Considering a Prenup? Here's Everything You Need to Know

It’s not surprising that a soon-to-be-married couple might think that exploring a prenuptial agreement would be detrimental to their relationship. “You’re basically negotiating what’s going to happen in the event of a divorce,” says Sandy K. Roxas, Esq., a family law litigator and mediator based in Torrance, California. Some couples worry that even talking about the possibility of divorce will lead to a breakup down the road, but it seems the opposite could be true, Roxas adds. “The divorce rate in California is over 50 percent, however in my sixteen years of practice, only 5 percent of my premarital agreement clients have returned to file for divorce or legal separation."

Roxas further explains, “Discussing a prenup forces partners to communicate their financial goals, their general attitudes about money, their spending and saving habits, and any accrued debts,” she says. “And since money issues are one of the leading causes of divorce, having these conversations before getting married can help build the foundation for a stronger and long-lasting union.”

Most experts agree that a prenup can actually be a wise investment, not only because it outlines a couple’s finances, but because it can thwart a costly and contentious divorce if the marriage doesn’t work out. That's why we’ve created a guide to help answer your questions when it comes to navigating this pre-marital agreement. Read on for more.

What Is a Prenup?

A prenuptial agreement, also known as a prenup, is a written contract where an engaged couple states their rights and responsibilities regarding premarital and marital assets and debts, and what would happen should their marriage end in divorce or death. Usually, the party who earns the most income and/or has more assets would retain an attorney to prepare the premarital agreement. “Then the other party would retain separate counsel to review and negotiate the terms of the agreement and make suggestions for possible changes and edits,” notes Roxas.

“Once a draft has been approved by everyone, they and their respective attorneys would execute the agreement,” says Barry Schneider, Esq., a divorce and family law attorney in San Francisco, California. It must be shown the parties had the legal capacity to enter into a contract and that it was not entered into by fraud, duress, or undue influence.

The Difference Between a Prenup and a Postnup

Postnuptial agreements, or postnups, are similar to prenuptial agreements but are negotiated after the parties have tied the knot. “They’re just as enforceable as prenuptial agreements,” says Elizabeth Green Lindsey, Esq., a domestic relations and family law attorney based in Atlanta, Georgia.

“The reasons for getting one vary," she further explains. "Sometimes parties who were unable to finish negotiating the prenuptial agreement prior to the wedding will come back to it after the wedding; sometimes an inheritance is forthcoming and the parties want to address it; or sometimes a large liquidity event, like the sale of a company, is about to take place and the parties want to address what happens with the proceeds."

The Average Cost of a Prenup and Postnup

A prenup can range anywhere from $1,500 to $10,000, plus more if the estate is incredibly complicated. “A simple agreement can be drafted for a flat fee,” says Alyease Jones, Esq. a family law attorney based in Chicago, Illinois. “But for more complicated matters, attorneys will typically charge their hourly rate.”

Postnuptial agreements, on the other hand, might be more costly because the parties are now married, and marital property must be considered. “The process may seem annoying, expensive, and even unnecessary, but if there’s a divorce, a well-drafted agreement can be worth its weight in gold,” says Lindsey.

The Top 8 Reasons to Get a Prenup

There are some justifiable circumstances that may require a prenup, including: 

One or both parties have already been married.

Previously married parties, especially those who suffered through an extended and bitter divorce, may not be willing to marry again without knowing what their financial future holds. “They’re aware of the problems that can occur during the divorce process and don’t want a repeat scenario,” says Lois Brenner, Esq. a matrimonial attorney and mediator in New York City. “This is especially true if someone feels their ex took advantage of them or got a better deal in a prior divorce.” Plus, a previous divorce can affect any future rights and obligations pursuant to a divorce decree or judgment, notes Jones. 

One or both parties have children.  

Oftentimes, a party will want to protect the financial interests of children from a previous marriage. “The premarital agreement can ensure that assets remain separate property and allow the party to create a living trust or will to provide for their children in the event of death,” says Roxas. Having a premarital agreement may also prevent a fight over a will if a parent dies. “For example, in New York State, you must leave something to your spouse, no matter what you say in your will. A prenuptial agreement can allow a couple to supersede this law,” explains Brenner. 

One party is wealthier.

Prenuptial agreements often come into play when there’s a disparity in wealth between the two parties. “A person marrying into money may have a significantly improved lifestyle, which, absent a prenuptial agreement, can create rights for spousal support and property division down the road,” says Lindsey. “There are some who believe having a prenuptial agreement assures that the parties are not marrying for money.”

Typically, the party with the higher earning potential or more property will ask for an agreement, but a prenup can be beneficial to both parties. “There have been situations where my clients were asked by their wealthier fiancées to sign a premarital agreement. However, during the marriage term, my clients become the wealthier party and the agreement ends up protecting them as well,” says Roxas. 

One party has more debt. 

“Premarital debts are usually paid by the person who incurred them. However, debts incurred during the marriage may often be allocated to both spouses, putting the non-debtor spouse at a disadvantage,” says Brenner. If one party has a habit of spending money, and the other party does not want to be responsible for debt incurred during the marriage, then a premarital agreement can help ensure that this does not happen, adds Roxas. 

