Marriage lessons from the celebrity side

The captivating news from England today isn't about Gordon Brown, Britain's prime minister.

The captivating news from England today isn’t about Gordon Brown, Britain’s prime minister. It isn’t about England failing to qualify for the European soccer championships. It isn’t even about the queen.

The big story is Sir Paul McCartney’s nasty divorce from Heather Mills, which might end up costing the former Beatle an unprecedented lump-sum settlement of $120 -million.

Over on this side of the pond, the New England Patriots cruised into post-season play and beat the Jacksonville Jaguars; meanwhile, the Patriots’ quarterback Tom Brady continues to be engulfed in a very public and troubled romantic relationship. For three years, he was involved with model Bridget Moynahan, who, despite their December 2006 breakup, gave birth Aug. 22 to their son, John.

Mr. Brady’s attention since has shifted to supermodel Gisele Bundchen, to whom he is now engaged. He seems to be moving around as much without a football as he does during a game.

The big stopping point, as reported from both Mr. Brady and Ms. Bundchen, is how to set up a logical prenuptial agreement. They are ridiculously wealthy: While Mr. Brady’s salary for 2007 will top $5 million plus endorsements, Ms. Bundchen will earn more than $30 million this year, so there is serious concern over who will get the most if and when the marriage ends, although my emphasis is on “when.”

Granted, celebrities get all the press, especially when it comes to relationships, but the sad truth is that 50% of all first marriages end up in a divorce, and 65% of second or third marriages hit the skids — so bachelors and bachelorettes need to prepare for the potentialities before they say, “I do.”

While a prenuptial agreement isn’t very romantic, it can make a subsequent divorce much simpler and cheaper, because it states clearly what each partner is bringing to the marriage. Terms usually include a promise to transfer wealth from one spouse to the other, with the receiving spouse renouncing future claims against the transferring spouse for additional support.

Prenuptial agreements generally stand up in court as long as both spouses are honest about their assets and liabilities, and each party has access to separate legal advice.

The agreements are especially valuable where one spouse is much wealthier than the other or when there are children from previous marriages. Without a prenup, a surviving spouse could lay claim to a large portion of the other spouse’s property, disinheriting the decedent’s children.

The betrothed might want to consider using some form of trust arrangement when structuring a prenuptial agreement. Qualified terminal interest property trusts, for example, are often used to provide an income stream and predetermined access to the principal by the spouse while leaving the balance of the principal to the children from the first marriage.

A prenuptial agreement should be considered if individuals fall into the following categories:

Own assets such as a home, stock or retirement funds.

Own all or part of a business.

May be receiving an inheritance in the future.

Have children or grandchildren from a previous marriage.

One spouse is much wealthier than the other.

One spouse is pursuing a degree in a potentially lucrative profession such as medicine.

To be sure, the process is easiest when both spouses need to protect themselves.

Ten years ago, Gerry Kurth of Jensen Beach, Fla., and his wife, Joanne, signed a postnuptial agreement, another form of protecting assets in the event of a divorce. “It only worked because we were both bringing assets into the marriage and we understood and agreed that those assets would eventually end up with our children from prior marriages,” he said.

The problem is that a prenuptial or postnuptial agreement arouses immediate distrust in the relationship. Any discussion can be viewed as a way to get out of the marriage. It flies in the face of a lifelong commitment and can leave long-lasting scars. At this point, however, Mr. McCartney would have been glad if he had signed a prenuptial agreement. As for Mr. Brady and Ms. Bundchen, I predict that the engagement ends before the agreement is even drafted.

David T. Phillips is the founder and chief executive of Estate Planning Specialists LLC in Chandler, Ariz., a national network of estate planners. He can be reached at [email protected].