Although marriage is a romantic union, it's also a financial partnership. In 2023, more than 50% of US adults said they were open to signing a prenup, according to Axios and the Harris poll1 — up more than 8% from 20222.
What is a prenup?
A prenuptial agreement, most commonly referred to as a prenup, is a legal document signed before you marry. It details how financial assets and responsibilities—real estate, investments, retirement benefits, and the like—will be divided in the event the marriage ends in divorce or death.
"A prenup may be set up for many different reasons," says Kelly M. Quinlan, advanced planner at Fidelity. "It can establish ‘What's mine is mine and what's yours is yours.' More importantly, it forces a soon-to-be-married couple to discuss money-related issues, such as debt, credit, savings, salaries, homeownership, and the like. As improbable as it sounds, a discussion regarding the management of a couple's finances may also inspire conversation to help ensure a stronger marriage." If discussed early, it can be an effective tool for wealth and asset protection for both parties. It can also be a tool that helps reduce the possible emotional and financial turmoil that follows if the marriage dissolves.
It's important that a potential prenup is discussed, prepared, and executed—to the extent possible—well in advance of an upcoming marriage. It requires full disclosure of assets, debts, and in some cases, potential inheritances. Each party must also retain their own attorney to represent them.
The risks of not having a prenup
If you divorce without a prenup, decisions about how you divide the property and assets you own together, as well as those you brought into the marriage, will be made at an emotionally fraught time. You may be legally required to divide property you brought to the marriage and consider solely yours. You may also have to pay alimony if you're the higher earner, or you could find yourself responsible for your former partner's debts.
If you can't come to an amicable agreement during separation and divorce negotiations, state laws will likely dictate how the court divides your assets and debts. The division could be for assets acquired during the marriage in community-property states—currently Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In other states, sometimes referred to as "non-community property states" or "equitable distribution states" assets are generally divided based on what the court considers to be "fair" but not necessarily equal, each partner's income and earning potential, health and age of both partners, as well as what was accumulated together.
Who should consider getting a prenup?
While in the past prenups had a reputation as being appropriate only for wealthy couples or those where one party was more well-off than the other, now the value is apparent for more couples. For example, you may be bringing significant savings to the partnership, anticipate getting a significant inheritance in the future, or co-own a business that you want to protect. You may even have interest in a family business that would be difficult to divide.
When you earn a hefty salary (or are likely to in the future)—or foresee taking time from the workplace for childrearing or caregiving and, earning less as a result—a prenup can help set expectations for future support. It can also acknowledge children from a prior marriage and set expectations for estate planning to benefit those children.
While prudent at any age, if you're marrying in midlife—be it your first marriage or your fourth—you're more likely to have significant assets, so drafting a legal document that outlines your expectations and obligations prior to marriage may be smart. However, keep in mind that a prenup isn't a replacement for an estate plan in the event one partner passes away, cautions Quinlan. "When you include prenuptial terms that apply upon death, you'll want it to be mirrored in your overall estate plan," she says.
What is a postnup?
After you marry, you can still draft a postnuptial agreement (or postnup), which is an agreement a married couple can enter to outline the ownership of financial assets in the event of a divorce or death. Like a prenup, each party must have an opportunity to retain legal counsel, there can be no fraud or coercion, there must be full disclosure of financial assets, and the terms must be fair and reasonable at the time of execution and marriage dissolvement. "It's important to obtain legal counsel for a post-nuptial agreement as the rules regarding enforceability may vary between states," says Quinlan.
How to write an ironclad prenup agreement
Talk first. Have productive conversations with your future spouse before you bring in your lawyers.
Get help. Ask friends, family members, or another lawyer you've worked with for recommendations for a lawyer who specializes in matrimonial law.
Plan ahead. Sign the prenup well in advance of the wedding date, which may help remove any impression that it was done under duress.
Be transparent. Full disclosure is vital. You and your future partner must share all your finances, including what you own, income, what you owe, and in some cases, what you could potentially inherit in the future. "If there is a divorce and the prenuptial agreement is challenged by one of the parties, the court will review the agreement to help determine that it was fair and reasonable at the time of execution, and fair and reasonable at the time of divorce," Quinlan says.
Pay attention to related paperwork. IRAs, 401(k)s, and pensions are distributed at your death through each plan's beneficiary designations, not your estate planning documents or a prenup. For some types of assets, a surviving spouse may be deemed to be the primary beneficiary. In some instances, if you want your kids or other individuals to receive the proceeds of those accounts, your spouse may need to waive those rights in writing.
Talk to the kids. If you have adult children and you're entering a second marriage, consider discussing the prenup with them before you sign it, that way they know what to expect. If they have other financial concerns about your upcoming marriage, it may be wise to give them a chance to share their thoughts.
Revisit the plan. "Prenuptial agreements usually have some flexibility built into them so that if the couple decides to amend it after marriage, they can do so," says Quinlan. That may even be necessary. "Since the prenuptial agreement must be deemed fair and reasonable at the time of execution and divorce, in some instances, it may be important to amend the prenuptial agreement during the marriage to account for impactful financial changes," Quinlan adds.
Quinlan also suggests reviewing your prenuptial agreement every 3 to 5 years or as often as circumstances dictate. You may even consider revisiting your prenup when you're creating or updating your estate plan to ensure continued alignment between the two.