Connect Marriage

Why You Already Have a Prenup… Even if You Didn’t Sign One!

Kara Duckworth  |  August 2, 2021

Every married couple already has a prenuptial agreement. (And no, that’s not a typo.) We’ve got all the details here.

The question about prenups is not if you should get one, rather it’s: Would you rather have an agreement that you and your fianceé both carefully considered and agreed to, or one that gets decided for you? If you did not sign a prenuptial agreement before getting married and you get divorced in the future, a family law judge or the laws of your state will determine how your assets are divided — and there’s not much you can do about it. 

I’ve heard every reason there is about why a couple does not need a prenup. The most common one is that they are so happy and in love, there is no way they will ever get divorced. While divorce rates are declining from the often quoted “50% of all marriages end in divorce,” the statistics are still quite high – 39% of all first marriages end in divorce and that figure is substantially higher for second marriages.  I have also been told that one partner does not want to bring up the topic of prenuptial agreements because they don’t want to be seen as either greedy (if they have assets they would like to protect) or a “gold digger” (if they have less assets), or they don’t want to have a conversation that could turn into an argument. My response is always this: Consider that a marriage is a contract, not a scene in a romantic comedy. No prudent person would enter into a business partnership without a mutually agreed upon legal contract with future possibilities addressed. Why should the most important partnership in your life – your marriage – be any different?

Protecting Your Property 

Years ago, only celebrities and fabulously wealthy people would be worried about getting a prenuptial agreement. Times have changed and the reasons for needing a prenup have changed with them. Now, I would argue that there are very few couples who should not consider a prenuptial agreement, regardless of the value of their assets. Current marital trends are part of the reason, as people are entering into a first marriage at a later age, when they are more likely to have acquired at least some separate assets that would need protection like 401(k) accounts, stock options, intellectual property, or real estate. A recent survey by the American Academy of Matrimonial Lawyers showed that 62% of the attorneys are reporting an increase in the overall number of clients that are requesting a prenuptial agreement and of those clients, they are seeing a 51% increase in the number of millennial clients wanting a prenup. The main reasons clients cite for their desire to enter into a prenuptial agreement are: protection of separate property (78%), alimony/spousal maintenance (74%) and division of property (68%). Additional reasons to consider needing a prenup are protection of children from a prior relationship, business ownership (sometimes business partners may be required to have a prenup in their operating agreements), and anticipated family inheritances (again, prenups may be required in order to receive a future inheritance.)

What if you have more debts than assets? Having assets to protect is only one reason to have a prenuptial agreement – protection from the other partner’s debt is another good reason to have a prenup. Student loan debt, for example, can be addressed in a prenup and it can be specified that all student loan debt, whether the borrowing occurred before or during the marriage, is the sole responsibility of one spouse to repay. Making provisions for handling debts in a prenuptial agreement is especially important if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin, optional in Alaska) where any debt incurred by either spouse during the marriage makes both spouses equally liable for repayment of the debt, even if they received no benefit.  

Money Fights & Money Rights 

Money is usually the biggest reason that couples argue – and possibly divorce. The best time to talk about money and a prenuptial agreement is when the couple is very happy and planning a future together. Having an honest, and maybe uncomfortable, conversation with your intended life partner before you get married ensures that you both are on the same page about finances and can give you a good idea of how handling money will go in your marriage.  

Ready to take the plunge and have a prenup drawn up? There are a few key things to know about the requirements for a valid prenuptial agreement:

  • It must be voluntarily entered into by both parties, free of coercion and duress
  • It must be written and signed, usually with witnesses – oral agreements are not valid
  • Both parties should be represented by independent attorneys (required in some states)
  • Full disclosure of all assets and liabilities must be made by both parties. Hiding details can render a prenup invalid
  • In some states, there is a specific time period before the wedding that the agreement must be signed by – a surprise prenup presented the day before the wedding with a threat that the wedding will not go forward if not signed would be considered to be duress and therefore, not valid
  • The agreement must be balanced – that is, not completely in favor of one party or the other

A truthful, respectful, and caring prenuptial agreement is a step to making each partner feel secure about the financial future of your family. In many ways, a prenup is like having fire insurance on your home – something that you truly hope you never need but very reassuring that if you do, you will be secure in your understanding about how you will rebuild. Your financial advisor can refer you to qualified family law attorneys to draft a prenuptial agreement and help you put together your personal balance sheet to start a productive conversation with your fiancé. And after signing your prenuptial agreement, you can celebrate starting your marriage with honesty and confidence that you are on the same page about your finances in your marriage!

The CDFA® mark is the property of The Institute for Divorce Financial Analysts, which reserve sole rights to its use, and is used by permission. 
Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.
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