Contrary to stigma, prenuptial agreements can inspire financial confidence.
What is a prenup? While pop culture hasn’t exactly been kind to this binding legal premarital agreement, a well-crafted prenuptial agreement can serve as an essential protection for both parties in the event a marriage ends. The divorce rate in the US currently stands at around 50% for all couples, meaning it’s in the best interest of every to-be-wed to consider a prenup agreement before marriage, especially as couples are increasingly enlightened about their financial and relationship wellness.
Signing a prenuptial agreement doesn’t have to be an exhaustive process rooted in distrust. In fact, it can strengthen the relationship between you and your future spouse by driving communication and setting the groundwork for proactive financial management before the nuptials. Preparation for worst-case scenarios is key to anything in life. Marriage is no different. The goal is for couples to be protected if the event of divorce ever looms.
What is a Prenup?
A prenuptial agreement establishes property and financial rights of each spouse should the marriage end in divorce. Prenups are like estate planning. You make a will to leave items to your children or heirs, ensuring each person gets a meaningful item. A prenup agreement lets you determine who gets what if you divorce.
A prenup contemplates the end of your marriage so you can divide assets with an objective mindset. It can even help protect your business and long-term financial interests.
Prenups allow you to determine whether spousal support will be due if the marriage ends and the amount and terms of those payments. They can also determine what kind of bequests you leave to each other in your wills.
Prenuptial agreements go by other names:
- Antenuptial agreement
- Premarital agreement
- Prenuptial contract
No matter what it’s called, a prenuptial agreement works to clarify the rights each party has should the marriage end. This may sound unpleasant now, but it can save a lot of heartache and money down the road.
Should I Get a Prenup?
If you’re asking yourself: “Do I need a prenup?” You probably do. It may be worth any early discomfort to have a prenup agreement’s value down the road. Prenups are increasingly viewed as a way to foster trust and open communication about finances between partners.
Prenups can be particularly useful to couples trying to keep separate significant pieces of personal property, including future inheritances and other anticipated income. This motivation is common among couples with a big age or wealth difference and among older or remarrying couples looking into a prenuptial agreement for second marriages.
If a couple enters a marriage with few of these issues to address, prenups can still be important because their circumstances may change dramatically. In fact, couples who still have most of their lifetime assets and debts ahead of them are some of the best candidates for a prenup agreement before marriage.
How Much Does a Prenup Cost?
The cost of a prenuptial agreement can fluctuate widely based on your state, your attorney, and the complexity of your case.
In some simple instances, it could cost as little as $500. In other cases, a prenup can cost between $2,000 and $6,000 per person.
The average cost of a prenup nationally is $850. The average prenuptial agreement cost in Illinois is around $950.
The cost really depends on the sophistication of the agreement, the organization of the parties, and the collaborative nature of the opposing attorney.
Prenups Aren’t Just for the Uber Wealthy
While extremely wealthy individuals use prenups most often, usually to protect familial assets or wealth earned before marriage, prenuptial agreements are not just for the wealthy. Prenups can be a good tool for almost everyone.
Even couples of modest means can find value in a prenup agreement, especially when planning for future financial growth or protecting against debt.
Some people worry that creating a prenup will make it more likely they will divorce. If your relationship can’t survive financial planning before marriage, it most likely won’t survive the financial challenges marriage itself brings.
Protect Family Heirlooms
Your prenup does not have to contemplate every asset and item you own or every divorce scenario. You can create a prenuptial agreement for a single purpose.
If you received a family heirloom as inheritance and want to make sure that if your marriage ends, you’ll get to keep that item, you can draft a prenup agreement that states that the family heirloom is yours. The prenup can also specify that items you inherit during marriage will remain your separate property.
Pass Property to Children From Prior Marriages
Many prenups are used to establish property rights for second marriages. A prenuptial agreement for second marriages is especially helpful when children are involved.
If you have kids from a previous marriage, you may want to protect their interests in your assets and property.
Using a prenup agreement, you can describe what property should remain separate from the marriage, protecting that property should your marriage end. Combining this with proper estate planning, you can ensure pre-marital property goes where you want.
Clarify Financial Rights
Prenups are specifically for financial matters. Whether you come to the marriage with substantial assets or very little, a prenuptial agreement allows you to decide now how assets will be split instead of waiting until divorce proceedings.
While divorce may never come, figuring out the financial distribution now saves time and headache. Consider the split now and hope you never need to rely on your prenup agreement.
Debt Protection
Prenups also provide debt protection, going hand in hand with clarifying financial rights. Some people enter a marriage with substantial financial debts or student loan debt.
For couples in this situation, they can enter a prenuptial agreement and clarify that those debts remain the separate responsibility of the spouse who incurred them. They can also decide how debts incurred during the marriage will be handled.
Avoid Emotional Arguments
Divorce is emotional. Even if you know it’s the right decision, it’s still an overwhelming and upsetting process.
When you’re negotiating with your spouse about who gets what, emotions often run hot and can cloud your judgment about asset distribution. Contemplating these items ahead of time through a prenup agreement allows for more rational decision-making.
How to Get a Prenup
You can have attorneys negotiate and draft a prenuptial agreement, or you and your spouse can create your own.
How to Draft Your Own Prenup
Drafting your own prenup or any legal document is not recommended. There are complex state laws you’ll need to follow with regard to the drafting and signing of a prenup agreement.
Keep in mind that you’ll still need a lawyer to review any prenup you create. You need a legal advocate to protect your rights and ensure the contract is valid in your state.
Making Your Prenup Valid
Prenups are becoming more common and courts scrutinize them less than in the past. Still, for a prenuptial agreement to be enforceable, you need to understand what you’re signing.
When drafting your prenup, keep it clear. Don’t write it in legal language that is confusing. That will make a court question its validity. In most states, the agreement should not be signed immediately before the wedding because this can create coercion.
Most states require both parties to have their own lawyer review the document. Never sign a prenup without first understanding your rights.
Terms in Your Prenup
Your prenup should consider financial and property rights. To be fully transparent, you’ll need to provide each other with accurate financial information and disclose all your assets and debts.
Most prenuptial agreements include a clause stating both parties have been transparent and honest. If it’s found that either party was not, the agreement will likely not be valid.
What Happens When You Don’t Sign a Prenup
If you marry without a prenuptial agreement, your state laws determine how your marital assets and debts are distributed.
Most of the assets acquired during your marriage will be considered marital property, including income, retirement accounts, homes, investments, and more.
If you don’t sign a prenup, you’ll have to figure out how these items are distributed, or let the court decide.
Frequently Asked Questions (FAQs)
Do I need a prenup if I don’t have many assets?
Yes. A prenuptial agreement is not just for protecting wealth. It creates clarity around future finances, debt, and expectations.
How enforceable is a prenuptial agreement?
Most prenup agreements are enforceable as long as they meet legal requirements like full disclosure, fairness, and voluntary signing.
Can a prenup protect future income or a business?
Yes. A prenuptial agreement can outline how future earnings, investments, and business interests are handled.
What makes a prenup invalid?
A prenup agreement may not be enforceable if there was coercion, lack of financial disclosure, or if the terms are extremely one-sided.
Can you get a prenup after marriage?
No. Once married, you would need a postnuptial agreement instead of a prenuptial agreement.
