Maybe all you know about prenuptial agreements comes from the well-known lyrics of Kanye West. If that’s the case, Attorney Troy Schneider sets us straight on how a prenup can be a tool for the farm business and a successful marriage.
Schneider, with Twohig, Rietbrock, Schneider & Halbach Law Office out of Chilton, says the conversation about a prenup tends to start out negative. But it doesn’t have to.
“I think as I educate clients about what exactly we’re doing and why, I think both people feel a little more at ease,” he says. “Really, you’re writing a financial plan for the marriage, and a strong marriage should be about open and honest communication. One of those things that a good married couple should discuss is finances.”
A prenuptial agreement is an agreement between a husband and wife about how you wish to classify property under Wisconsin’s marital property laws in the case of a termination of marriage. Marriages end via divorce or death. Think of it as a financial plan to fill three buckets: him, hers and ours, Schneider says.
In agriculture, the prenup conversation tends to start in farm transition planning. If the successor is getting married, the parents often want a prenup to protect the farm legacy. Prenups also come in handy if a farm business partner gets married. These agreements also consider children either from the marriage or a previous marriage.
Schneider says prenuptial agreements are customizable. He recommends a farm family take the time to write out the farm story within the document. Explain that farm assets are not meant to be sold off in order to appease both sides of a divorce. A farm’s assets exist to continue bettering the farm for future generations. He says when you break it down like that, it makes sense to all parties why a prenup is beneficial.
“Educate the non-involved spouse about the ‘why’. It’s to protect the farm equity so it can continue to be used by the farm,” he says. “Sometimes, when we have resistance by a successor’s spouse to sign a (prenup), it kind of taps the breaks on the farm succession which is unfortunate because there’s a lot of good managing and tax reasons why the succession should continue.”
If you are already married, you can get a postnuptial agreement. But Schneider recommends getting it done ahead of time.
“It takes the urgency away from the situation if you wait until after the marriage.”
