The Legacy Firewall: Prenuptial Agreements as Asset Protection
The Legacy Firewall: Prenuptial Agreements as Asset Protection
Romance is emotional; marriage is a financial contract imposed by the State. Why signing a Prenup is the only way to rewrite the default rules of divorce and save the family empire.
Executive Summary
- The Default Contract: If you don’t sign a Prenup, you already have one. It’s called “State Divorce Law.” In Community Property states (like CA, TX), everything earned or appreciated during the marriage is split 50/50. A Prenup allows you to opt out of this state default.
- The “Appreciation” Trap: Even if you bring $10M into the marriage (Separate Property), the growth of that $10M during the marriage might be considered Marital Property. If your business grows from $10M to $50M, your spouse could claim half the growth ($20M). A Prenup fixes this.
- The Governance Requirement: For wealthy families, a Prenup is often not a choice; it’s a mandate. The Family Constitution (Art. 731) usually requires any heir wishing to receive Trust distributions to sign a Prenup to prevent “outsiders” from gaining family voting rights.
The “Duress” Defense
Why Prenups Fail: Judges will throw out a Prenup if it looks like it was signed under pressure.
👉 The Golden Rules:
1. Timing: Sign it at least 30-60 days before the wedding. Never the week of.
2. Counsel: Both parties MUST have their own, independent lawyers.
3. Disclosure: You must fully disclose all assets. Hiding money here voids the contract later.
Mechanic: Redefining “Marital Property”
Simulation: Business Owner Divorce (10-Year Marriage, Business Grew $40M)
| Feature | No Prenup (Default) | With Prenup |
|---|---|---|
| Business Growth | Shared (Marital Asset) | Separate (if defined) |
| Spousal Support | Judge’s Discretion (Unpredictable) | Pre-Defined Formula |
| Privacy | Public Court Record | Private Arbitration |
“A Prenup isn’t planning for divorce; it’s planning for the continuity of the estate. It ensures that no matter what happens emotionally, the ‘entity’ of the family wealth remains intact and governed by logic, not anger.”