Introduction Despite the horror stories about ugly breakups among doctors, physicians in the United States are actually more likely to stay with their spouses than other white-collar professionals, including lawyers and other non-healthcare workers. Among healthcare professionals in particular, with the exception of pharmacists, physicians are less likely to get divorced than dentists, nurses, and healthcare executives. These findings, which were published in February 2015 in the BMJ,[1]included responses from nearly 49,000 doctors. While this is certainly encouraging news given the very demanding schedules many physicians keep, the reality is that any divorce can prove to be an expensive proposition for everyone involved. But there's a way to lessen the financial pain of a breakup, if not the emotional sting: a prenuptial agreement, or a "prenup." Take the case of a 45-year-old surgeon in New Jersey who was preparing for his upcoming wedding. This would be his second marriage after having been divorced for 7 years. His colleague reminded him about a former partner who had lost half of his sizable investment in his medical practice during his divorce. Disturbed, the surgeon called his attorney to ask his advice. The lawyer's response was unequivocal: "Ask her to sign a prenup." While no one enters a marriage expecting to split up, the reality is that almost 1 in 3 first marriages ends in divorce -- as do nearly one half of second or third ones. Your best opportunity to protect yourself is before you tie the knot. Otherwise, you may find yourself embroiled in a legal battle with dueling experts trying to value your practice both at the time of your marriage and your later divorce. To be sure, few things throw cold water on a courtship more than the mention of a prenup. But as a high-earner -- or a potential high earner -- it may make sense to try to protect as many of your assets as the law, through a carefully considered prenuptial agreement, will allow. Before you dismiss the idea as a romance-killer, consider that your future spouse may be bringing a great deal of assets to the marriage and may also want such a contract for his or her own protection as well. Let's examine the pros and cons of prenups for physicians and their betrothed, using 2 basic scenarios. Young Doctors, First Marriage If this is your first marriage and you're not bringing a lot of debt or assets to the union, you may not need a prenuptial agreement, experts say. But for everyone else, including a doctor who has recently started or is thinking of starting his or her own practice, a prenup could make sense, especially since the stigma around them is starting to fade (albeit slowly). "Prenuptial agreements are becoming more generally accepted as an effective way to protect assets. They're no longer limited to a specific gender or age group," says Marlene Eskind Moses, a past president of the American Academy of Matrimonial Lawyers (AAML) and a principal with MTR Family Law, in Nashville, Tennessee. In fact, a 2010 survey of AAML members revealed that women are becoming more likely than men to initiate a request for a prenup and that the overall number of prenups is on the rise. Part of the reason, experts say, is that people are waiting longer to get married, meaning they may have more assets -- and big debts, such as credit card balances, mortgages, and student loans -- to bring to the union than couples who wed when they're much younger. A prenup can help you preserve those assets (or sidestep those debts) in the event of a divorce. Same-sex couples may also benefit from a prenup, even if their state doesn't legally recognize the union. That's because prenuptial agreements are general legal contracts, which, like any contract, any 2 parties are free to enter into. Laws Vary by State Moreover, without a prenuptial agreement, you could be subject to the laws in your state -- at least 9 of which require a straight 50-50 split of assets accumulated during the marriage, as Steven Spielberg discovered in California. Spielberg and his first wife, actress Amy Irving, didn't have a legally enforceable prenup -- it was written on a cocktail napkin (yes, a cocktail napkin) and there were no witnesses -- so Spielberg was forced to cough up one half of his net worth (a whopping $100 million) when they divorced after 4 years of marriage. In all others states (with the exception of Alaska, which is a mixed bag), a judge will consider what's fair in the absence of a prenup, on the basis of such factors as the couple's ages, the length of the marriage, the number of kids involved, and the role of each spouse in building household wealth. A wife who supported her husband financially as he went through medical school, for instance, may be entitled to a much more generous settlement because of the sacrifices she made while he pursued his dream. "Sometimes the very reason for a prenup is to protect the non-monied spouse," says Ginita Wall, a financial planner in San Diego, California; coauthor of the book ABCs of divorce for Women; and cofounder of the Women's Institute for Financial Education, a nonprofit dedicated to improving women's knowledge of finances. "We had a client who made $4000 to $5000 a month selling real estate, and she wanted to be compensated for that lost income if she agreed to marry him and become a stay-at-home mom. "When the couple broke up some 20 years later, she received all of that lost income as part of her divorce settlement, thanks to the prenup. She took some of that money and used it to help her daughter pay for college." Although we've