Prenuptial agreements (a.k.a. prenups) don’t have to be scary! They’re pretty straightforward, and we’ve put together a Prenup 101 document with everything you need to know about prenups. Let’s start off with some marriage and divorce statistics:
Marriage/Divorce Statistics Table
|Top reasons for divorce||Commitment issues, infidelity, too much conflict/arguing|
|Divorce rate in 2021||13.6 out of every 1,000 marriages ended in divorce|
|U.S. marriage rate in 2021||30.5 married people per 1,000 unmarried people|
|Percentage of never married U.S. adults||34% (up from 23% in 1950)|
|Trend in marriage and divorce rates||Both decreased in the last 10 years|
|Percentage of divorced U.S. adults in 2018||9.5% of men, 12.1% of women|
|State with highest divorce rate in 2019||Arkansas|
|State with lowest divorce rate in2019||Maine|
What is a prenup?
A prenuptial agreement (a.k.a. a prenup) is a contract between two people about to get married that covers financial obligations during the marriage and in case of a divorce. The topics that may be covered include, but are not limited to, property division, debt assignment, and alimony (i.e., spousal support). Prenups mostly cover financial topics but may also include some non-financial topics, such as pet ownership, confidentiality, social media image, and more.
Note: Prenups are only effective upon marriage (no marriage = no prenup).
Who gets a prenup?
Anyone may get a prenup! It’s a common misconception that prenups are only for the wealthy. It’s just not true. Prenups can also protect the less wealthy partner or partners that are financial equals, among many others. Here is a list of potential people that would benefit from a prenup:
- People with assets (real estate, bank accounts, retirement funds, investments, etc.)
- People with partners that have debt
- Stay-at-home parents
- People that have significantly less wealth than their partner
- People that have significantly more wealth than their partner
- People with pets
- People with businesses (or that plan on opening a business in the future)
- People with a future inheritance(s)
- People that may receive significant gifts from family or friends (i.e., wedding gifts)
- People on their second (or third or fourth) marriage
- People with children from another relationship
- People that want a private lifestyle (this may be people in the public eye for whatever reason, business owners, social media, etc.)
- People that fear infidelity
- Couples that want to align their financial and life goals
- Couples that want to facilitate in-depth communication about finances
Benefits of a prenup
Beyond the typical “protect your assets” benefit, there are many other benefits to a prenup that many folks don’t know about. Prenups are more than just legal documents; but can actually affect your relationship in a positive way.
Equalizing power dynamics
If there is a financial discrepancy between you and your spouse (i.e., one spouse has more money than the other), then there may be an uneven power dynamic at play. This could be that one partner has less agency in the relationship because they are completely reliant on their partner. They might feel that they can’t speak their mind for fear of losing that support. This could be between stay-at-home parents and a working parent or even just when one spouse makes significantly more than the other. How does a prenup help? Well, prenups can protect more than just the wealthy partner; they can also protect the lesser-earning partner. A prenup can equalize power dynamics by giving the lesser-earning partner a solid amount of assets in a divorce and helping them feel supported, even if the marriage comes to an end.
Let’s use an example to demonstrate. Marissa and John are married and have a prenup. Marissa is a stay-at-home mom, and John is the breadwinner. He makes over $500,000 a year as a CEO. Marissa had almost no assets to her name before the marriage. In the prenup, Marissa is awarded a lump sum payment of $1 million should the marriage ever come to an end, in addition to the marital residence. This helps Marissa feel supported and secure, even if divorce happens. There is no uneven power dynamic because she has just as much “financial power” as John, thanks to the prenup’s lump sum clause.
Alignment of life goals
Picture this: you’re retired, sailing on a yacht through Croatia; you stop off in a small town to get dinner and wine; the water is crystal clear, and life’s good. If that is your life goal, you should probably communicate that to your partner. The process of getting a prenup is a great time to do so; in fact, it’s required! Maybe you don’t have to get down to the exact location of where you want to be sailing, but if you plan on retiring at a certain age with a certain amount of money, then you and your partner NEED to discuss this. A couple of reasons why this is necessary: (1) your partner may have a completely different retirement plan in mind, and (2) they may not be aligned financially with purchasing a yacht! Alignment on life goals is more than just retirement; it is also about children, expectations of one another, financial roles in the marriage, budgets, and more.
During the prenup-making process, you two need to hash out the difficult topics, such as death, divorce, money, retirement, children, family, etc. If you aren’t aligned on the goals and expectations of one another, then you probably shouldn’t be getting married in the first place!
