Prenups aren’t just for the wealthy. Traditionally, these kinds of agreements have served to protect a wealthy person’s assets from a gold-digging lover. However, a prenup can serve a number of purposes for people of ordinary means who simply wish to cover all the bases before getting married.
A prenuptial agreement is particularly useful for couples entering a second marriage. A groom or bride may wish to ensure a legacy for his or her children from a prior marriage; a prenup can spell out exactly how much of a person’s assets that he or she is bringing into a second marriage — and that would not be considered “marital assets” of the second marriage — will pass on the children, and how much will be used to provide for the new spouse and any new children. Lacking a prenup, a surviving second spouse with a good lawyer may be able to claim a large share of the deceased’s assets originally intended for children from a prior marriage.
More simply, a prenup can basically lay out a couple’s respective financial rights and responsibilities for their marriage. In this regard, it can act as a roadmap for financial responsibility, honesty, and clarity that a couple can refer to and abide by throughout the course of their marriage — it can be a primary financial planning document.
More specifically, a prenup can help protect spouses from each other’s debts, whether debts that they bring into the marriage or debts that they individually accrue during the marriage. If one of the couple is better with money than the other, for example, they may decide to maintain separate accounts, including separate credit card accounts, and each assume responsibility for his and her own personal purchases. Or, a prenup can specify that the more responsible person be put in charge of family finances.
And a prenup will help avoid dispute in case of divorce. It may be “bad karma” to be thinking about divorce in the course of planning for a wedding and new marriage, but if both spouses-to-be are practical-minded and honest with each other, they should be able to discuss all possible contingencies with each other. Nearly 50 percent of marriages in the United States, after all, do end up in divorce.
If you don’t file a prenuptial agreement, your state’s laws will determine the status of your property — including assets that you bring into your marriage as well as assets that you accumulate with your spouse during the course of your marriage (“marital property”). Legally, a marriage is contract between equal partners, and each partner to the marriage is assumed to have equal rights to marital property, as well as equal responsibility for debts accumulated during the marriage. These laws will come into effect in case of death or divorce. Of course, during the course of divorce proceedings, you and your spouse can draft a division of assets agreement that you both consider to be more fair than whatever arrangement the state might impose, but seeing eye to eye during this stressful period might be difficult, especially if you’re battling over child custody and other contentious issues at the same time. If a prenup, drafted under more cooperative conditions, is already in place, that’s a big part of your divorce settlement that’s decided already.
A court still must validate your prenup; traditionally, such agreements were viewed suspiciously, since they often involved a less-wealthy spouse waiving rights that would ordinarily be hers (or his) under state laws. Also, prenups were thought to encourage divorce. However, with the modern realities of more frequent divorces and greater financial equality between spouses, courts are willing to accept prenups that are prepared correctly and that meet state requirements. (Prenups that are considered unfair to one party to a divorce may still be left invalidated by a court, although this is becoming more rare.)
You can draft your own prenup; various websites give good advice and offer sample agreements that you can follow. Nolo (www.nolo.com) is a particularly reliable site, which also gives information on particular state requirements as well. If your situation is complex, Nolo recommends additional books and documents that you can refer to, and also provides advice for domestic partners who wish to draft “pre-partnership agreements” that will be considered valid by state courts. Given that marriage is a legally a contract, a prenuptial agreement between a same-sex couple would have the same validity as a prenup between a man and woman getting married, everything else being equal, but given that this is a new area of the law, there may still be wrinkles, covered in the Nolo publication Making It Legal: A Guide to Same-Sex Marriage, Domestic Partnerships, and Civil Unions by Frederick Hertz and Emily Doskow (2011).
No matter how you prepare your prenup, you should still have it reviewed by a lawyer to ensure that it will hold up before a state court. And, if you and your spouse-to-be are bringing vastly unequal amounts of wealth to your marriage, or if one of you anticipates generating considerably more wealth than the other during the course of the marriage, you should each have your own separate lawyers review the document before you sign.
Should you prepare a prenuptial agreement before getting married? Many might still consider it to be bad luck, or inappropriate, or unseemly — in the lead-up to your wedding, your thoughts should be focused on how strong your love is for each other and on how committed you are to making your marriage last forever, not on how you’ll split your assets in some as yet unforeseen future circumstances. However, the noted personal financial advisor and author Suze Orman argues to the contrary that, if you and your spouse-to-be draft a prenuptial agreement together, you are exhibiting “incredible trust and financial openness” — indeed that, as a couple, you can’t achieve “complete intimacy” without a prenup. From this perspective, a prenup might make all the sense in the world.