Trust in Me: A No-Prenup Prenup

January 26, 2021
Categories
Estate Planning Trust Administration

The course of both true love and finance never did run smooth. Up until very recently, prenuptial agreements were something for the rich and famous only. After all, for the rest of us mere mortals, love should be enough to sustain a union, right?

The course of both true love and finance never did run smooth. Up until very recently, prenuptial agreements were something for the rich and famous only. After all, for the rest of us mere mortals, love should be enough to sustain a union, right?

Unfortunately, that's not the reality. With Americans entering into marriage with all sorts of complex financial backgrounds coupled with the reality of modern divorce statistics, the need for pre-marriage financial arrangements is high. However, it is also not uncommon to encounter friction along the way. This is the story of Kathy Sparks, a highly-successful business woman who fell hard for a more traditional-minded man.

When Somebody Says “Yes” to the Dress but “No” to the Nup

Kathy waited to get married until later in life: she dedicated her 20s and 30s to building her online clothing business. In Kathy's case, though, all of the hard work paid off. By the time she hit her 40s she was worth roughly $1.5 million dollars. While most of this was in the business itself, by 2019 she was making over half a million dollars in profit alone. Successful and stable at last, Kathy began dating and fell in love with a dashing older man, Kevin, in his early sixties.

Everything was blissful and they were compatible in almost every way. The exception was money matters. Kathy was no fool: she was aware that getting married with no prenuptial agreement in place to protect her business assets could cause serious problems down the line. Protecting her business was important to Kathy, because she had spent so much time nurturing it: time that may have otherwise been spent getting married and having children. In lieu of children, Kathy was an animal lover: a vegetarian who was also a staunch supporter of and donator to the ASPCA. She planned to donate her business’ profits to save animals after her death.  However, Kevin was very much against signing any kind of prenup because, in his view, marriage was eternal. He was willing to break the engagement over it.

The prospect of losing Kevin was devastating for Kathy. However, she was aware that she lived in a community-property state. Thus, getting married without protection for her business was a risk she was not willing to take. She loved Kevin, but she loved her life’s work and her principles, as well. 

Trust is Vital to a Relationship: Unexpected Ways

While it may seem noxious to mix love and money, the strongest relationships tackle this head-on. Oftentimes, many people are against prenuptial agreements specifically since they might indicate a potential level of untrustworthiness. One of the first things that Kathy decided to do before moving forward with anything was to seek out counseling. Having a good pre-marriage counselor can help couples through these tough discussions with less judgment and pressure. Kevin was more willing to discuss the possibility of pre-marriage financial maneuvering once he and Kathy were able to have that discussion in a safe, neutral environment.

Ultimately, Kathy ended up deciding not to go for a traditional prenuptial agreement. What she decided to do instead is protect her business using a specialized trust. This allowed Kathy and Kevin to bypass the traditional prenuptial agreement while also giving Kathy's business the protection it deserves.

Trusts are not only for end-of-life estate planning. Contact us at AmeriEstate today to learn more about how trusts can help you through all turns of life.