Contrary to popular belief, prenups must be reasonably fair. This doesn’t mean a prenup needs to be exactly 50/50, but both parties should walk away feeling comfortable with the outcome. In fact, if one party is left destitute or needing public assistance, the prenup may be thrown out by the court entirely. In other words, if your prenup is overly one-sided, it may not be legally enforceable.
Avoid a lengthy and expensive divorce process
Having a prenup streamlines the divorce process. We know, we know, it’s no fun thinking about divorce, but it’s a reality, with nearly 40%-50% of marriages ending in divorce. A prenup pre-determines those difficult issues that you would otherwise be decided in a divorce and possibly arguing over. For example, in a prenup, most people include asset ownership, debt allocation, and alimony. Without a prenup in a divorce, you will have to spend your time and your money to work out those issues. And attorney’s fees ain’t cheap!
Protect your property
This is the most obvious benefit of a prenup and why most people get them to begin with! Prenups protect your “stuff.” Whether you have $5,000 to your name or $5,000,000, a prenup can help you. Some people ask, “is a prenup even worth it if I only have X amount of dollars?” and the answer is, “a prenup can help protect your property, no matter the size.” Think about it this way, if you are cool with your partner taking a portion of your money in a divorce, then don’t get a prenup! But, if you are uncomfortable with the thought of your future ex-spouse taking some of your hard-earned money, then a prenup may be for you.
Protect yourself against your partner’s debt
There is always the question of debt, especially with the number of student loans floating around out there these days. You might be thinking, “should I even bother getting a prenup if my partner’s debt was taken out before I met them?” And the answer would be, “you could be assigned a portion of your partner’s debt in a divorce, regardless of when it was taken out, depending on your state laws and your specific case.” If you are okay with taking on your spouse’s debt, then by all means, do not get a prenup.
Plan out financial obligations during the marriage
Prenups aren’t just for divorce; they also handle financial obligations during the marriage, as well! Will you two have a joint bank account during the marriage or maintain separate accounts? If you are choosing to have a joint bank account, you’ve got some prenup homework to do. You need to discuss and come to terms with what will go in and come out of that joint bank account. For example, how much money will each of you deposit each month? What expenses will be paid from the account? These questions are extremely important to discuss and come to an agreement on. Why? Because joint bank accounts are usually deemed community/marital property, which means they will be split up in a divorce. If you aren’t in agreement on what goes in and out of the account, one party may be extremely disappointed when they have to share it with their spouse, who maybe didn’t contribute enough or spent too much.
Protect any children from another relationship
If you have children from another marriage or relationship, a prenup can protect them from losing out on financial support and/or future inheritance. Without a prenup, you may lose out on a percentage of your assets to your ex-spouse (who isn’t your children’s parent). Some of those assets may have been used to financially support your children or leave them some money when you pass. Without a prenup, your kids lose out on that money because it’s going to your new ex-partner. With a prenup, you can make sure to protect those assets and make sure your kids get your money instead of an ex.
Protect your pets
Yes, that’s right, a prenup can protect our pets. Without a prenup, our four-legged friends are typically treated as property. Some states have branched away from this and have started treating pets like real living beings, but most states still follow the pets-as-property principle. In a state where pets are treated like property, the court may award ownership of the pet based on factors like who purchased the pet. This may be very uncomfortable for some people because we all know just because you are the one who put the credit card down for the pet, doesn’t mean that you are the one really attached to it. In a prenup, you can dictate which partner will have ownership over which pet. This includes who will be financially responsible for the pet.
Real-life stories that prove that prenups can be romantic!
A prenup does not equal divorce. A prenup also does not equal a bad relationship. It’s like getting car insurance. You don’t assume the worst every month when you sign up for car insurance. You also don’t assume that you are a bad driver just because you have car insurance. You simply have it for the “just in case” moments.
“Imagine the possibilities if we thought of prenups as stress-reducing tools that strengthen relationships, rather than weapons that merely guard assets.” -Professional Life and Divorce Coach, Vindy Teja
Let’s look at some real people that have prenups and lived happily ever after, starting with Catherine Zeta-Jones and Michael Douglas. They have been together for 22 years (and that’s equivalent to 100 years in Hollywood time). This famous couple also signed a prenup back in the day. Their prenup (allegedly) has an infidelity clause requiring Michael to pay $5 million if he cheats, among other clauses.
Next up: Mark Zuckerberg and his wife, Priscilla Chan, who have also been together for over 20 years now! They, too, have an agreement with some wild clauses included. The contract includes a requirement of one date per week, with a minimum of 100 minutes of alone time (which must take place outside of the home and office). Together forever!
