According to recent studies, in 2020 the average age of a person getting married for the first-time in the United States was 32. As the age of people getting married for the first time continues to rise, it stands to reason that more couples are also entering marriage with pre-acquired belongings and higher levels of personal wealth.
However, with nearly 50% of marriages ending in divorce, it’s surprising that according to this white paper, less than 5% of couples choose to get a prenup to protect those hard-earned assets. We think the number of couples who get prenups is actually higher.
Unfortunately, prenuptial agreements have a bad rap in pop culture; a stigma that getting one is a sign that you have no faith in your relationship or that you are planning for the end!
Startlingly, Justin Bieber refused to draft a prenup with his now-wife Hailey Baldwin… or so he says. Despite his $265 million fortune, he opted against financial protection citing that his marriage will last ‘forever’. And we hope it does! We also wonder if there is more to that story, given the financial advisors Justin likely has around him. But, with over half of all marriages failing, along with the added benefits of a prenup allowing couples to gain clarity and plan financially…there are a host of reasons to get a prenup.
So, what does a prenup entail and what does it mean in a marriage?
What is a prenup?
A prenup (also known as a prenuptial agreement or premarital contract) is a legal document, signed before marriage, that details how a couple’s assets and property will be divided should they divorce, and can also detail how assets should be held during marriage.
Is a prenup legally binding?
A prenuptial agreement is a legally binding contract between two engaged people that sets out the financial details of marriage and division of assets in a divorce.
In a prenup, you can determine which of your current and future assets should be categorized as marital property and which are separate property, and this will determine how they will be dealt with if you divorce. This can also determine how these assets are handled during a marriage.
Separate property (often also also known as premarital property) refers to any assets (including finances) that a party had before the marriage, or those which were obtained through gift or inheritance. It is separate property that parties mainly look to protect through a prenup. Now, separate property isn’t JUST premarital property, or gifts, or inheritance. In many states, these premarital assets are not considered to be separate at all once you get married. This is why a prenuptial agreement can be important in a second marriage. It allows you to delineate what you, the couple wants to be considered marital or separate.
Marital property is often considered those assets that both spouses acquire during the course of the marriage. But remember- marital property can include separate property that you would like to be considered marital, too.
It is important to make a distinction between premarital and marital property because it will distinguish what you are able to protect and what should be shared between you and your spouse.
A prenuptial agreement can also contain details about spousal support or alimony, which is important if you or your spouse will earn a significant income during the marriage.
Similarly, if you or your spouse enter the marriage with a considerable level of debt, a prenup can dictate who will be responsible for that debt during your marriage or should you divorce.
As a prenup is a legally binding contract, the provisions set out within it should be honored during the marriage and in the event of a divorce. However, there are instances when a judge will render a prenup void or unenforceable if requirements for validity in the state were not followed.
What needs to be done to make a prenup valid?
Remember- each state has its own rules, requirements and case law for what constitutes a valid prenup. For a prenup to hold up in the eyes of the law, generally speaking:
- The contract must be in writing, signed and should be notarized. Verbal prenups are not enforceable.
- In most states, there must have been a full disclosure of assets from each party. If either party is found to have hidden or had undisclosed assets, then it could invalidate the agreement.
- You may need legal representation to make your contract enforceable in certain states. Not every state requires both parties to have legal representation. More information about what is required in your specific state can be found here.
- The agreement must be voluntary. Evidence that a party was forced, threatened, or coerced into signing the contract will deem it void.
How Does a Prenup Affect a Marriage?
With divorce rates skyrocketing in recent years, many couples see a prenup as a practical tool for setting out the fair division of belongings in the event of a divorce. But where some couples view prenups as being practical and realistic, others view them as setting a precedent of pessimism and untrustworthiness from the outset of a marriage.
So, what does signing a prenup really mean to a couple? Can a prenup really negatively affect your marriage? Let’s take a look at what it really means when you sign an agreement with your partner. Check out our prenup encyclopedia for more!
FACT: Prenups can provide peace of mind and protection
Prenups are a practical way to protect income, wealth, assets, inheritance and property and many couples feel this is a solid reason to get a prenup before marriage.
For many, once their assets are legally protected, they feel a sense of reassurance and peace of mind – and more trust in their relationship. This is especially common when either party has accumulated a lot of personal wealth in their life prior to getting hitched. This may be particularly true of those who are getting married later in life, or those who have been married before.
MYTH: Prenups can set a precedent of cynicism
Some may shy away from the idea of arranging a prenup as they fear it will set a precedent of distrust within the relationship. Granted, speaking about money, finances, debt, assets, inheritance, and support before your marriage has even begun can be difficult, but it is important to have those conversations and open up a dialogue fostering trust and honesty.
