Rich, Young Israelis Are All Fired Up About Prenups

Prenuptial agreements are all the rage in Israel, especially among rich hi-tech workers, but some warn that what felt ‘fair’ may look mighty strange a decade or two later

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Divorce illustration
Credit: Design and animation: Aron Ehrlich and Shani Daniel
Yael Darel
Yael Darel
Yael Darel
Yael Darel

He proposed some months ago. Now aged 29, he works in hi-tech. “After proposing, he asked that we sign a prenuptial agreement because he owns a home that he rents out, and he doesn’t want me to get half of it if we divorce. On my part I don’t want to sign because signing a prenup seems messed up to me. I love him very much and he’s my happiness – but his wanting to sign a prenup undermines me and makes me wonder if I should forgo the wedding.”

This dilemma was posted this past August by a member of “Tel Aviv Confessions”, an online group to share problems anonymously. Not shockingly, her dilemma triggered a raging debate on a topic once reserved for fairly rarified relationships and the highest economic strata. Today, as the very institution of marriage changes, it is becoming more and more relevant to a growing proportion of Israeli society. “It [the prenup] is becoming more and more accepted,” says Lihi Cohen Dembinsky, a family law attorney at the law firm of M. Piron & Co.

First of all, people are marrying later, she explains. So they come to marriage – even for the first time – with property. “When people marry after age 30, they may have managed to buy a home, they have accrued social benefits, or may even possess hi-tech stock options or started a business. It’s become popular to sign an agreement to protect what you’ve accumulated.”

Wedding gowns at an exhibition at Holon Design Museum.Credit: Hadas Parush

Data from the Central Bureau of Statistics confirms that Israelis (Jews and gentiles alike) indeed marry less these days, and when they do, they do so at a later age. If in the late 1970s around 28 percent of Jewish men aged 25-29 were bachelors, by the end of 2019 the bachelor rate in this age range was 63 percent. Among women: 13 percent in the same age bracket were unwed at the end of 1970, but by the end of 2019, the rate soared to 48 percent.

As the institution of marriage constantly changes form, drawing from cultural influences and changes. Also, the CBS data should be taken with a grain of salt. In other words, it is uncertain that what was fairly accurate in 1970 – back when the definition of marriage was more conservative and official – is accurate today. Some Israelis classified as single may be cohabiting with partners in some unofficial framework.

“Many couples are choosing not to marry because they don’t want to go through the rabbinate, and they hold some kind of wedding celebration but in the eyes of the state they aren’t considered married, and then then need an agreement. Because, unlike marriage, which creates a clear status of property partnership, in a situation where people do not officially marry, they need to define the economic issues,” says Cohen Dembinsky.

“A lot of professionals come to me, including people who’ve made a lot of money in high-tech, and they want to protect themselves in the event of a future separation or just to create an economic separation. What I mean is, many of them want to live as a married couple, but they don’t want the economic partnership. So, yes, today it is quite accepted for people to go into a marriage like a business – everything is separated, and sometimes they stipulate what percentage of each person’s salary goes into a joint account. It’s managed just like a business.”

Prof. Shahar Lifshitz of Bar-Ilan University, an expert in contract, family and inheritance law, and a consultant in the private clients and family and inheritance disputes practice at the law firm of FBC & Co., thinks another reason for the trend is Israelis reacting to court rulings.

“In principle, the law says that married couples only share the property that was accumulated together through joint effort in the course of the marriage, and therefore, theoretically, assets that were accumulated before the wedding, or assets that were received through inheritance, or as a gift are not supposed to be shared. But in effect, over the years the courts have developed the concept of ‘specific sharing,’ which applies the sharing also to assets that were accumulated before the marriage. Therefore, despite the law’s original intention, people feel a need to protect themselves against this ruling.”

A bride (unrelated to the article).Credit: Gil Cohen-Magen

Marriage – yes. Economic partnership? No

It’s hard to collate data on the scope of the prenup phenomenon, but from numerous interviews we conducted for the purposes of this article, middle-class Israelis seem to be just as concerned with taking a pragmatic view of marriage and a future household as they are with romance, including in a first marriage.

