Prenups are no longer taboo — they’re a to-do.
A Legal Love Letter: Prenuptial Agreements
Did you know that new research shows that over half of adults in the United States are open to a prenup nowadays? A prenuptial agreement, better known as a prenup, is a contract you sign, before the wedding day, with your future spouse, to sort out financial matters. Now, I know what you might be thinking: prenups, aren’t those for celebrities and the ultra-rich? No, that is a common misconception! Prenuptial agreements are for anyone who’s about to say “I do” and wants to set marital expectations and protect their interests. So, let’s explore what a prenup is, the benefits it offers, and when you should consider getting one.
What is a prenup?
Simply put, a prenuptial agreement is a legally binding contract made between two individuals before they get married. What you put into your prenup and what is required for your prenup is state dependent. What is required for a valid and enforceable prenup in Alaska may be completely different than what is required in Florida. You generally choose the state in which you reside in to govern your prenup, not the state you get married in. For example, let’s say you get married in Las Vegas, but you live in Illinois. You would likely need to choose Illinois law to govern your prenup because that is where you reside. You should not choose Las Vegas if you are simply getting married there.
Let’s discuss some general things that most states allow you to put into your prenup. Most states allow you to include property division, alimony, joint bank account clauses, life insurance clauses, and more. One of the primary motivations for seeking a prenup is to address property-related issues that may arise in the event of a separation. With a prenup, you have the means to safeguard the assets you owned prior to getting married and those future assets you don’t own yet.
Now, let’s move our attention to the legal requirements that go into making a prenup. Like we said earlier, every state dictates what is required for a valid and enforceable prenup. However, there are some similarities across many states as to what is necessary. Generally, most states will require the prenup to be put into writing and signed voluntarily by both parties. We say “voluntarily” because if one person can prove they entered into the prenup under some type of duress, virtually all courts will throw it out. Another commonality between most states is the requirement of financial disclosure. Financial disclosure is the sharing of finances between you and your partner during the prenup making process to ensure both people know what they are getting themselves into.
Benefits of a prenup
Prenups benefit everyone, not just the rich and famous. Most people think, “ah, I don’t need a prenup if I don’t have a lot of stuff,” but that’s not true! Not only do prenups protect your future money that you haven’t earned yet, but they also do more than protect your money. We discuss all the benefits of a prenup below.
Facilitates Communication on Finances
Creating a prenup requires open and honest communication between partners about financial matters, which can lead to a healthier financial partnership. For example, there’s a requirement of financial disclosure where both parties need to share their finances openly. This can be a great way to break down barriers and have conversations you may not have had with your partner prior.
Facilitates Communication on Life Goals
When you create a prenup, you are creating a roadmap for your life together. Do you want kids? Do you want to retire when you’re 45? What will you spend your money on? These are the types of questions you need to discuss when getting a prenup. It brings up tough topics, but also romantic ones. You get to talk about your future life together and all that comes with it!
Show Mutual Respect for Each Other
Let’s face it: we’re all individuals at the end of the day. Even though marriage brings us together, we still maintain a level of autonomy. Getting a prenup shows mutual respect for that autonomy and that sometimes what’s best for one person isn’t best for the other, and that’s okay.
Set Marital Expectations
Did you know you can include clauses that dictate what happens during the marriage in your prenup? For example, you can set budgets, which is a great way to discuss spending and expenses to avoid future conflict. Also, you may require your partner to get a will and life insurance policy with you as the beneficiary. The moral of the story? There’s more to a prenup that just clauses in case of divorce!
Protecting Children from Previous Relationship
If you have children from a previous relationship, a prenup can ensure that your assets go to them in the event of your passing. Not only that, but you can make sure your assets STAY your assets in the event of a divorce to retain as much money for your kids as possible.
Asset protection is the bread and butter of prenups. Let’s say you have a checking account with $5,000 in it. Do you want to make sure that stays yours in the event of a divorce? If so, you might be a good prenup candidate.
Prenups can also protect you from absorbing your partner’s debt. These days, everyone has student loans or some kind of debt. Prenups can define how debts acquired before and during the marriage will be handled, ensuring that one spouse isn’t unfairly burdened with the other’s debt.
Preserving Family Assets
Expecting a future inheritance? Don’t be fooled: not all states automatically protect your inheritance in a divorce. In other words, there are some states and some cases where you could be paying out a portion of your inheritance to your future ex. Luckily, a prenup can protect those family assets.
When should you get a prenup?
Generally, the timing of a prenup will depend on your state laws. Most states will not invalidate a prenup just because it was executed close to the wedding, there would need to be other extenuating circumstances for a court to throw it out. Put simply, most states are okay with you getting a prenup two weeks out, as long as you are entering the agreement voluntarily and have met all the other standards, such as financial disclosure.
However, there are some hard and fast rules laid out by some states that require some attention. For example, in California, there is something called the seven day rule. This rule says that you must have seven calendar days in between the final draft of the prenup and the signing of it. The reason for this rule is to give the parties enough time to obtain a lawyer (if they want or need one) and to contemplate the terms of the agreement (i.e., allow them to “sleep on it”).
Prenuptial agreements are more like a realistic love letter to each other
Remember, a prenuptial agreement isn’t a harbinger of divorce; it’s a tool for open and honest financial communication, a sign of mutual respect for one another’s autonomy, and a way to set marital expectations. It’s like a safety net for your future, ensuring that you and your partner have a clear understanding of your financial expectations both in marriage and in the event the marriage ends.