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Home Resources Personal & Family The Case For the Prenup

The Case For the Prenup

The Legal Templates Team

Published February 8, 2016 | Written by The Legal Templates Team

Gossip about celebrity marriages and dramatic divorces are rife on the internet, such as multi-billionaire news mogul Rupert Murdoch’s recent divorce from Wendi Deng and subsequent engagement to Rolling Stone Mick Jagger’s ex-partner Jerry Hall. Speculation about costly the divorce settlement and prenuptial agreement always lingers around these cases in full view of the public eye.

Under these circumstances, it’s little wonder that prenups still carry a stigma of cynicism, mistrust, and cold calculation. Yet, if we take extravagant celebrity wealth out of the picture, and have a careful look at how prenups help couples to negotiate their way through their finances together, it’s clear that the prenup is one of the most undervalued yet significant documents of an adult’s life.

Marriage: The Facts

The truths about marriage are stark: the average male marries at 28.3 years old, and the average female at 25.8, spending an average of US $26,000.  Of all first marriages, 41% of them end in divorce. Marriages that end in divorce last an average of 8 years. To top it off, the average divorce costs up to a whopping $20,000.

What are the most common reasons why couples divorce in America? Many people cite various types of conflict as the cause for their divorce: money, irreconcilable differences and expectations, marrying too soon or too young, breakdowns in communication, or infidelity. With so many unpredictable factors at stake, two people navigating their way through the maze of adulthood, parenthood, and careers can often find themselves alienated from one another. The truth is, no matter how optimistic you might be, this can truly happen to anyone. So…

What’s the best way to protect your marriage from the outset and protect your future assets in the case of a divorce?

Dana Hall McCain, a marriage adviser for iMom.com, says that an important step to take at the beginning of your marriage is to get on the same page:

Develop a family ‘vision’, ‘plan’, or ‘mission statement.’ If you agree on where you’re going, then you’re more likely to get there.

Conversely, if you are both in a naive “love conquers all” mindset where talking about money is a taboo, then you may be in for some nasty surprises.

Making a Financial Game Plan

If you and your partner are ready to start having some serious conversations about your life together, here’s a list of good starting points to think about.

  1. Have you ever been married before, and if so do you have an annulment or proof of divorce to show that you are now legally divorced?
  2. What does an ideal marriage, career, and family look like to you? What kind of life do you want to live and how are you going to get there?
  3. What is our savings plan going to be and how are we going to budget for each month?
  4. Do you have any outstanding student loans or credit card debts? What is your credit rating and have you ever filed for bankruptcy?
  5. What personal assets and property do you own? What do you stand to inherit from your family?
  6. Will we keep our finances separate, or share accounts (savings, credit cards, mortgages etc.) and file our taxes jointly?
  7. Who will be responsible for the bills and filing our tax returns, and how will we manage our personal finances?
  8. How will we pay for health, life, and home insurance? Will we invest in property, and how will we pay for the mortgage?
  9. How many children will we have and how will we afford childcare and save for their education?
  10. How are we going to save for our pension, how shall we spend our retirement, and have we written our estate plans and wills?

Building these conversations into your relationship early on is healthy and could be a saving grace for you later on in the relationship. But before you tie the knot, there’s one more question to consider: Should you get a prenup?

The Case for the Prenup

There are certain situations in which getting a prenup should be an automatic no-brainer.

If one of you has:

  • children from a previous marriage
  •  a successful business
  • a sizable inheritance
  • an impressive personal net worth
  • unpaid debts
  • a bad credit rating.

Without a prenup, in the event of a divorce, the situation could get ugly very fast.

On the plus side, the process of getting a prenup would help you to talk about these potential situations while your bond and mutual respect is still strong. For example, the prenup will force you to consider how your money and assets would be split between your children from a previous relationship and your new partner. You would need to think about whether you would hand over a share of ownership of the business to your partner if you got divorced, and how your business associates would feel about that decision.

If one of you has significantly more wealth, assets and inheritance than the other, you would have to decide if you want that to become shared marital property. It’s a great time to sit down and work out your net worth – here are some awesome tips from Budgets Are Sexy on how to do that if, like most people, you have never even considered it.

Most importantly, a prenup discussion is a chance for full disclosure about previous and current debts, and your credit rating.  If there are some cobwebs in the cupboard, this is a perfect time to own up to it, and come up with a strategy for overcoming it as a couple.

Even you don’t fall into one of these categories, having a prenup is a “better safe than sorry” mechanism in your marriage. It doesn’t have to mean that one partner walks away with all the money and leaves the other destitute – in fact, there are strict laws in place to prevent this from happening. It simply means that you love each other truly and hope your marriage will last, but in case it doesn’t, you are each sheltered from paying for the unexpected financial consequences of your union for the rest of your lives.

Many people are not familiar with the default laws of their state and the glaring difference between Shared Marital Property States, and Community Property States. Furthermore, these laws can still leave huge grey areas for many couples, leaving them to fight out the terms of their divorce in the family courts with a costly legal battle. Prenups give couples the chance to adjust these default laws to their own specific requirements, and to take greater control of their future finances.

So if you are in a serious relationship with your partner and considering tying the knot, make sure the prenup is included in your long-term future planning discussions, even if it doesn’t make for the most romantic pillow talk.

The Legal Templates Team

The Legal Templates Team

Staff Writers

The Legal Templates team is a dedicated group of legal counsel, product specialists, and staff writers, who tirelessly work together to provide users the information they need about commonly used...

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