G., a 43-year-old mother of two in Tel Aviv, married a decade ago and signed a prenup at her spouse’s urging. It was one of the wisest financial steps she ever made as an adult, she says.

“I was 32 when I got married and my husband was 39. We weren’t penniless students. We were a little older, and my husband already owned two apartments,” G. says. “In one of our conversations, he let me know that it was important to him that we sign a prenuptial agreement. To be honest, I wasn’t offended – It seemed legitimate to me, both because he had assets and because every other couple gets divorced these days, and I could understand that he wanted to protect himself. Nonetheless, for some reason, when I saw the agreement for the first time, even though it was totally standard, I suddenly felt bad and called my mother to consult with her.

"To my surprise, she thought it was the most romantic possible thing, and she offered me a fresh perspective on it. She saw it as a precious opportunity to see what a fair, thoughtful and generous person my partner is. And she was right, it really was the most romantic thing I’ve done, and ultimately, the prenup also spurred me to action. I requested that a section be inserted that said that in the event we divorced with one or more children, my husband would be obligated to purchase an apartment for me in Tel Aviv. Also, a month before the wedding, I took the modest personal capital I had and quickly bought a small apartment. This apartment also went into the agreement – and that made me feel like I was entering into it as an equal.

"Now when I look at it, I feel that the prenup is protecting me and ensuring me economic rights, but in our daily life it is meaningless and has no impact on our relationship or on the family that we have built,” G. says.

Yaron (not his real name), a lawyer in his 40s, who has also been in a committed relationship for 10 years and two years ago signed a prenup that his partner suggested, is also extremely pleased to have made this move. “We were having a bunch of arguments and tension surrounding money – less about daily money management and more about the question of what happens with this money at the end of the road, and the same thing in regard to assets we’d acquired, and as to the question of what the children would get.

My partner came into our relationship with a daughter, and I came into it with two biological children of my own, and we didn’t always see eye to eye when it came to handling finances. Whenever there was tension, this issue would come up. Eventually, signing a prenup was his idea and thank God I went along with it. The agreement has given us a lot of peace, certainty and clarity. It was the best thing we ever did, because money can blow things up – and once you neutralize this grenade, you can live in peace in a respectful manner.”

A seamstress works on a wedding gown in Tel Aviv.Credit: Hadas Parush

Unlike some prenups involving dramatic difference in the partners’ financial situations, Yaron says they came from similar economic backgrounds. “We each owned an apartment and earned good salaries, but there were still questions. For example, to whom does the money accumulated in the course of the relationship belong? So, while there is a certain theoretical disparity that derives from future earning capabilities, you can’t say that there are dramatic financial differences between us. The agreement ensures fairness and creates a situation in which, even if the romantic partnership ends, both parties come out of the relationship in a good and decent way.”

When the parents press

Although prenups have become an accepted protective measure, some believe that on the psychological and emotional level, such agreements actually create a comfortable basis for future divorce.

“Keep in mind that before marriage, these are ultimately two people intending to build a household together and that’s no easy task in itself, but as a lawyer I also see that there is a trend toward separateness and self-preservation that they bring into the marriage. I’m seeing more and more young people going into a first marriage and wanting to protect themselves and keep things separate. I’m also noticing much more massive involvement by parents. There have been times when the parents’ intervention and the pressure they exerted to sign an agreement ended up wrecking the relationship, and the wedding got called off. Sometimes it goes that far,” says attorney Ornit Nornberg, an expert in family law.

“Often I think too much emphasis is placed on self-protection and that people aren’t looking at the other side enough and saying – wait a minute, we’re about to start building a family unit, with children. The process can become overly intellectual, and sometimes, with couples that come to me to sign a prenup, I feel I need to remind them that they are about to become one another’s family, and that while the agreement is important, it also has to have a limit.”

Parental pressure most often occurs in cases of major financial differences between the partners, says Cohen Dembinsky. But external pressure may result in extreme agreement that isn’t fair to the other side.

“I had a case of a young guy who worked in the successful family business that his parents started and built up ‘from nothing’ – and when he was ready to marry, his parents insisted that the young couple sign a prenup that included total [financial] separation. They were willing to support their son and his spouse very generously, but in the event of a divorce, they didn’t want her to receive so much as a shekel.

