings, your stock options and any business you have an interest in. Professional licenses or degrees may be considered property too, especially if you supported your spouse while he or she went to school to get them.

There are two standard ways to go here (with every conceivable variation in between). One: The property that each of you brought to the marriage will be considered separate, and any property that either of you acquire afterward will be considered marital or joint. Option two: You continue to keep all assets separate after marriage. That's what Dann Kingsley, who lives near Toronto, is proposing to his fiancee, Natalie Dugas. She's studying to be an oral surgeon, and Kingsley, who works in local government, estimates her earnings potential is about 10 times his. "I thought a prenup would show her I'm willing to concede right now that I'm not interested in her money," he says.

However, just keeping property in one name isn't enough to keep things separate. You really have to treat it as if it's yours alone. If you keep a separate brokerage account where you've always invested your annual bonus, don't let that account be the one you both start using to save for a trip around the world (unless you want to share that money when you divorce).

Appreciation is a crucial consideration when it comes to property, but it sometimes gets overlooked. What happens, for example, if you agree now to split marital property 50/50 and then your earnings really take off? Unless you exclude appreciation in the prenup, your ex may well be entitled to half of that bigger pie. Absent a prenup, stock options -- and any appreciation on them after the exercise date -- will typically become marital property as well.

Should Gigi Villanueva and her husband have a baby, she'll take as much as two years off from work. If they subsequently divorce, her prenup says she'll be entitled to spousal support (the more PC term for alimony), compensation for the income she forfeited while raising the child. In some cases a spouse will waive his or her right to alimony in the prenup. But those agreements may be overruled later if a judge feels that the spouse who waived won't be getting a fair shake.

Estate planning
People getting married for the second or third time often have kids from previous marriages and will use prenups to "keep it in the family." B.B. Simmons, a 38-year-old from Cincinnati, intends to put much of what he's bringing to an upcoming marriage into trust for his kids, ages seven and nine. "They need assets put away for college," he says. "It's not about (my fiancee); it's about protecting my children."

To do this, you'd typically waive your rights to each other's estates in the prenup, and then both will your separate estates to your respective kids. (If you have additional children together, you'll need to decide on a different way to divvy things up.)

Here you must be careful to avoid conflict between your prenup and your will. For example, stating that each party will be responsible for their own premarital debts can cause trouble if one spouse dies. The husband's will might leave the wife the house they lived in, one that he'd bought before they married. The rest of his estate goes to his kids from a previous marriage. But because of the debt provision, the children may suddenly find that their inheritance is wiped out because they must pay off the mortgage, while the wife hangs on to the house, debt-free. Big estates and/or complicated wills make it worth paying extra to have an estate lawyer look over all the prenuptial documents.

Your prenup is a private document now, but if you get divorced, it may be introduced as Exhibit A -- remember full disclosure? Better to agree that the document stays between you and your intended (and your lawyers).

Once you've got your prenup thrashed out, it's time to think about changing it. That is, you should agree to review and update the prenup as your life evolves. Or you can phase it out completely over time, say, 10 years. Some lawyers recommend these "sunset clauses,'' especially if the issue the prenup addresses no longer exists; you've paid off the IRS, for example. Charleston, W.V., attorney Mark Kelley prefers to call this "planned obsolescence.'' Not for the marriage, mind you. Just the prenup.

Additional reporting by Chris Taylor