Should You Get a Prenup? Everything to Know About Prenuptial Agreements
Mar 5, 2024
2 min read
The thought of signing a prenup before marrying the person you’re planning to spend the rest of your life with can be difficult to fathom. Prenuptial agreements don’t have to be a bad thing; in fact it’s a good time to outline the duties and obligation of each party during the marriage and in the event of a divorce.
What Does a Prenup Do?
A prenuptial agreement is a written contract which outlines the assets, debts and division of said assets and debts in the case of a divorce. A prenup can also outline the division of future assets. For example, if one spouse stays home to raise the kids while the other partner works, it could be outlined that the stay-at-home parent is entitled to a certain amount or percentage of alimony or spousal support in the event of a divorce due to their lack of work history and financial stability.
If you live in one of the nine states that follow community property laws — Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington or Wisconsin — once you’re married, all assets are considered marital property (property of both individuals) unless you a have a prenup.
Though a prenup can help split current and future assets, it can’t define custody or child support.
Who Needs a Prenup?
Depending on what stage of life you’re in, you may want to consider a prenup if:
- It’s not your first marriage.
- You have kids.
- One of you has significant debt (student loans, credit cards, etc.).
- You own a business.
- You’re a stay-at-home parent.
- You’re expecting a future inheritance.
If you’ve had a prior marriage that didn’t have a prenup, you’re probably aware of how complicated financially adjusting to a divorce can be and, depending on your financial situation, it could have left you financially hindered.
Additionally, if you have kids, you may want to add a note in the prenup that protects the assets or heirlooms you’d like them to receive in the future. If you’re a business owner or shareholder, disclosing that these stay in your name could also ensure you’re protecting yourself — and your business.
Is a Prenup a Good Idea?
If you’re considering a prenup, the most difficult part is likely having the initial conversation with your partner if you suspect they don’t feel the same way about it. If you’re both on board, here are the high-level pros and cons:
Advantages of Prenuptial Agreements
- Protection from your partner’s debts
- Estate planning measures are already in place in case one of you passes away
- Protection for your assets
- Streamlined divorce process
- Clarity on division of responsibilities and assets/debts
Disadvantages of Prenuptial Agreements
- May not be enforceable
- The financial balance may shift
- Family relationships
- Prohibitive cost
- Legal fees and prenup costs
How to Get a Prenup
If you want to start the prenup process, here are a few steps you can take.
Have an Honest Conversation
Talk with your future spouse about wanting a prenup and what security it could provide to both of you in case things don’t work out.
Get a Full Picture of Your Finances
Sit down together and outline your assets such as any owned properties, vehicles or stocks and debts like any mortgages, loans or credit cards.
Outline the Goals of the Prenup
It’s important to keep in mind what the prenup’s role is in your relationship. Is it to mitigate risk, protect assets or provide a guide for estate planning?
Work With a Professional
Once you have an idea of what your finances look like and what you want included or excluded, connect with a legal professional to initiate the prenup process. Individual state’s laws regarding prenuptial agreements are different. Consider consulting with your attorney to determine the best course of action for you.
We’re Here to Help
Whether you have questions about financial planning, estate planning or bundling your insurance policies after you walk down the aisle, we’re here to help. Connect with a local Farm Bureau agent to get started.