Prenups are a sensitive subject
How do you talk with loved ones about a prenuptial agreement? This is the most challenging part of the process, says Angela Gloy, Purdue University Extension ag economist. “A prenup is often looked at as a vote of ‘no confidence’ in the upcoming marriage, and invites emotional stress and anxiety,” Gloy says.
“Recall that prenups are not relevant only to divorce, but to death of a spouse — an often-overlooked fact. For some, the emotional piece can be difficult to objectify for the good of the farm business. For others, the business management risk is simply easier to talk about.”
• Prenuptial agreements are more than a business decision.
• Allow couples to investigate the idea of a prenup early and slowly.
• Last-minute surprises in prenups rarely work.
No one chooses their last day, Gloy continues, and some marriages survive and some don’t. “In the absence of a prenup, the state dictates property distribution,” she observes. The question is whether couples would prefer an alternative distribution scheme.
Positioning the prenup as a management decision can minimize downside risks. “If both individuals can agree that the farm business is central to their personal and financial futures, then taking precautions to ensure its economic viability is a joint effort,” Gloy explains. “Looking at farm success as a common goal for newlyweds, and their common effort to protect against big economic risks, helps refocus the purpose of the prenup.”
Approach it in steps. Discuss it privately over time. Put your questions and concerns on paper and meet with a trusted attorney. “We often worry because we lack information,” Gloy says. “Some may feel better if they understand default-state divorce laws about property and spousal support.
“Others may see a prenup as not as scary as they originally thought because the distance between the ‘with’ prenup and ‘without’ scenarios is smaller than they thought. Finally, the couple might meet with the parents, the current farm owners, to present their thoughts on a prenup and its impact on the farm business.”
New couple’s perspective
How well the idea goes over may depend on when and how it’s presented. “How many current farmers were asked to sign prenups, and what would they have thought at the beginning?” Gloy asks.
Waiting until the bride has her final wedding dress fitting is too late. “She’s more concerned about the right earrings than the future of the family business,” Gloy says. “This topic necessitates careful thought and consideration over time.”
Hayhurst writes from Terre Haute.
This article published in the February, 2012 edition of INDIANA PRAIRIE FARMER.