Would You Sign a Prenup?

Divorce, Money

Prenuptial agreements were once associated only with the rich and famous, but have become increasingly common for average, everyday couples over the past decade. Though on the surface, a prenup seems like a lack of faith that a marriage will last, it can actually be a very smart way to ensure that children from a previous marriage, for example, are taken care of financially, or that assets obtained over many years are protected in the event of divorce.

Traditionally, it was men who most often requested a prenup, but it’s becoming more common for women to ask for them now, too. More women are in high-level, high-earning careers than ever before, and want to protect their assets. Prenups are definitely not romantic, but they are practical.

So, what are the pros and cons of prenuptial agreements, and should you ever consider signing or asking for one? Here’s what you need to know:

Asset Protection and Debt Liability

Probably the most common reason to have a prenup is the protection of assets on both sides, especially in the case of later marriages or marriages with children from a previous relationship. It’s certainly unromantic, but agreeing on which property or assets each spouse will keep separate throughout the marriage is a practical step and can help prevent conflict in the future. Knowing where everyone stands from the get-go removes misunderstandings and assumptions that could cause fighting and drag out a legal battle in the event of a divorce. This doesn’t mean that all assets are separated—that will vary for each individual couple.

Another reason people create prenups is for debt protection. When spouses are coming into a marriage with varying levels of credit card, student loan, or mortgage debt, they may decide to use a prenup to avoid putting that debt liability on the other partner.

Emotional Implications

For some couples, the negotiations involved in putting together a prenuptial agreement can cause emotional turmoil, hurt feelings, and fighting. A prenup, for some, implies a lack of belief that the marriage will last and could compromise trust between the couple. If the prenup is brought by the parents of one partner to protect family assets, it may cause conflict between the other partner and his or her in-laws. However, for couples who are pragmatic and prefer to keep certain assets separate, putting everything down on paper before the marriage can actually be an exercise in healthy communication and set expectations correctly. It may actually give the relationship a better chance.

Validity and the Courts

It’s important to understand what your state allows and disallows in prenuptial agreements. For example, you cannot use them to determine things like which spouse is responsible for cleaning the cat’s litter box and who does all the cooking. You also can’t put custody or alimony into a prenup—those things are up to the court at the time of a divorce. Even if you think your prenup is ironclad, the court has the right to throw out sections it deems unfair and inequitable. In addition, both parties have to willingly agree to a prenup before marriage for it to be valid—it can’t be used as a requirement for marriage by the wealthier spouse. If the judge thinks parts of the prenup were not understood by both spouses or were written incorrectly, he or she can throw it out. Prenups can be extremely expensive to draft, especially if they are complex, so it’s worth thinking carefully about whether it’s really necessary and whether a judge is likely to uphold your terms before moving forward.

Determining Whether You Need a Prenup

There are certain questions you should ask yourself when considering a prenuptial agreement. You might want to consider one if you and/or your partner own real estate, have more than $50,000 in other assets, make over $100,000 per year, own part or all of a business, have stock options or profit sharing through work, have an inheritance, or have other beneficiaries who will inherit your estate. You and your partner will want to discuss estate planning, retirement benefits, separate and joint property, management of household bills, management of bank accounts and credit cards, savings, investments, and whether one or both of you plan to go to school for an advanced degree while the other works. Though these issues can be sensitive, partners who trust one another and have the other’s best interests at heart will likely have a positive experience that will serve to actually strengthen the relationship.