The 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, adds Barry Schneider, Esq., a divorce and family law attorney. “Without a prenup, creditors have ways of collecting premarital debts from later acquired joint assets.”

One or both parties own a business.

If you own a business before the marriage, a prenuptial agreement can make sense as a divorce can destroy a family business. Plus, if you own a business with other people, their share of the business may also be impacted by your divorce. A premarital agreement can allow the party to have full discretion over how to manage their business now and in the future. “If one spouse has built up a business pre-marriage, that spouse may want to limit the other spouse from acquiring an interest in the business during marriage,” says Schneider. “Forensic accounting problems arise when a business increases in value during marriage and one spouse wants a share of that business increase. A prenup can quantify what that interest is, or it may allow the owning spouse to keep the business outright no matter what contributions were made during the marriage.” 

One or both parties want to keep their personal life private. 

The right to privacy is recognized in prenuptial agreements. “The parties can agree that, without the prior written consent of the other party, neither shall disclose, intentionally publish, or provide information or documentation to any other individual or entity,” says Roxas. There are often confidentiality clauses in prenuptial agreements to prevent, for example, social media exposure and tell-all books. “The parties can also contract to have any disputes handled by arbitration and therefore kept out of the public eye,” says Lindsey.

One or both parties have an inheritance to protect. 

Generational wealth and future inheritance are two reasons why someone may want a premarital agreement. “If a party to the marriage receives an inheritance, it will be their non-marital property, unless they do something to make it marital—such as putting the funds in a jointly titled account or buying a piece of real estate in both names,” says Roxas. “The best way to avoid any unintentional transmutation of inheritance is to always maintain the inheritance in a separate account and only in the name of the person who inherited. That being said, a prenuptial agreement can, and often does, clarify if the inheritance of a party remains their non-marital property.” 

One party plans on being a stay-at-home parent. 

“If a party plans to be a stay-at-home parent, a prenuptial agreement can provide security that this spouse will be treated fairly in the event of a divorce. “A stay-at-home parent is foregoing work or career advancement to raise a child and this puts them at a disadvantage in the workplace should the marriage fail later,” says Brenner. “Couples often choose to compensate for this, if they can afford to, by providing a sufficient income stream and/or property to guarantee the homemaker a comfortable lifestyle or income after the child-rearing years are over if the marriage ends in divorce.” 

Roxas agrees, saying, “A premarital agreement can protect the stay-at-home parent if the party is able to negotiate terms—such as an annual anniversary gift, an annual contribution to an IRA, a life insurance policy, or a monthly mandatory monetary contribution to a joint account by the spouse.”

How to Create Your Own Prenup

Given the advances in technology, there are several online platforms—such as Rocket Lawyer, Hello Prenup, and Prenup Planner—that now allow couples to create their own prenups. That being said, couples may not understand all of the legal ambiguities of an online prenuptial agreement. “An online form may be a useful stimulus to start you thinking about options, but if you’re going ahead with a prenuptial agreement, you’ll want to make sure to can achieve its intended goals,” says Lindsey. “The enforceability of a DIY prenuptial agreement will depend entirely on whether it meets the criteria of that state’s laws. How can you tell if it meets your state’s requirements to be enforceable? By hiring a lawyer!”

It is possible to write your own prenuptial agreement just as you can a do-it-yourself divorce. “But there are many subtle and not-so-subtle details that must be considered that a layperson may not think of or be able to figure out,” notes Brenner. “It may not be worth the risk that something will be incorrect or overlooked and come back to haunt you.” In fact, parties are usually more successful in challenging the validity of an agreement when they have drafted their own premarital agreement without legal counsel, warns Roxas.

How to Initiate the Prenup Conversation With Your Partner

Many partners are uncomfortable addressing prenups out of fear they will do harm to their relationship or offend their future spouse. “However, to have a successful marriage, it’s essential couples communicate well, even when it comes to unpleasant topics. If they can have this conversation, and have it in a healthy way, it says a lot about what they’ll be able to handle in the future,” says Marcia Kimeldorf, Ph.D., a psychologist and the director of clinical services at the Center for Anxiety in New York City. 

“I advise the person who broaches the topic to make it clear it’s only being discussed and created as a precaution, and that they strongly hope the issue will never come up and the marriage will last forever. It’s essential both sides feel valued and heard, even if the emotions stirred up are ones of hurt,” notes Kimeldorf. “The person who initiates a prenup should negotiate as lovingly as possible, with each other’s best interests at heart.” When the conversation does take place, be prepared to listen and try to understand your partner’s perspective without interrupting. “Ask for what you want clearly, but be open to new ideas and compromises,” notes Kimeldorf.

By discussing expectations and differences about money before marriage, partners can learn to more effectively understand and support each other throughout the marriage. “As importantly, if a discussion regarding finances uncovers a red flag or a hot-button issue, there’s value in the couple dealing with it before marrying. Because more often than not, an issue that one person lets slide as ‘not that big of a deal’ can snowball and become a bigger issue over time,” Kimeldorf adds.

Finally, when proposing a prenup, remember the goal is not to have the same views but to come to a place of understanding, empathy, and agreement regarding how differences will be addressed. “Some couples in premarital conflict cases can benefit by discussing these issues in therapy sessions,” shares Schneider.