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Should you get a prenup?

With many uses, they’re not just for the wealthy.

Key takeaways

  • Prenups are a growing trend with multiple advantages that are not just for the wealthy. 
  • If you'll have a blended family, have a pet, own a business owner or have business partners, then consider a prenup.
  • A family law attorney can help to mediate, write, and review prenups. Each soon-to-be spouse should have their own attorney. 
If you're planning to get married, the thought may have crossed your mind, "Should I get a prenup?" 
 
Having that thought doesn't have to mean you're being negative. Hopefully, nobody goes into a marriage with the intention or expectation of a divorce, or even death, but realistically, both are a real thing and a real possibility that couples may have to grapple with during their marriage. Because of that, a prenup can be a good idea for any couple who are about to get married. 
 
It’s a common misconception that a prenup is only for the wealthy or that having one shows a lack of confidence that the marriage will last. 
 
A prenup is a legally binding contract that both soon-to-be spouses sign before the wedding that sets financial expectations in case of a divorce or death, outlining the division of finances, personal assets, and debt. It helps both soon-to-be spouses understand their financial rights and obligations. Continue reading to learn about 5 overlooked advantages of a prenup that many soon-to-be spouses may not consider.

1. Prenups can help with hard conversations

The reality is: divorce can be contentious, stress inducing, and expensive. Communicating transparently before marriage about divorce can be uncomfortable, seem dismal, and may even cause dreaded feelings, but talking frankly about the possibility of divorce may help prepare for difficult conversations in the future. During the divorce process may not be the most opportune time to discuss your finances, allocation of assets, or debt as emotions are probably intense. 
 
Prenups can also help to avoid protracted litigation in the future. For example, prenups can be a good option to discuss and outline the agreed upon distribution of property assets so in case of divorce, the courts don't decide who gets what. Prenups can also set the stage for hard conversations about the provisions for alimony or other maintenance payments (keeping in mind that alimony and spousal support laws differ from state to state).

2. Prenups can offer protection from preexisting debt

Debt is common for many people; it's part of life. Prenups can help soon-to-be spouses avoid taking on liability of the other person's preexisting debt. This is especially helpful when one spouse brings significantly more debt into the marriage than the other. In case of divorce, a prenup can limit the debt responsibility for the spouse with lesser debt or determine who is liable.
 
If you're concerned about debt, be sure to understand the various types of debt a prenup can help protect against. For example, other than premarital debt there's also individual debt, joint debt, and business debt. It's a good idea to outline how debts will be handled and understand how a prenup can contribute to safeguarding your financial future in the event of a divorce.

3. Prenups can help with estate planning with blended families

A prenup offers estate planning safeguards and can help to ensure your plans are honored. For example, if you want to protect a financial legacy for your children, from both your current and previous relationships, a prenup can detail the treatment of inheritances received or separate property acquired during your new marriage. 

It's worthwhile to exercise care and ensure the previsions of estate planning documents including your will and/or living trust align with the terms of your prenup agreement. 

4. Prenups and Pet-nups

A majority of households have pets, whether it be traditionally domesticated animals like dogs, cats, horses, or birds. Most people are attached to their pets and it's not uncommon to consider them family. 

A "pet-nup" or a pet prenup is much like a prenup. It's an agreement that both soon-to-be spouses sign before getting married; it's an agreement to avoid ownership disputes of pets if there's a divorce or separation. A pet-nup sets rules for the custody and care of pets, can reduce stress for pets, and can help reduce conflict. Because legally pets are considered property, a pet-nup can be a good idea if you're going into a marriage with a pet and want to make note that your pet is non-marital or separate property. A pet-nup can also establish pet joint custody. 

Note: A small but growing number of jurisdictions have begun to apply a “best interests” standard, similar to child custody cases, when determining what is most appropriate for pets after a divorce. It is important to consult with your estate planning attorney about how these evolving standards could impact the enforceability of your pet-nup.

5. Prenups can be essential if you're already a business owner or business partner

If you're a business owner or a business partner going into a marriage, safeguarding your business may be a practical decision. A prenup can help prevent the division of your business. It can also let you define your business as separate property from other marital assets prior to going into the marriage and can even specify what part of the business stays separate or what's considered shared (if anything). 

In the event of a divorce, prenups can help protect the non-business owning spouse from liabilities of the business including financial liabilities, debt, obligations to other partners, and etcetera. 

If you're a business owner or a business partner going into a marriage, consider consulting an experienced family law attorney who can help you create a prenup that protects your business.

"Should you get a prenup?"

Not every couple chooses to establish a prenuptial agreement—it’s not mandatory. For those who do, it’s a good idea to start your discussion and prepare your agreement early. The earlier, the better. Signing too close to the wedding date could possibly be a reason to void the contract.

Although couples should communicate honestly and work together to prepare their prenup, keep in mind that each soon-to-be spouse will need their own attorney. 

While you'll need your own attorney, couples can still draft their prenup together or use online tools. It's important to disclose all assets, liabilities, and other relevant facts during the negotiation process. Be sure to consult a family law attorney for legal advice. 

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This information is general in nature and provided for educational purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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