Should You Get a Prenup?

For generations, prenups have been considered taboo. They had a reputation of leading to divorce, or only being necessary for the wealthy. Both are just not true: Prenuptial and postnuptial agreements have actually been found to lead to stronger marriages, and they can be beneficial to any engaged couple with assets. 

In recent years, prenups have grown in popularity. Why? Experts point to the accumulation of more assets prior to marriage and a rise of women in the workforce. Or, perhaps the younger generation learned from experience, such as a divorce in their family. Either way, the numbers don’t lie: The American Academy of Matrimonial Lawyers conducted a 2021 study that found 62% of attorneys surveyed reported an increase in the total number of clients requesting prenuptial agreements in recent years.

Read on to find out the factors you and your partner should consider when deciding whether a prenup is right for your relationship.

What Is a Prenup?

A prenuptial agreement, or a prenup, is a written contract entered into between two people before they are married that states their rights and responsibilities regarding premarital and marital assets and debts, and what would happen should their marriage end in divorce, death or incapacity. In addition to dividing up financial assets, a prenup can outline a range of provisions touching on topics like spousal support and inheritance.

What’s the Purpose of a Prenup?

Prenups serve multiple purposes, but one of the main reasons is to establish the property and financial rights of each spouse in the event of a divorce, therefore deviating from what the law would provide in the event that there is no prenuptial (or postnuptial) agreement in place.

Discussing a prenup also forces partners to communicate their financial goals, their general attitudes about money, their spending and saving habits and any accrued debts. Since money – financial problems and debt – is one of the leading causes of divorce, having these conversations before getting married can help build the foundation for a successful relationship and financial future.

How Much Does a Prenup Cost?

Costs of a prenuptial agreement can range anywhere from $1,000 to $10,000 for complicated situations. Factors that determine cost include:

• City and state of residence.
• Amount of assets each individual has.
• Amount of debts each individual has.
• Reputation and practice of the attorney.
• Prolonged negotiations.

That said, some family law attorneys will draft a simple agreement for a flat fee.

Note that postnuptial agreements, written contracts completed after the marriage of two parties, can be more costly because marital property must be considered.

You Should Consider a Prenup If:

• One or both parties has assets: A prenup protects current assets — and safeguards assets the parties may acquire later in life.
• One or both parties have debts: A prenup can require that no premarital debts of one spouse can be paid from the joint community property of the marriage. Or, that during the marriage, one spouse’s business debts cannot be paid from joint funds,
• One or both parties have children: A prenup can ensure that assets remain separate property and allow a party to create a living trust or will to provide for their children in the event of a death.
• One or both parties have been married before: A previous divorce can affect any future rights and obligations pursuant to a divorce decree or judgement.
• One or both parties own a business, fully or partially: A prenup can allow the business owner to have full discretion over how to manage their business now and into the future.

Some partners are uncomfortable addressing prenups out of fear they will do harm to their relationship, or offend their future spouse. That said, having the conversation with your partner as early as possible can set the stage for future expectations. If you communicate your wishes in an open and honest manner, and your significant other respects and accepts that, you’re likely on the road to a solid relationship. 

If you have questions about your individual situation and would like to speak to our team of financial advisors, we invite you to schedule a complimentary consultation below.