Should You Get a Prenup? What Experts Say

Before getting married, couples often talk about how they’ll manage their finances, including during the marriage and in the unfortunate event of a divorce. One topic that may arise, especially for couples bringing substantial assets to bear in the relationship, is whether to sign a prenuptial agreement that commands the allocation of belongings and funds in a marriage. But how do you know if it’s the right move for you?

In this article, we’ll offer an overview of what it means to sign a prenup and outline factors to consider as you and your significant other decide what’s best for you. We’ll include the viewpoints of four legal and financial professionals with experience working with the topic.

What Is a Prenuptial Agreement?

A prenuptial agreement is a contract that dictates the dispersal of marital assets following a divorce. Couples sign them to ensure that the assets they brought to the marriage and earned during it are secure in the aftermath of a marriage. According to Diana Arnone, Esq., founder of Diana Mohyi Attorney at Law, PC, this may include protecting savings, investments, retirement accounts, real estate, and personal belongings and “the income they earn,” as well as “gifts and inheritances from family during the marriage and the assets created by them as a result.”

Even though it’s never the plan to get a divorce, life can take unforeseen twists and turns, and it can help to have a structure in place. A prenup is advantageous if you and your spouse want to take extra steps to protect your assets. Per Kristyn Carmichael, Esq., CDFA, Professional Mediator at Couples Solutions Center, this is much like an insurance policy you would get for a home or car without a second thought.

“We like to explain it as insurance,” Carmichael says. “You buy car insurance, but don’t plan on getting in an accident. You buy home insurance but don’t plan on there being a fire. A prenup is insurance in case you get divorced, although we always want our clients to stay together forever if possible,” she continues.

Putting together a prenuptial agreement takes careful planning with your partner and one or more professionals, including a financial advisor and an attorney. Holding expertise in both areas, Carmichael explains that she would “introduce couples to prenups when they are contemplating marriage” and that during “premarital mediation we discuss not only a prenup, but communication, finances, and expectations – to set a solid foundation for a marriage to begin.” She adds, “It is always surprising how many couples avoid these challenging conversations (prenup or not) that will have a drastic impact on the success of their marriage.”

It’s a Delicate Topic

Because they deal with the idea of separating assets and drawing sharp lines within a marriage before it even begins, prenuptial agreements can hold a reputation for being a contentious topic. People may worry about the effects broaching the subject may have on the relationship with their significant other. Therefore, it’s crucial that each person feels heard and that they’re not being slighted or blindsided by the agreement.

“Drafting a prenuptial agreement can sometimes be emotionally charged,” observes Oliver Morrisey, lawyer and Director of Empower Wills & Estate Lawyers. “It might be perceived as an indication of distrust or a lack of commitment, which could strain the relationship. For some, even the mere discussion of a prenuptial agreement can trigger feelings of anxiety or insecurity regarding the future of the marriage, overshadowing the practical advantages of such an agreement.”

When discussing the separation of finances or signing a prenup, it’s important to balance understanding and practicality. The conversations may not be easy for everyone and, in that way, may take time to develop, but they are important and should take place if you want to protect your assets.

Therefore, Morrisey suggests that it’s critical to ensure each party in the couple feels like the other hear their desires and accounts for them as the agreement takes shape. “If not carefully negotiated, a prenuptial agreement can lead to an imbalance that favors one partner over the other,” he warns. “This imbalance can cause feelings of unfairness, especially if one partner believes their contributions or sacrifices are not adequately recognized. This is why both parties need to approach the agreement with a sense of fairness and mutual benefit to avoid these issues,” he continues.

What Happens Without One?

In cases where a couple with substantial assets, originating from before or during the marriage, don’t have a prenuptial agreement and divorce, dividing property can be messy and costly. This can especially be the case when the couple is near retirement after a lifetime of saving and needing money to fund their post-working lives.

Without a prenup, your assets, including real estate, bank accounts, and investment accounts, will face division in court. Depending on the state you live in, these may be treated as community property — meaning a 50/50 split — or may be distributed in a way the court deems equitable.

