Five million people are expected to get married in the U.S. this year — and every one of them should have a prenup, financial experts say.
The 2.5 million weddings scheduled in 2022 are the most since 1984, according to The Wedding Report, an online database of wedding statistics.
And 10% of couples get engaged on Valentine’s Day. That’s a lot of matrimony.
Just like anybody would get insurance on very expensive assets, a prenup is like insurance for your marriage. A prenup protects your money in ways that can save you a lot of headache in the future, and experts agree it’s an important investment in a romantic relationship.
Prenups are frankly too important not to be discussed. “If you have the type of partner who’s not willing to entertain the idea [of a prenup], that’s a red flag,” says Jannese Torres-Rodriguez, host of the Yo Quiero Dinero podcast. “If you can’t talk openly about money in your relationships, you probably won’t be able to talk openly about a lot of other important topics.”
So who needs a prenup? These experts say everybody. Let’s talk about nuptial agreements, their function in your marriage, and why these three experts agree that you need one.
What Is a Prenup?
A prenup, short for prenuptial agreement, is a written legal contract between two people that covers a variety of financial issues and concerns, such as property, cash accounts, and financial obligations.
If you don’t create your own prenup, “every state has laws and regulations about what is going to happen in the case of a divorce,” says Rita-Soledad Fernández Paulino, financial coach at Wealth Para Todos. Depending on what you and your spouse bring to the marriage, those laws can work in your favor — or to your detriment.
Consider discussing prenups when your relationship starts to get serious or when you get engaged, says Lowry. A clean, simple way to start the conversation is to ask your partner how they want to handle any assets or debts that both of you are bringing into the marriage.
What a Prenup Protects
A prenup protects or determines anything related to finances, including:
- Property acquired before or during marriage
- Education or retirement funds accumulated before or during marriage
- Ongoing spousal financial obligations following a divorce
- Taking on your spouse’s debt
- Expected inheritances
- Payouts for life insurance policies
For a prenup to be legally enforceable, it must be fair and equitable and cannot appear one-sided, deceptive, or exploitative. And both parties must have their own separate legal representation.
Lowry cautions to never sign a prenup if you feel strong-armed or coerced in any way, such as if you’re suddenly presented with a prenup right before marriage, if your partner says they won’t marry you without one, or if someone in their family is requiring a prenup.
Prenups are about protecting both spouses, says Torres-Rodriguez. It’s easier to make decisions when you’re in a healthy place and trust one another instead of when emotions are running high during divorce proceedings. A prenup can — and should — come from a place of love and compassion for one another.
What a Prenup Doesn’t Protect
Just like a prenup protects financial matters, it does not cover anything unrelated to finances, such as requiring your partner to appear a certain way, relationships outside the marriage (including infidelity), unreasonable living conditions, or anything that’s explicitly illegal.
It’s also extremely important to note that a prenup doesn’t cover anything related to child custody, visitation, or support, because courts and legislators do not allow couples to bargain away a child’s rights as part of a marriage. Those rights will have to wait to be decided during divorce proceedings, and are based on each spouse’s emotional and financial fitness at the time of the divorce.
What Is a Postnup?
A postnup is a financial agreement that a married couple can create. It’s much the same as a prenup, but comes after the marriage has been established.
Couples often initiate a postnup when there’s a big lifestyle change, such as a spouse starting their own business, when children have entered the picture, or when one spouse decides to leave the workforce.
Also note that you can have both a prenup and a postnup. You might create a postnup that amends a prenup, like when you previously waived alimony but then had children, found out about an inheritance, or independently acquired property during the marriage.
Forget the Stigma and Get a Prenup
It’s unfortunate that prenups are perceived as divorce contracts, says Lowry, who encourages reframing them more like marriage insurance. Having regular money conversations with your partner can reduce the stigma around prenups.
Just like people don’t anticipate losing their home, car, or life when they get homeowners, car, or life insurance, respectively, no one anticipates divorce when they decide to get married. Prenups can cost anywhere from $1,500 to $10,000, depending on how complicated they are.
Think of a prenup or postnup as marriage insurance — with terms you get to decide. Without one, the default laws in your state will apply which can be unfavorable, particularly in community property states.
“Everyone needs to at least consider a prenup because people are getting married at older ages than previous generations,” says Torres-Rodriguez. “And so we are tending to acquire more assets that need protection in the event that we end up getting divorced.”
Torres-Rodriguez got a prenup to protect her business assets that she’s worked on building herself. It was important for her, she says, not only as a woman, but a woman with the ultimate goal of financial independence.
Plus, everyone who gets married already has a prenup, whether they know it or not: the default divorce laws of the state they reside in. You need to know what those terms and conditions are and if you’re comfortable with them, particularly if you live in a community property state where assets and debts are typically divided 50/50. If you’re not, then you definitely need a prenup that outlines how to handle your assets and debts that you bring into your marriage and acquire during it.
The beauty of a prenup is how it simplifies the divorce process, if it ever happens. Divorces can be expensive, messy, and drag on for a long time. But when you have a prenup, you already have a plan for how to split everything, which dramatically reduces the stress and emotions of a divorce during a time when you could be bitter or angry.
When your prenup comes from a place of mutual understanding, it can actually be cheaper and more efficient in the long run. Plus, it shows your spouse that you’ll honor their decisions if, for whatever reason, your marriage doesn’t work out.
Like most insurance, it’s great to have just in case something happens.