The term “prenup” might conjure up images of celebrity marriages — or their subsequently messy divorces — but it’s smart for every couple to consider putting together a prenuptial agreement before walking down the aisle.
“To people who are considering marriage, I highly recommend a prenuptial agreement,” says Katie Gampietro Burke, CFP at Wealth by Empowerment. “Unfortunately, most marriages end in divorce. So why not have that conversation when you can have the conversation? Not necessarily who’s going to get the house, but the financial side of things.”
Though many fear that getting a preup is simply about planning for, or even expecting, a worst-case scenario, a couple’s need for a prenup isn’t based solely on their income or assets. According to Terry Savage, coauthor of “The New Love Deal: Everything You Must Know Before Marrying, Moving In, Or Moving On!,” the real benefit of a prenup applies to any relationship: upfront, honest communication.
“The point is to discuss and plan now, while you are most in love and most in tune with each other,” Savage says, “not later, when you need to argue it out, and these become power issues as much as financial or social issues.”
Traditionally, a prenup determines the fate of assets like property that either person brought into the marriage, and that which they have acquired together. It may also address a major financial obligation held by couples of all income levels: debt.
“These days, with even lower income people coming into relationships with debt from college, credit cards, or obligations for child support, it might be wise to segregate these debt obligations and discuss whose income will be used to pay them, and whether that impacts the amount each will contribute to ongoing household expenses,” Savage explains.
(Know that while a prenup is a binding contract, it is open to amendment in the form of a post-nup, should circumstances change.)
Among the dissolution of a marriage, Savage writes in the “The New Love Deal,” financial issues are those that may become the most contentious. In fact, she shares that in her own experience, “divorce was made easier by having an agreement that left no debate about finances.”
Savage adds that there are other points a couple might want to address when making their contract, from how they will handle holidays to the religion in which the children will be raised. Although any couple is able to have these discussions without the paperwork, seeing your plans in notarized print adds a certain gravitas.
Plus, although prenups are treated differently by state, courts may only enforce certain elements of your agreement (in particular, those relating to children), but they’re likely to take your wishes as defined by the agreement into account when making their decisions.
“Just the very act of discussing and trying to come to an agreement — before you even see the attorneys — will help reveal what you have in common, and what might become a ‘dealbreaker,'” Savage says. “And you want to know these things before you get married!”
If prenup talk seems like too loaded of a conversation to have before the wedding, Burke suggests discussing a post-nuptial agreement instead, where couples create the document together after they’re already married. It serves the same purpose as a prenup, but allows the couple to discuss their options without the pressure of their impending wedding.
Even if they decide against getting a prenup or post-nup, it’s a good idea for couples to at least have the conversation.