In this instance, the young man was really like a puppet on a string. The entire agreement had been orchestrated by the parents and he signed it in their presence – but the way it was written, if his partner would have signed it, it meant she would come out of the marriage with nothing in the event that they parted. Therefore, each side had a lawyer representing it and negotiations were done, and it was ultimately agreed that she would be left something in the event of a divorce.”

Residential buildings in Tel Aviv.Credit: Eyal Toueg

No crystal balls

With the growing popularity of prenuptial agreements, lawyers appear to agree on one thing: many of the people who sign then don’t always fully grasp the significance or implications.

“First of all, people should know that when they make a prenuptial agreement, they need to have it ratified or approved, usually by a family court judge or dayan, and then it assumes the validity of a court ruling and can be brought to the enforcement authority,” Lifshitz says.

Nornberg points out that, for this reason, this isn’t a contract one can just wriggle out of and because of its unique character as a contract that settles financial issues pertaining to an emerging household, when signing, it is difficult to see what will happen to each of its stipulations.

“People don’t always understand that a prenup has the validity of a court ruling and therefore it is hard to fight, and so when you are formulating it, you need to try to see into the future, and that’s a very tricky thing to do when you’re talking about a project like building a family. Not only does a family contract involve emotions, it also seeks to define something that is an ongoing project,” Nornberg says.

“I often see young people trying to put together an agreement that supposedly looks to the future, when obviously they have no clue how things will turn out. When young and optimistic, of course the couple expects to have a good life – that everything will go the way it should, that their income will rise, that they’ll buy a home together and have children together. There’s a natural expectation of steadily building a life together. But life is dynamic, and anything can happen. Lost assets, sudden disability, children with special needs, illness, or something like a large unforeseen capital gain by one partner. That’s in addition to the classic situations we all know of how marriages come apart – whether its infidelity, or the couple growing apart over the years. In other words, what looks fair to you when you’re young and optimistic suddenly doesn’t look so fair 20 years later.”

Among the scenarios that people fail to take into consideration: “What happens if suddenly one partner’s business collapses, when the other partner has means or a wealthy family? Yes, this is outside capital that belongs to the family of one member of the couple, but that leaves the other person without any financial support. In that case, is it fair to equally divide the property that accrued in the marriage? Not really – because one has a financial cushion and the other will be left with nothing. This is where the concept of distributive justice comes into play,” Nornberg says.

Then there’s also the elusive matter of motivation, which sometimes gets overlooked too. “If there is a big economic disparity between the two parties, you get a situation in which the financially strong side has less motivation to build themselves up financially or to save money,” Nornberg says. “In this situation, if there is a joint account along with other separate accounts, sometimes the side that is stronger financially actually has a tendency to spend more from the joint account – then what happens to the party that is weaker financially?”

There are many other potential pitfalls too, such as inadequate legal knowledge, at times even by the lawyers behind the agreement. “There’s a mistake that I see a lot of people make – which is to try to choose between a prenup and a will. It’s more common with second marriages, where people are already thinking more about the end. Why go for a will? Because it’s easier, it doesn’t hurt the romance, and therefore people sometimes people try to arrange the property issues this way, but in reality they also need a prenup.

"A will says – I bequeath what belongs to me to my children, let’s say, but if somebody else, perhaps by current spouse from my second marriage, has claims about what belongs to me, there will be a problem. Unfortunately, I run into a lot of cases like this. It’s professional negligence. There are also agreements that seek to create an economic arrangement for the duration of the marriage itself, not only to address the question of how things get split in the event of breakup.

"More and more people today are asking – how will we finance our life together? Will each person keep his or her own money separately, and we’ll keep a joint account too? Of course, when divorced people embark on a second marriage, they frequently want to maintain financial independence. You also occasionally hear about agreements regarding intimacy, sometimes involving famous people. For example, it was once reported that Mark Zuckerberg and his wife Priscilla Chan signed an agreement requiring them to spend quality time alone with one another, and you even hear sometimes about attempts to contractually set the frequency of sexual relations in a marriage. But it’s legally, it’s questionable whether that can be enforced.”

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