Even Millennials With No Assets Want Prenups

it becomes bitter and violent. I fum the one who found in this house. I fought with my money. It's a lot easier to spend, but it's a vaking honey bottom. You might not have made it not for me, So we takes. When a couple of starts keep his score, there is no winnings, its only degrees of losing. The yellow areas are mine, the red areas for hers. This seems rational, t boats I got more square footage now. With a well written pre nuptial agreement, the Roses would

have avoided this havoc. A prenuptial agreement is a safeguard against a messy divorce, and it's becoming the answer for more couples, including millennials. In a survey by the American Academy of Matrimonial Lawyers, three and five divorce attorneys said more clients were seeking pre nups in the past three years. About half said they'd seen a spike in the number

of millennials requesting the agreements. And in Silicon Valley, where entrepreneurs believe their ideas are worth billions, even those who are not wealthy want to protect the money they may have in the future. Joining me is divorce attorney Monica Mase of sidmon Bancroft. So Monica, tell us about the experience you had with the founder of a startup years ago. So about seven years ago, I had a client come to me. She was young, in her early thirties, getting

married for the first time. She didn't have any assets, that she had an idea for a company that she had already kind of started the wheels in motion, and she was admit that she needed a prenup to protect her her business idea, this business that she was going to build that she hadn't yet built. So we prepared the prenup. Prenup st that this business idea and this

business would be her separate property. We find it. And then about three years ago I was in the airport and I saw her on the cover of Forbes, and now her business is worth a billion dollars. You know, at the time myself, she told me the idea of her business, and I thought it was a clever idea that I didn't necessarily think it was going to be kind of the next unicorn. And sure enough she was right,

and that business now is her separate property. And so he was really smart and savvy um and knew what she wanted and communicated that to her fiancee, who was completely on board with this concept and idea, and she really ended up protecting herself pretty well. So and they're still married, by the way. That was my next question. Does it cause problems though in some marriages because you have an idea, but also you may put money into that idea from you know, your joint funds. You put

energy and time into it. Both partners may do that. The beauty about a prenup is it forces people to talk about all of that. We address all of that in the prenups, so they actually have to have a discussion about all of those concepts and ideas. You know before entering into the agreement. But I think it's more problematic for couples that don't have a premarital agreement and find themselves in that situation during the marriage and resentful or unhappy. But in a prenup, we we spell all

of that out. For example, in that client's prenup, we had a provision that if community funds were contributed to her business and there was a divorce, the community would be reimbursed. So we address all of that in the premarital agreements so that people don't find themselves in that situation. It used to be that you thought of pre nups for people who were established and had a lot of assets, or people who are going to inherit. Do you see

a change. Do you see more millennials with nothing wanting a prenup? I do, And I think that might be a virtue of where I practice. You know, I practice in the Bay Area many of my clients or San Francisco, Silicon Valley. And I noticed two things. One the millennials, the prenups seems, you know, not taboo to them. They don't seem to have a problem bringing it up to

their fiance or discussing it. Maybe that's become prenups have become more talked about in the media and celebrity prenups, and but it's not a foreign concept to them and they don't seem offended by it. They're more open to this idea that we're going to have a contract that we get to choose the terms of that dictate um, what's going to happen during our marriage and our divorce. There doesn't seem to be much stigma to it as

there was fifteen years ago. And secondly, they just seem to be more savvy about protecting their assets and it's more financially savvy, and that just could be a result of that type of information being more readily available to people online. You know, it could be because a lot of these millennials are coming out of divorced families and they want to make sure that they don't go through a nasty divorce. Said things and depth heading that way.

But they're very open to the idea and they are pretty educated about what prenups do and that they exist. It just seems like, well, yeah, of course we're going to get a pre up. Did you ever have an

engagement fall apart because of disputes, Yeah, I have. I have had one that fell apart during the negotiations of the prenup, and I think that my client is very happy that it did fall apart and that she didn't go through with it, because, you know, I think it really brings things to the forefront, right, and it shows people's true colors. So they ended up not only not

getting married, but ending their relationship. But my client was very grateful for the experience and having that happened before they got married. So under what circumstances can you contest a pre nup? So in California, it's really if there's undue influence at the time that someone signed the prenup, they were being pressured to sign it, or they didn't

understand what they were signing. Although that's less common, it's more common the claim of you know, I was I was pressured, I was being yelled at at home during the negotiations. You know, we had invited three people to the wedding. I didn't want to back out. More of those types of arguments, and I think the second most common is that the terms of the agreement at the

time someone seeking to enforce them are unfair. So in California, the standard is if, at the time someone seeking to enforce the prenup or at the time of the divorce, if the prenup or any of its terms are unconscionable, the court does not have to follow them. It's got to be something that's a pretty extreme example. You know, I had a client who waived spousal support but um at the time of the divorce or around the time of the divorce, she had been diagnosed with breast cancer.

There were going to be a lot of uncovered medical bills, and her share the community probably wasn't going to be enough to last her through her lifetime ampide uncovered medical So obviously, in that situation, the court found that the spals of support waiver wouldn't wouldn't be fair, and they did work her some support um, mainly to cover her uncovered medical So there's exceptions. But you know, in California, to have a valid prenup, each person has to be

independently represented by an attorney. So I'm finding that these prenups are getting invalidated less and less. You know, people have counseled, they're well drafted, they're well advised, things are well documented, emails, text messages about the negotiations. You know, we're very careful to preserve our file to show all of the back and forth and a tone of the negotiation. So I'm not seeing a lot of these agreements being invalidated in California. If you do not have a prenup,

is it a community property half and half? How does it work? It is? So California has a community property state. And I always tell people if you if you don't have a prenup, you know, California basically has one for you, and it's called the Family Code, and everything that you earn or acquire during the marriage is community property and a split fifty. So vent your capital firms often demand that the founders husbands and wives signed spousal consent forms.

Explain what that is and the partnership agreement for then your capital firms they're putting in spousful waivers into their corporate documents. So the spouse of waivers and the corporate documents are interesting. They typically say that the spouse is waiving any ability to become an active partner in the business.

And the spousal waivers really started and the corporate documents to protect against the scenario where the partner spouse passes away and a certain they don't want their surviving spouse trying to take over and actually be part of the business. So a lot of times the spousal waivers will not apply in a divorce situation, and they only say that the nonpartner spouse won't have any voting rights or you know,

won't have any right to run the business. But what they don't say is they don't say that the non partner spouse has no community interests. So I have not seen a spousial waiver and a corporate document yet that would waive the nonpartner spouses community interest And there would be an argument that if the nonpartner spouse find that waiver without counsel advising her, that it wasn't valid even if it was worded in the way that waves our

community interests. Are these spousal waivers? Are they something new or have they been around for a while. It's been around for a while. People just you know, really weren't focused on them or talking about them, and they weren't asserting them in a divorce context. So yes, they have been around, and you know, I've seen them the last seventeen eighteen years. Not in all corporate documents, but in

a fair amount. There's been some high profile divorces in recent years, like Google co founder Sergey Brin that seemed to have gone off smoothly or without much fanfare. Is that because of well written prenups? It is? You know, the prenup is like a road map in a divorce. So if a client comes to me and they're divorcing and they have a prenup, you know, unless someone is contesting it, the prenup tells us what we're supposed to do. A divorce attorney's to split up this estate. You know.

It saves everyone a lot of money and possibly years of their life in enough divorce. Thanks for being on Bloomberg Lawmonica. That's Monica Mase of Sidman Bancroft. Thanks for listening to the Bloomberg Law podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud and on Bloomberg dot com slash podcast. I'm June Grosso. This is Bloomberg