It’s all over Instagram, which already says a lot: Billionaire attorney John Morgan says any of his children who refuse to sign a prenuptial agreement before marriage will still receive about $1 million a year, but won’t inherit the bulk of his fortune.
Needless to say, a million per year is a lot less than they might otherwise receive.
There are a few things to unpack here.
Let’s set aside the snarky comments about extreme wealth and inequality.
Rather, let’s focus on the merits or otherwise of prenups, and how to communicate and negotiate them within families.
With high divorce rates and significant family wealth, divorce has become a major channel for “horizontal wealth transfer”.
In the interests of keeping the family wealth within the family (usually defined by its blood lines), it is common practice to use a prenup to limit the ‘exit’ of financial capital to someone once they cease to be part of the family.
Often, the biggest risk is in respect of who that person may re-partner with after the divorce. While they may be the parent of a grandchild forever, how about children with a new partner?
It seems reasonable to limit the claims on the family wealth to a fair definition of “family”.
The big question is: what message does this send to married-ins?
Are they second-class citizens? Part of the family?
This issue similarly extends to policies about employment within the family enterprise. Blood is family forever; married-ins for as long as they stay married. If the daughter-in-law has a senior role in the family business, a divorce can be even more complicated than usual.
Like most things in family, there is no right or wrong: only consequences.
Yet sometimes, the choices may be between the lesser of two evils.
Then there is the matter of how this is communicated within the family.
Morgan, by design, wants to play “bad guy” ostensibly to make it easier on his children to demand this from their prospective spouses.
Wow.
Imagine the conversation between the two lovebirds:
“My dad says we have to get a prenup or else …”
So many directions that one can take (and sadly, I’ve seen relationships break up over this). This is excellent fodder for comedians and satirists.
Now imagine how this impacts the relationship (a) between the child and the father, and (b) between the married-in and the father-in-law.
What message does it send about trust – a family currency far more valuable than anything financial?
Talk about getting off on the wrong foot!
Again, no right or wrong. He created the wealth, and it’s his right to set the rules as to where it goes.
The consequences don’t come from the policy itself.
They mostly come from how it’s decided, and how it’s communicated.
Both of those are an essential part of good governance.
A policy dictated from a position of power doesn’t encourage buy-in from those people affected by it.
And there are ways to frame and communicate policies like these so that they don’t lead to resentment, which can actually set them up for failure.
I wish that John Morgan’s children all find loving life partners and enjoy long and successful family relationships together. I also hope Morgan – together with others in his family – finds a better way to set and communicate policy on prenups.
Conversation Starters:
- What is your family’s policy on prenups?
- How has family history informed this policy (or lack of)?
- When and how is this communicated to family members?
- What have been the consequences of policy (or lack of policy) within your family?
Further Readings:
Parents are hoarding wealth rather than giving inheritances because they fear their children’s spouses could walk off with it in a divorce
Millennials: Creating Your Estate Plan Is a Family Affair
Why female heirs still miss out in succession planning
Love, marriage and prenups: The role of family dynamics in growing families
JOHN MORGAN ON BUILDING A BILLION-DOLLAR LAW FIRM, $600M MARKETING STRATEGY & KIDS SIGNING PRENUPS