discussed tangible assets to this point, prenuptial agreements can also be used to hammer out lifestyle issues, including what religion any future children will be raised in and whether they'll attend public or private schools. (Custody and child support issues are determined separately by the courts, so they can't be added to a prenup.) Older Doctors, Second (or Third) Marriage "As more people marry or remarry in their later years, there's an increasing emphasis on protecting pensions and retirement benefits if the marriage doesn't work out," says family law attorney Marlene Eskind Moses. Plus, there are often kids involved in second marriages, as well as older parents who may need expensive care, so couples rightfully want to protect these interests as well. Experts also say that doctors who own their own practice would be very wise to have a prenuptial agreement, especially if they built up substantial equity in it before getting engaged. The contract covers the physician, but it also protects the partners from the hassles of divvying up property in a split. "We had a situation in a 4-doctor practice where the other 3 doctors insisted that their partner, who was getting remarried, get a prenup," recalls Gary N. Skoloff, a family law attorney with Skoloff & Wolfe, in Livingston, New Jersey. "A few years earlier, the practice had been turned upside down during his divorce proceedings by accountants who spent a year going through receipts and other paperwork in attempting to properly value the doctor's stake in the practice. And the partners sure as heck didn't want to go through that again!" In a case like this, where a doctor has an equity stake in the practice and wants to remarry, a prenup can protect his or her interest in the practice both before and after the marriage, says Skoloff's partner, attorney Jonathan W. Wolfe. "Without a prenup, in most states the appreciation in the value of the practice will be considered a marital asset, unless it's protected by a prenup," Wolfe says. This can lead to even greater problems in a future divorce, he explains, because "the business will have to be valued both at the time of the marriage and at the time of the divorce." Emotional Comforts and Discomforts Prenups are all well and good in theory, but what if your sweetie refuses to sign the document? "That happens," Ginita Wall says, "and I've seen engagements broken off because of it. Or the person who wanted the prenup gives in and abandons the idea. The third thing that can happen, and it often does, is that the couple agrees to modify the prenup and come to terms they can both live with." Even if you and your fiancé(e) don't think a prenup is necessary, don't be surprised if someone else nudges you to sign one. That's becoming increasingly more likely these days, lawyers say, because parents sometimes own investment properties or businesses with their children and don't want to see the new spouse possibly inherit something they had earmarked for their son or daughter. "A prenup in a second marriage is really important," Gary Skoloff says. "By shielding certain assets, it can actually help preserve and enhance the new relationship. Everyone is immediately comfortable with one another because they know their interests are protected." Will a Prenup Hold Up in Court? No prenup is bulletproof, much as both spouses would like to believe. "A lawyer can't guarantee that a prenup will be enforced any more than a doctor can guarantee the result of a surgery," Skoloff cautions. Many states, for instance, require both parties to disclose all of their assets and liabilities for the prenup to be enforceable. Judges don't take kindly to folks who try to hide things. Other circumstances, too, can put the agreement on thin ice, such as an unexpectedly large windfall (an inheritance or lottery winnings, perhaps). The key here is that the circumstances weren't foreseeable at the time the agreement was signed, making it less likely that a judge would enforce it. Oddball lifestyle clauses, such as stipulating sex 3 times a week or that your future spouse maintain a certain weight, can also sink a prenup. The more lifestyle clauses you add, the less likely your contract is going to be enforceable. Life isn't linear, after all. "Unfortunately, there's not a lot of uniformity to the laws on prenuptial agreements, like we have with estates or child support," says Ginita Wall. "That's why I tell people that if they move to another state and they haven't modified their prenup, don't be surprised if a judge rules on it very differently from what you'd expected." You'll increase the chances of a prenuptial agreement being fully enforceable if both parties retain their own separate legal counsel and sign the document well in advance of the chime of wedding bells, so that no one can argue it was agreed to under duress. "This shouldn't be handled like your typical negotiation, where both parties ask for the moon and then agree to meet in the middle," Jonathan Wolfe says. "It's better if both people are reasonable up front and are open and honest about their objectives. No one wants to mess up what's already a good relationship." Conclusion The decision to enter into a prenuptial agreement is a highly personal one, layered with emotion. If you're young and just starting out -- and you and your fiancé(e) have roughly equal assets -- you probably don't need one. But an older doctor, with children from a previous marriage and significant assets, may want to consider the extra measure of financial protection that a well-crafted prenup can afford. Source
