Don’t Be Like Paul McCartney—Cover Your Assets

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Paul McCartney once sang "All you need is love." Apparently his ex-wife needed a little more.

On March 17 a British Family Court ordered the former Beatle to pay his estranged wife Heather Mills $48.6 million, significantly less than the $125 million she originally requested. Text of the settlement, released by the court, further revealed that McCartney's assets are worth about $800 million overall, not the $1 billion plus that has been previously reported. Sir Paul, 65, married the former model and activist, Mills, 40, in 2002. They split four years later and have a daughter, Beatrice, 4. After the ruling, McCartney declined to comment, while Mills expressed relief: "I am so glad it is over. It is an incredible result in the end."

Incredibly costly. And an expense that could have been significantly reduced with a prenuptial agreement, even though experts say McCartney was fortunate the final tab was not more. “It could have been a lot worse,” says Richard Fried, an attorney in Central New Jersey. “This result is very fair. He acquired most of the wealth before he met her. She doesn’t get to share in the lion share of his wealth. He did pretty well.” Morris Armstrong, a financial advisor in Danbury, Conn., agrees. “$50 million on [close to] a billion is nothing," says Armstrong. "Some people can lose half of their assets.”

Is a prenup right for you? It depends on your assets. In most cases a prenup is for people who have a significant amount of money, or a potential inheritance, that they want to protect. “It’s for people who come to a marriage with substantial assets,” says Fried. “And by substantial assets I mean even a house. Something worth several hundred thousand dollars is worth drafting a prenup.”

Creating a prenup that holds up in court depends on what you precisely map out in the document. To ensure your prenup is valid, each party needs to obtain independent council. “There has to be full disclosure,” says Fried. “This is a big stumbling block that stops people from signing a prenup or not realizing the consequence of lying.” Adds Armstrong: “If you say you have $2 million and really have $20 million, then the prenup isn’t valid."

And if you are already married, but sense that it won't be for long, a postnuptial agreement is the best way to save money, provided that you are still on speaking terms with your spouse. A postnup is an agreement drawn up either between the couple, or with a third party licensed mediator, before litigation starts. With lawyer fees easily reaching $5,000 for ten hours of arguing, spending around $2,000 to sit down with a mediator to work through a settlement blueprint is cost effective. “If you hate each other’s guts, you are going to wish you had a postnup," says Fried. "Once you get the attorneys in there, it just fuels the fire and the battle can go on forever.” Just ask Sir Paul about the long and winding road that led to his divorce.

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