Another famous couple, Keith Urban and Nicole Kidman, have been together for nearly 16 years, and, you guessed it, they also signed a prenup. Their prenup states Keith may receive $600,000 per year from Nicole… as long as he stays sober and clean. So far, so good! They’re still happily married, and Keith is clean as a whistle (as far as we know!). See? Prenups are romantic!
Requirements of a valid prenup
If your prenup is not valid, then you don’t really have a prenup at all. Prenups typically need to be valid to be enforceable. But what makes a prenup valid? This depends on which state you’re in. What is required to create a valid prenup varies from state to state. For example, a valid prenup in New York may not be a valid prenup in Minnesota. However, there are many requirements that are commonly utilized by many states, which you can see below:
- The prenup must be in writing (no oral agreements allowed)
- The prenup must be signed by both parties (a prenup without signatures is just paper!)
- The prenup must be notarized (this is not required in every state, but it’s a good idea to get this done regardless)
- The prenup must have one or two witnesses there when you sign (most states actually do not require this, but there are several that do)
- The prenup must be entered into voluntarily (not under duress, coercion, undue influence, or any other type of force)
- There must be some level of financial disclosure (in some states, you may waive financial disclosure)
- The prenup does not have unconscionable terms included
- The prenup does not have unlawful terms included
- The prenup was executed at a reasonable time before the wedding
Contents of a prenup
Okay, so what ACTUALLY goes into a prenup? You may hear rumors about the crazy things people put into their prenups and wonder what is real and what is not. Most of those outlandish clauses (weight gain, no drug use, etc.) are not enforceable in courts. Prenups typically cover financial topics like property division, alimony (i.e., spousal support), and debt allocation, but can also cover some non-financial topics. Here are some examples of what may go into a prenup:
- Separate property versus joint property (what is yours, what is mine, and what is ours)
- Alimony (sometimes called spousal support or maintenance, depending on your state)
- Debt allocation
- Financial obligations during the marriage, such as whether or not you will use a joint bank account or maintain separate accounts during marriage
- Gifts and inheritances
- Lump sum clauses (will either of you be required to pay the other a lump sum upon divorce?)
- Confidentiality and social media image clauses
- Sunset clauses
- Death clauses
- Life insurance clauses
- And more.
Cost of a prenup
The cost of a prenup the traditional way (i.e., with a family law attorney) typically averages about $2,500 but can increase depending on the complexity of your case, the attorney’s experience and skill, the city you live in, and other factors. If you have a particularly complex case, your prenup could get up to $10,000 or more.
With online prenup platforms, such as HelloPrenup, you can get a prenup for a one-time fee of $599 per couple. No hidden fees and no last-minute costs. It’s very straightforward!
Starting the prenup conversation with your partner
For some, the prenup conversation may be a scary one. Maybe their partner is uncomfortable with the idea of a prenup or completely offended by it. Either way that shouldn’t deter you. Hollywood sometimes portrays prenups as an evil thing only for wealthy, rich old men to protect themselves from gold-digging wives. We get it; prenups sometimes get a bad rep. However, we can help you change this narrative with your partner. Educating your partner (in a non-patronizing way) on the real benefits in the section above is a great way to start. If that still doesn’t do it for them, you can give examples of real couples (see the success stories above) that have been together for 20+ years and lived happily ever after, even with a prenup in tow. Make sure you are clear with your intentions and choose a good time to discuss (like, let’s not do it after a big argument)!
To sum it up: educate your partner on the real benefits, show them how romance and success can also be in the same sentence as “prenup,” be clear with your goals, and choose the right time.
How to get a prenup
You can get a prenup in several ways. Through a lawyer, through an online prenup, or through a combination of both lawyer and online prenup. We do not recommend doing a prenup DIY-style.
If you are going the online prenup route, such as with HelloPrenup, you can get your prenup done and dusted from the comfort of your own home. How does it work? Each partner signs up with their own account and goes through a questionnaire. This questionnaire helps create a prenup that is tailor-made to your needs, not just a copy-and-paste template, as many other online prenups do. After you both finish the questionnaire, there will be a negotiation phase where you work out any discrepancies in your answers. Maybe one partner wanted to waive spousal support, but the other did not. You two will need to work this out. Once you’ve done that, you’re almost there! Just need to generate your prenup, sign, and notarize it!
Before signing the agreement, if you require or desire a lawyer, you can do so at this point. A lawyer can come in and answer any questions you may have or simply review it for another pair of eyes. This hybrid approach of using an online prenup AND an attorney is still saving you time and money–the attorney is simply reviewing a contract and answering questions instead of consulting with you, drafting the prenup, and then reviewing and answering questions, saving your attorney’s fees.
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]