Is a Prenup Right for You?

A prenup (prenuptial agreement or antenuptial agreement) is a written contract between two future spouses that is agreed upon before the wedding date. A prenup decides how financial issues, separate property, and community property (marital property) should be divided in the event of a divorce or death.

Deciding whether to sign a prenuptial agreement and what terms to agree to is a very personal decision.

Keep in mind that every situation is different. What works for you may not work for your friends or family, and vice versa. It is important to keep your best interests in mind when considering a prenup. For instance, you may want to protect a family business in case of divorce. Or perhaps, your future spouse may want to protect their property interests. Both interests can be protected in a prenup.

Prenuptial agreements are very specific to each couple. Everyone has different finance, business, and property interests. To determine if a prenup or premarital agreement is right for you, base your decision on your own unique circumstances.

This article will discuss the benefits and concerns of prenuptial agreements and help you decide if a prenup is right for you.

Prenup Benefits

A prenuptial agreement will list the financial and property rights of both partners and detail what will happen to them in the event of a divorce or death.

Some of the benefits of a prenuptial agreement include the following:

• It documents each future spouse's separate property in order to protect it as separate property. For example, if your car is listed in the prenup as your separate property, it will be yours after death or divorce.
• It provides evidence of your estate plan so you can avoid having to go to court and have a judge divide the property for you.
• It determines which properties are community property (marital property) and which properties are separate property. For example, a house that you and your future spouse buy and live in together during the marriage is considered community property, also known as marital property. Compare this to your parents' family home that you inherit. That property will be considered your separate property because it came to you by inheritance.

A prenup can also:

• List any special arrangements between you and your future spouse
• Help you avoid long court proceedings (which will save time and money in a divorce)
• Reduce potential conflicts during the divorce process
• Establish procedures and rules for issues that may arise in the future
• Assign debt, such as credit cards, school loans, and mortgages, to the appropriate partner to avoid both partners sharing debt liability equally

Many people fear that discussing these matters, or even bringing up the word "prenup," will cause turmoil in their relationship. However, this is a misconception. Finances and property disputes are the most common irreconcilable differences which lead to divorce. Talking to your partner in advance about finances and property arrangements can minimize potential conflicts down the road.

Prenup Concerns

While considering a prenup, you may have a few concerns, ranging from social norms to invalid provisions. Some of the concerns may include the following:

They're not romantic. Socially, prenups are considered taboo. Although this is a common misconception, societal pressures may cause someone to reject the idea of signing a prenup.

The timing may not be right. Prenups must be signed before the wedding. But you can still get married without a prenup and choose to sign an agreement after you are married. This is called a postnuptial agreement (postnup). Getting a postnup may be a benefit. You may know a little more about the management of your household after marriage.

Your prenup may contain a waiver of spousal support. This means that if you sign the prenup, you will not be able to get spousal support in the event of a divorce. This provision will have serious consequences if you agree to waive spousal support. You should consult an attorney before signing any legal document waiving spousal support.

There may be state laws that cover all of the issues you want to address, which you may believe to be reasons not to get a prenup. On the other hand, if there are certain issues in your situation that are not already addressed by state law, a prenup is the best way to clarify an issue.

What a Prenup Can't Do

Keep in mind that a prenup cannot include child support or child custody issues. If you decide to get divorced, you must go to court to determine child support and child custody. The court determines child support based on the "best interests of the child." All states use a guideline system that bases support on the income of the parties. However, in contested cases, the court will make the decision about the amount of support based on the guidelines and other factors.

A court will set aside any provisions in the prenup it finds to be unfair or not in the interest of justice. For example, courts have set aside provisions that do not allow a partner any share of the other partner's bank account (even if the account holder contributed greatly to that bank account during the marriage).

A prenup also cannot assign duties in a marriage or include personal preferences.

The following provisions are all invalid terms of a prenup:

• Assignment of household chores
• Determination of who will be the financial provider or household provider
• Where to spend the holidays
• Which school the children should attend
• Which religion the children should be raised to follow

Prenuptial agreements are designed to address financial and property issues. Courts have declined to enforce provisions attempting to regulate the day-to-day life of a marriage. See this article for more information about invalid provisions in a prenup.

Analyzing Your Own Situation

Now that you have reviewed the benefits and concerns, consider your own situation to determine whether a prenup is right for you. First, consider the following questions:

• Do you own real estate?
• Do you have more than $50,000 in assets?
• Do you earn more than $100,000 a year in earned income?
• Do you own any part of a business?
• Do you have more than one year's worth of retirement benefits?
• Do you have employment benefits such as stock options or profit-sharing?
• Do you or your partner plan to go to school for an advanced degree while the other works?
• Does a part of your estate name beneficiaries or heirs other than your partner?

If you or your partner answered yes to one or more of these questions, a prenuptial agreement may be in your interest. Consult with an attorney if you are unsure about the benefits of a prenup and want to know how it could still be used to protect your current or future assets.

Brainstorm Important Property Issues

If you realize that a prenuptial agreement is right for you, you will need to decide what to include in the prenup. Here is a list of common prenup topics:

• Estate planning issues (such as conveying family property and providing for children from previous marriages, not including child support)
• Separate businesses
• Retirement benefits
• Distinguishing separate property and joint property
• How to assign debts (Are partners responsible for their own debt? Or will the debt be shared?)
• Income, deductions, and claims for filing your tax returns
• Management of household bills
• Management of joint bank accounts
• Arrangements regarding investing in certain purchases or projects (house, business, etc.)
• Management of credit card spending and payments
• Savings and future contributions to savings
• Supporting a partner while they attend higher education
• Property distribution to the surviving spouse (including life insurance in the event of death)
• Considering mediation or arbitration for future disputes
• How to split finances and property in case of divorce (including alimony)

Prenuptial agreements regarding alimony are treated differently in every state. Enforcement of these agreements may greatly depend on individual circumstances and the intent of the parties. Anyone considering addressing alimony in a prenuptial agreement should consult an attorney.

Evaluate Your Comfort Level

Next, you should evaluate how comfortable you are with the idea of having a prenup. Familiarizing yourself with the laws of your state or talking to a lawyer can also be helpful. You do not want to make the mistake of relying upon a prenuptial agreement that turns out to be invalid or partially unenforceable years later.

If you or your partner is uncertain or uncomfortable with some of the provisions in the prenup, talk to a family law attorney. Attorneys will help you understand whether the terms of the prenup are in your best interest.

Should You Get a Prenup? Get Legal Advice From an Attorney

Although getting a prenup can be a logical and safe choice, prenups are still viewed by some people as “taboo." Even bringing up the subject of prenups can be uncomfortable. However, it is easier to talk about the division of property and finances now rather than after the marriage ends.

If you want a prenuptial agreement or have questions about prenups, meet with a family law attorney near you. Also, you should suggest that your partner seek separate legal representation to understand the benefits and concerns of a prenup agreement.