My Kid Won’t Insist on a PreNup: Now What?

So, your life story is pretty simple. Graduated engineering school and got recruited by General Electric in 1980. Married in 1982. By the 1990s you were creating new stuff for GE when Jack Welch was taking it into finance. You were offered the chance to “buy out” your division for a cheap price. You and some others did just that and, in 2020 some private equity guys agreed to pay you $10 million for your 20% stake. You stuck the $8 million you netted in an index fund and today that 8 is now $13.5.

Along the way came Clara. Born in 1995, she’s an only child and is now a pulmonologist at UPMC. At 31 she met Mr. Right and they are engaged to marry in December. Mr. Right is a cardiac care nurse making about 25% of what Clara now earns. That’s a little strange but he seems like an upright guy and they seem to get along well.

You saw your lawyer at the engagement party. He took you aside and asked whether Clara was getting a prenuptial agreement. Hmmmmm. Attorney sez: “Look dude if you fell dead on the night we celebrated your $10 million closing and Clara was married to him and your heir, that $5.5 million dollar index fund gain in the past five years could mean she could owe Mr. Right $2.75 million. Are you chill with Mr. Right getting $45,000 a month of your money because he spent 60 months married to your kid?”

Once you recover from that missile strike at your engagement party, you corner Clara. “Look honey. I like him. He’s gonna be fine. I liked that pediatrician you dated better but that’s history. But, you need a prenup to protect you and to protect what I plan to give you as it grows in value.”

She’s a sensible woman but your daughter is not pleased by your involvement in her marriage. After a week, she calls you to say that she discussed it with Mr. Right and it’s just not the “right” thing to do.

Now what? You understand her position and were it only her money at stake, you would back off. But, this is the money you want to give her, not them.

Well there is a solution, albeit an uneasy one. You go back to your lawyer. “Write me a memo about how I, (dear old Dad) want an agreement that Mr. Right waives rights to claim any assets I give my kid. Ever. Put in the memo what you told me about how he could get thousands or millions of my money just because he married my daughter. And then recommend to me that, without a prenup, my estate will go into trust until a waiver agreement is signed. The trust will give Clara the income from my estate for life with the balance going to the Salvation Army or the Daisy Hill Puppy Farm when Clara dies. But if an agreement is signed by which Mr. Right does “right” by me, Clara gets the balance of the estate once the trustee approves the waiver agreement.”

You get that memo. You attach your own letter to Clara in which you say you are fine if she gives Mr. Right all her income and assets. But the lawyer memo will become your estate plan unless a prenup or other agreement is signed waiving claims to your assets. You suggest Clara discuss it with Mr. Right.

Not ideal, but you are marking boundaries between “their life” and “your money.” That often gets muddy in the prenuptial world. It doesn’t need to be rushed to have signed before the wedding, but it needs to be signed before Clara steps into your $13.5 + million.