If both sides are in agreement that a prenup is a step in the right direction, then you can sidestep the fear that the contract is a precursor to marital failure or divorce. It isn’t!
FACT – Prenups can promote openness and fairness in your relationship
TRUTH! It is true, prenuptial agreements do not have to breed a sense of distrust in a marriage. In fact, they can nurture an air of transparency and result in a fairer distribution of assets between couples around money, assets and ya know, #lifegoals.
They can also prevent unnecessarily acrimonious divorce proceedings. Without a prenup a judge will make the decision about how assets will be divided, therefore removing any control or say a couple could have about their financial futures.
For a premarital contract to be legally binding, in many states, there has to be a full disclosure of assets by both partners. This means that each party has a full and clear picture of their future spouse’s financial position, including assets and debts. This is not about causing embarrassment, concern, or blame. Rather than triggering distrust, it can encourage understanding and provide opportunities for discussions, which can help set the tone for the future of your marriage.
MYTH – Prenups are a waste of money
Prenups do cost money, but it is important to look at the bigger picture financially when you are thinking about getting one.
Generally speaking, there are three best practices for getting a prenup. You can write your own, hire an attorney or use HelloPrenup.
You can compile your own prenup for a nominal fee if you download a template from the internet, but we recommend that you hire independent legal advice to ensure that your contract is fair and binding. Costs for hiring an attorney per hour can range from $50 to $1,000 online. This ballpark figure does not take into account potential retainer fees or additional negotiation needs.
You can hire a competent lawyer to draft your prenup and take care of the whole process on your behalf, including documenting your assets and customizing your prenup accordingly. The global cost of a prenuptial agreement will vary depending on your assets, and the intricacy of the agreement you require. In some instances, lawyers will charge by the hour or will work on a flat fee depending on your needs and your chosen firm.
Typically, prenuptial agreements drafted through an attorney can cost in the region of $1,200 to $2,400. Per person. However, this could be more depending on whether you and your spouse have difficult issues to iron out or a number of amendments that need to be made. Couples who are negotiating very intricate matters could anticipate spending upwards of $7,500.
Another option is to use our innovative proprietary platform HelloPrenup to create a quick, efficient prenup agreement that works for you. HelloPrenup costs a miniscule percentage of what you would expect to pay by having your document drafted by a divorce attorney in your state. There are no hidden fees or expensive retainer costs, like you could otherwise be lumbered with. HelloPrenup costs a one-off fee of $599, to be paid prior to downloading the final agreement.
So, yes getting a prenup does cost money and the amounts involved vary depending on your method of choice. But it is worth considering that the average cost of divorce in the United States is currently topping $15,000. The overall cost of divorce can differ from state to state, but the estimate cost ranges between $10,000 and $20,000.
When you think about the cost of drafting a prenup versus how much you could stand to lose without one, it seems like a small investment, right?
FACT – Prenups can protect you from debt
When thinking about prenups, you may believe that they are only useful for celebrities or the super rich. Maybe you focus only on how they solely benefit a wealthier person and how it can safeguard their assets.
What is often overlooked is that a prenup is a useful way to protect people from their partner’s debts too.
A prenup means that if a couple divorces, then the person who accrued the debts will remain responsible for repayments. Remember, this does not extend to creditors- a prenup is a private contract.
In addition, prenups can also be a great way to protect business interests too. They can safeguard a partner from business debts, which is vitally important if one party has plunged their personal savings into an individual business venture.
With this in mind it is also important to note that all marriages are prone to change, and some choose to have their prenup expire at a certain date with the use of a sunset clause.
MYTH – Having a prenup is a sign your marriage is doomed
WRONG! Wrong. Wrong. Wrong. Some people may think that having a prenup is the equivalent of saying your marriage is set to fail from the outset. The truth is that research has shown that arguments about money and finances are one of the most common causes for marital breakdown.
And, ya know, communication is key in a healthy marriage. Communication about finances is key to a really healthy marriage
Therefore, it stands to reason that couples who communicate effectively about their financial issues by getting a prenup before walking down the aisle, will have a better understanding of their spouse and have a stronger, happier, and healthier marriage going forward.
MYTH – Having a prenup means a marriage is loveless
Only an individual person can determine how much they love their partner and what love actually means to them. Ultimately, a prenup indicates that you love your future spouse and want to communicate with them. In fact, you could view a prenup as a way of demonstrating the feelings of respect and fairness that you have for your other half. A prenup is a written declaration that you value your spouse, respect their property and assets, and that you want your marriage to be fair and honest.
Only you and your loved one can decide what is right for you and whether you feel a prenup would benefit you both in the long run.
If you want to find out more about how a prenup can benefit your marriage, then why not reach out to us 🙂 We are here to help!