Talk to almost any lawyer and they will agree that a prenuptial agreement can be a wise investment in your future. Not only is it a legal document that spells out your finances as an individual and as a couple, it might just save you some stress and heartache should your marriage end in divorce.
That’s not to say that all lawyers believe a prenup is the right path. Some say it can be detrimental to your marriage and is more likely to result in divorce.
So, which is it? Will a prenup be helpful or harmful to your marriage? To help you decide, our guide outlines all of the pros and cons of investing in a premarital agreement.
In This Article
What is a Prenup?
A prenuptial agreement, more commonly known as a prenup, is a written contract created by a couple prior to marriage. This legal document not only lists the assets and debts each person owns before the wedding, but it specifies what each person’s property rights would be if the marriage were to end either by divorce or death.
What Happens if You Don’t Sign a Prenup?
If you decide against a prenup, state law will determine who owns any property acquired during your marriage, as well as what happens to that property if you were to divorce. Depending upon where you live, your state may even decide what happens to property you owned before you said “I do.”
Should I Sign a Prenup? 7 Reasons Why You Should
While a prenup may not be on your to-do list as you plan your wedding, it is worth considering depending on your circumstances. Here are seven scenarios when having a marital agreement is for the best.
1. If either of you were previously married
The old saying once bitten twice shy comes to mind for some previously married parties. If you both had to deal with long, antagonistic divorces in the past, signing a prenup can give you both peace of mind about your future financial situation.
2. If either of you have children
If either you or your future spouse have children from prior relationships, a prenup can come in handy in the event of divorce or death. Not only will it give you both peace of mind that your childrens’ inheritance is protected in the event of divorce, but it ensures your wishes will be carried out upon your death.
A prenup will allow you to give property to your children and still provide for your surviving spouse. Without an agreement, a surviving spouse could claim the deceased’s property, leaving little or nothing for the children.
3. If one of you will be a stay-at-home parent
If you or your spouse plan to be a stay-at-home parent, a prenup is the only fail-safe way to ensure that person is treated fairly during a divorce. A prenup will lend value to the stay-at-home parent’s contributions such as giving up their income and career advancement to raise children and run a household. With a prenup in place, this unpaid work can be rewarded in a fair and equitable way.
4. If one or both of you are business owners
If you are a business owner before tying the knot, a prenuptial agreement is a sensible way to protect the business you’ve built if you were to divorce. This is especially smart if you have business partners. A prenup not only protects you, but them as well.
“By designating your business as separate property in your prenup, you can help clarify any misunderstandings that may arise during a divorce,” reads a blog post by the law office of Nicholas T. Exarhakis. “You can also protect important investments, intellectual property, and other assets.”
5. If one of you is more affluent
While the person with the higher earning potential, the trust fund or future inheritance is the more likely half of the partnership to ask for a premarital agreement, it can be a good thing for both of you. If your career flourishes or your financial situation improves drastically, the agreement will protect you just as much as it protects your spouse.
6. If one of you has more debt
Prenups can be used to ensure you’re not saddled with an ex-spouse’s debts. With such an agreement in place, you won’t be held responsible for any debts your former spouse incurred prior to your marriage, but it can also help if your spouse takes on debt without your knowledge after marriage.
“It can keep you from acquiring the debt that your spouse happens to get into … when you’re married,” Suze Orman said on an episode of her Women & Money podcast. “So here you are, you’re married, and your spouse has just run up $30,000 on credit cards, you get mad and divorce him or her and, guess what happens, they claim bankruptcy” leaving you holding the bag if you don’t have a prenup.
With a prenup, however, the creditors can’t come after you for that debt.
7. To protect your privacy
If you or your spouse is a public figure or are prominent in your field of work, signing a prenup can give you peace of mind that your privacy can’t be violated in the event of a divorce. A prenup can prevent your ex from blasting your business on social media, talking to the press about you or even writing a tell-all book.
7 Reasons Not to Sign a Prenuptial Agreement
While a prenup is a necessity for some couples depending on their circumstances, it certainly isn’t right for every relationship. Here are seven reasons to avoid signing a prenuptial agreement.
1. Can harm your confidence in each other
Discussing a prenup could cause one or both of you to doubt your trust in the other. Asking for a prenup can often be seen as a lack of faith in one’s partner not to mention a lack of faith in the marriage lasting long-term.
Lawyer and mediator Laurie Israel describes prenups as detrimental to marital health.
“The marriage becomes more concerned with money after a prenup than it would have been without the prenup,” she writes in a blog post. “I have heard people say their marriage never recovered from the prenup.”
2. Can undermine the partnership in marriage
If you and your future spouse aspire to an equal partnership where each person’s non-financial contributions to the marriage have value above and beyond wages earned from working, then a prenup probably isn’t a great idea.
“People with prenups tend to manipulate their property during the marriage by adding to their ‘separate property’,” Israel writes. “By protecting yourself (the ostensible reason for the prenup) you have succeeded in leading to a dysfunctional marriage which is now more likely to fail.”
3. Can be unfair to one party
There is no way to know what the future holds and how each individual’s level of contributions — both monetary and non-monetary — will shift and change due to the circumstances life throws their way. And, for that reason, planning how assets will be split before your marriage has even begun is rarely fair.
Priorities change over the course of a marriage and what was once important to you simply may not have as much value to you 10 or 20 years down the line. It’s wise to keep that in mind when deciding if a prenup will really serve your interests.
4. Doesn’t help you avoid court
If a prenup is deemed to be unfair to one spouse, the likelihood of ending up in court is still pretty high. The spouse that feels wronged will likely petition the court to have the document overturned in favor of state law.
“Court cases that involve the validity of a prenup can be very expensive and time-consuming – they can literally drag on for years,” attorney Lina Guillen writes in a post on DivorceNet. “It’s important to realize a prenup (especially an unfair prenup) is no guarantee that you’ll avoid divorce court.”
So, not only would you possibly be stuck adhering to state law anyway, but you can expect to deal with a lengthy and expensive, not to mention stressful court process.
5. Not always necessary for first marriages
Marriage is a partnership not just emotionally and physically, but financially as well. Even if there is some wage disparity between partners, focusing on money rather than on all of the other things you’ll gain by marrying your partner can sour a marriage in its infancy.
“State divorce laws are designed to handle the issues of disparity of income and disparity of premarital assets if and when the spouses get divorced,” Guillen writes. “So insisting on a prenuptial agreement that may end up harming the relationship may not be a sensible trade-off.”
6. Can be costly
Prenups typically cost about $2,500, although that figure will go up or down according to where you live. People living in large cities, like Chicago, Boston, New York or L.A. will shell out far more for a premarital document than someone living in a small town.
7. Not all lawyers are created equal
If you don’t have the funds for a capable attorney, a prenup can do more harm than good should your marriage end in divorce.
Remember, each of you will need to hire your own lawyer to represent you and, if one of you has better counsel than the other, the prenup could be heavily skewed in that person’s favor without either of you realizing it.
