Like every good thing in life, sometimes there are downsides to even the best of things, like candy… and prenups. Candy is delicious, sweet, and fun to eat. The downside? Too much of it will send you straight to the dentist. Prenups help protect you financially, set expectations with your spouse, and reduce the stress of divorce if it ever happens. The downside? Prenups can also be expensive! See what we mean? There are downsides to even the greatest things on Earth, like candy and prenups.
What is a prenup?
A prenuptial agreement, a.k.a. a prenup, is a contract between two fiances who are getting married. It outlines the terms and conditions of their marriage, including the division of property and assets in the event of divorce or death. While prenups provide several advantages for couples, it is important to also consider the limitations, drawbacks, and potential risks associated with them before deciding if a prenup is right for you.
Prenups have become increasingly popular in recent years as more couples look for ways to protect their assets, clarify their financial expectations, and reduce the stress and uncertainty of divorce proceedings. In this article, we’ll take a closer look at the pros and cons of prenups, so you can make an educated decision about whether a prenup is right for you.
The Advantages of Prenups
Let’s start by taking a look at the advantages of prenups.
Many people get prenups to protect their assets. Whether you have $50,000 or $50,000,000, a prenup can protect that money. Assets can include bank accounts, retirement funds, real estate, and much more. For the sake of a prenup, assets are either accrued before the marriage or during the marriage. You can protect both existing assets and future assets in a prenup by marking them as separate property. This means that your assets will be safeguarded, and you won’t have to worry about losing them in the event of a divorce.
Defining the terms and conditions of the marriage (and divorce)
A prenup allows you and your partner to define the terms and conditions of your marriage, which can help reduce stress and uncertainty. You and your partner can specify how assets and debts will be divided in the case of a divorce, which can help ensure that both spouses are on the same page. A prenup not only clarifies what should happen in the event of a divorce but also the terms of the marriage. Things like marital expenses, joint bank accounts, and other financial obligations can be outlined in the prenup to dictate the rules during the marriage.
Reducing the stress and uncertainty of divorce proceedings
Because the terms and conditions of your marriage have been agreed upon in advance, the divorce process can be much smoother and less stressful. There will be less room for disagreement and less uncertainty, which can make the process less emotionally taxing.
In other words, the big issues like property and debt division have already been decided on in your prenup. If you have a prenup, you pretty much know what’s going to happen in your divorce (Spouse A gets X, and Spouse B gets Y). Taking the uncertainty out of the divorce process can provide a lot of peace of mind and relief to many.
Clarifying financial expectations
A prenup allows you and your partner to clarify your financial expectations, which can help prevent misunderstandings and conflict down the road. When your financial expectations are clear, you’ll be less likely to experience financial conflict in your marriage. What do we mean by financial expectations? Well, do one of you expect to be a stay-at-home parent? Maybe one of you makes significantly more than the other…who will pay the bills? Maybe the lesser-earning spouse falsely believed the higher-earning spouse would cover most of them. The list goes on and on. These are the things that need to be worked out in a prenup and will help clarify expectations.
The Downsides of Prenups
While prenups have many benefits, there are also some drawbacks to consider. Here are some limitations and drawbacks of prenups:
Difficulty in predicting future financial circumstances
Did you know that Jeff Bezos did not have a prenup with his ex-wife? Crazy, we know! When he started Amazon, he probably had no idea that it would launch him (launch…get it?) directly into billionaire status. Just like Jeff Bezos, there’s no telling where you’ll be in 5, 10, or 15 years. You could be orbiting around the Earth like Jeff in 10 years; you just never know! It can be difficult to predict your future financial circumstances. Okay, so where’s the downside? Well, depending on your state law and your specific circumstances, a prenup that was fair and reasonable at the time of your marriage may no longer be so in the event of a divorce.
The possibility of a prenup being considered unfair or unenforceable
In some cases, prenups may be considered unfair and/or unenforceable by the courts. This can occur for various reasons, such as if the prenup was not entered into voluntarily, if it was not properly executed, or if it contains provisions that are illegal, such as provisions related to child custody or support. There are things you can do to ensure your prenup is as ironclad as possible, like using HelloPrenup and/or an attorney to draft your prenup, which can help you ensure your prenup is up to par with the correct state laws. However, there are some things that may be out of your control, such as a major change in circumstances.
The possibility of a prenup being challenged in court
Let’s back it up a little bit. In order to even have a prenup be declared unenforceable by a court, you have to go through the court process. In other words, your spouse has to challenge the prenup. The prenup itself doesn’t just walk into the courtroom and let the judges know it’s a bad prenup. No, someone has to CHALLENGE the prenup. Now, the process of challenging the prenup can result in a lengthy and costly legal battle, which can be emotionally taxing and time-consuming. The downside here is the mere act of dealing with a court battle.
The possibility of a prenup being used as a bargaining tool
Sometimes a prenup can be used as a bargaining tool in a divorce proceeding. How? Well, a lawyer could theoretically threaten to or actually file a complaint with the court challenging the prenup. The bargaining tool here would be dropping the complaint in exchange for something, like more money in the divorce settlement. This can make the whole divorce process more complicated and emotionally taxing.
The possibility of a prenup costing a lot of money
Prenuptial agreements can be expensive, especially if you hire a lawyer to draft the agreement. The average U.S. prenup costs about $2,500. That’s just for the average case. If you have a ton of questions, complex finances, or difficult requests, your prenup could end up costing $10,000 or more. Yikes! Luckily, HelloPrenup is here to save the day and offer you a prenup for just $599 per couple.
Common Misconceptions About Prenups
Many people think about common misconceptions about prenups as the downsides to prenups when, in actuality, it’s not even true! So, we want to clear up some of those common myths floating around out there for you.
Prenups are never upheld
This is not true. Prenups are often upheld, despite what some people may believe. Yes, there are times when a prenup is not upheld, but that is not the baseline standard. The bottom line? It is possible to craft a valid and enforceable prenup that a court will uphold.
Prenups only protect one person
Wrong! Prenups can protect both parties to a prenup in different ways. For example, Spouse A can protect the majority of their future inheritance and pre-existing assets (perhaps more than they would in a divorce without a prenup), while Spouse B can still receive alimony and a lump sum payment to support them after the marriage ends.
Prenups mean your relationship will fail
Oftentimes, people cite distrust, a bad omen, or a failed relationship as their reason for not getting a prenup. Is it true? It could be true, but it’s not necessarily true. Think about it this way: when you purchase car insurance, does it mean it’s a bad omen, and you’re bound to fail at driving and crash every single day? Of course not. Car insurance is simply plan B in case things go wrong, which they might not! Think of a prenup in the same way. A prenup is simply a plan B in case things go “wrong.” Getting a prenup doesn’t equal failure.
Is a Prenup Right For You?
Should I get a prenup? That is the question. Whether or not a prenup agreement is right for you will depend on a number of factors, including your individual financial situation and your personal values.
If you are thinking about getting a prenup, it is crucial to educate yourself with the resources available and/or speak with a lawyer who can help you understand what is right for you. In our opinion, prenups can be for everyone, regardless of your current net worth.
Prenups have many advantages and benefits, but they also have some limitations and potential risks. It’s important to carefully consider the pros and cons of prenups before deciding if one is right for you. If you’re unsure about whether or not a prenup is right for you, it may be a good idea to educate yourself on prenup laws in your state and/or consult with a family law attorney who can help you evaluate your situation and make an informed decision.
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: [email protected]