Carmichael explains that relying on your state’s divorce law can be a risky proposition:

Something to remember is everyone has a prenup – aka divorce law. The state you get a divorce in dictates how your property should be dispersed upon divorce and what is “fair” for support, such as alimony. So your prenup is state law. You can choose to go with state law, or choose your own agreements by creating your own prenup. So a prenup is appropriate for anyone who wants control of their divorce rather than a court or the state being in control of it.

During the proceedings, consider that you’ll likely need to hire the help of a legal professional. If you have more assets you want to save, it can be expensive to work extensively with an attorney to get the best outcome and hang on to certain belongings or amounts of money.

In that way, the primary benefit of a prenuptial contract is saving yourself from a headache down the road, assuming a divorce occurs. Per Arnone, “The agreement is intended to save the ligation expenses that would be required in a typical divorce to prove who gets what.”

Role of a Professional with Prenups

When navigating premarital conversations surrounding prenuptial agreements and whether they’re right for you and your future spouse, it’s wise to consult an experienced professional. To understand how these fit into your financial picture, you could work with a financial advisor. When drafting the documents, you’ll also likely need the help of an attorney.

When discussing a prenup with a financial advisor, they’ll be able to highlight, first, whether it’s an option you should consider. For example, you should expect to have discussions weighing the risks of not having one. If you have a complex portfolio with sizable assets, the advisor could help you decide what to protect in a prenup.

A legal professional will also be fundamental. Arnone points out that “it is important that you consult with an experienced divorce and family law attorney, licensed in your state who can advise you based on your specific needs” and that “[a] client should be advised not only on the prenuptial agreement itself but also what typically happens in a divorce.”

Drafting a prenuptial agreement is a process that, as mentioned, requires close attention and understanding between partners. It is a complex process that requires professional expertise and a careful balance of defining parameters in an upcoming marriage. Therefore, it’s key to work with a professional who will help you understand the impacts of having a prenup — or not — on your finances.

Kenneth S. Glasser, Partner at Gallet Dreyer & Berkey, LLP, states, “We tell our clients that proper planning is essential, and that a carefully drafted prenuptial agreement could be a beneficial planning instrument because [it] defines how the newlyweds’ assets, debts, and other financial matters would be handled in the event of divorce or death, thereby thwarting contentious and costly divorce litigation.”

Which Couples Need One?

Though a prenup can be helpful, it might not occur to you — or most couples — to sign one. For instance, you may not think you have enough assets to draft one or you may shy away from it because, as noted, it can be a difficult subject for some couples to handle. However, if you’re bringing significant wealth or personal assets to the marriage, it may be in the cards to consider an agreement.

“The couples that typically need or want a prenup have assets,” says Arnone. This is common in cases where “[e]ither one party has significantly more than the other party or both parties have at least some of their own,” she adds.

While anyone could sign a prenup, they’re typically common among people who work in high-paying careers, including entrepreneurs, doctors, or attorneys, or those who have access to large sums of money or assets through an inheritance. Per Glasser, “[W]ealthy families often encourage younger family members to get a prenuptial agreement to protect family assets, beneficial interests in trust, inherited assets, and gifts.”

Older adults who’ve built up their portfolios and savings marrying later in life may also be candidates to sign a prenup, as are those who’ve previously had children or been divorced, says Glasser. At this point, they’ve built enough of their financial picture up on their own that it may make more sense to keep it separate from their new spouse, regardless of whether they stay together.

Ultimately, prenuptial agreements are a viable method to ensure that hard-earned assets or belongings stay with you during and after your marriage. They’re beneficial to many types of couples, ranging from high-net-worth individuals (HNWIs) to people who’ve spent most of their lives building their finances.

“There is nothing wrong with wanting a prenup,” Arnone emphasizes. “Think of the process as an opportunity to understand your finance on a deep level. Many couples don’t even talk about finances before they get married and that is a mistake.”