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Do We Need a Prenup? 7 Questions You Should Ask Yourself

Do we need a prenup?

Kevin at Thousandaire would say yes! (and in video form, too). Before I actually got engaged, I was a big proponent of prenuptial agreements. Throughout my childhood and teens, I’ve witnessed some rather unhappy marriages (fortunately, not my parents’). So I was quite hung-ho on getting a prenup and defining the financial terms if my marriage were to end. Well, now I am engaged to the man I’ve known for 10+ years, a supporter, a friend, a confidant, a partner. We are getting married in 8 months. Drafting an enforceable prenuptial agreement in California will cost thousands of dollars even for just-starting-out folks like us. Suddenly the issue is less theoretical and more practical. I still think that a prenup is important for many people with more assets, but we aren’t rich. In fact, we are going to be broke grad school students pretty soon. So, is a prenup for us?

7 questions to ask when you ask yourself “Do we need a prenup?”:

  • What does your state law say (and do you agree with it)? In 41 states, assets are split via “equitable distribution.” In 9 community property states (California included), everything acquired during the marriage is automatically split 50/50 if the marriage ends.
  • Do you have substantial assets or expect to come into substantial assets in the future? Bottom line, I don’t think we’re rich enough for a prenup. No millions in the bank, no ownership in businesses, no stock options at hot startups. Our career salary trajectories are roughly similar, and while I make more money now, either one of us has the potential to out-earn the other in the future.
  • Do you agree with splitting assets acquired during marriage 50/50 if you split up? Both of us agree that all assets we acquire during the course of the marriage – outside of inheritance – should be split 50/50 if we were to get divorced. I am more likely to receive an inheritance in the future. If I were to receive an inheritance, however, it would likely be structured in a trust and so would remain separate, not community, property. A prenup can reaffirm that separation, but it’s not critical.
  • Do you have similar levels of debt? We are coming in with roughly equal amounts of student loans.
  • Do you have children? Is this your second or third marriage? This doesn’t apply to us, but I’ve read that a prenup is exceedingly helpful for protecting the interests of children in a remarriage.
  • Do you want to have provisions where assets distributions are used to punish infidelity? If you want to make sure that your spouse’s share goes from 50% to 10% (or 0%), if he/she cheats, then a prenup is necessary. Cheating is so prevalent nowadays that courts don’t really look upon that as a consideration in terms of determining asset splits. Be sure to define what constitutes infidelity and what level of evidence is necessary. That must be a fun conversation.
  • Do you plan to have one person stay at home with the kids? Do you want to figure out the terms of alimony? Some people say that if one person leaves the workforce to take care of kids at home, it’s best not to have a prenup or to have a prenup that says assets will be split 50/50 (to protect the interest of the stay-at-home parent).

Our decision

The bottom line for us is, for the duration of the marriage -which is hopefully forever- we see whatever money we make as “our” money, no matter if he makes more or I make more. Furthermore, I cannot imagine CB behaving in an dishonorable manner.  I’d like to think I would never behave that way either. I love him for his humor, his good looks, his kindness and quirks. But almost above all I love him for his character – he would have to become a whole different person for him to become bitter and spiteful. (Though of course, the nature of divorce means that people have changed, and often into someone unrecognizable to the other).

So, I don’t think we are going to get a prenup. Given all of the above considerations, I’d probably take the money we would have spent on a prenup and spend it on a big vacation instead! I hope our marriages lasts and lasts until one of us is called to the Big Gathering Place In The Sky. But baring that, I trust that we will both try our hardest to remain civil and amicable even if we were to separate. I believe we will be good partners to each other, and if we fail at that, I believe we can be good ex-spouses. It’s probably not a terribly romantic way of arriving at what is the “more-romantic” decision to not have a prenup, but it works for us.

Would you sign a prenup? I’d love to hear from anyone who has gotten a prenup or who has considered one, especially if you don’t have millions in the bank!

  • My money, my life - Wow I never knew that prenups has been used by people to use infidelity (or lack thereof) as a precondition to equal distributions. I think if I were to get married, the biggest factors for deciding whether to get a prenup would be 1) whether my partner or I have been married or children from before, 2) whether we have similar income levels and netwealth and future prospects. Of course I would never marry a person that I foresee a nasty divorce, or a divorce with, but you never know.

    I took family law in school and by far the most common stories are situations where one partner is much richer than the other, and they've used prenups to get the other party to agree to a lesser amout than they would under normal divorce proceedings. But perhaps we just don't hear about amical divorces where both parties did "the right thing" post split, regardless of their prenup? Keep in mind that you can also make a marriage contract after you are married if your financial situations change, at least you can in Canada :) ReplyCancel

    • Well Heeled Blog - We have those contracts in the U.S. as well – they are called post-nuptial agreements. From my understanding, they are less enforceable than prenuptial agreements. I figured if prenuptial agreements are hard to talk about, post-nuptials must be even more difficult. ReplyCancel

  • Emily - I would have signed a prenup if my husband had wanted one, but it seemed pretty pointless. We didn't even seriously discuss it. 1) The only difference in our financial situations at the time was that I had student loans and he had some cash savings, both between 10 and 20 k$. Our retirement accounts were about equal and our educations/career prospects were equal. Since we combined all our money when we married and he agreed to pay my student loans with his cash savings a prenup didn't seem relevant. 2) We agreed that there is no "back door" out of our covenant – no divorce option. I know that seems naive to many people but we are very firm in our convictions and are perpetually working on strengthening our marriage so that divorce never seems attractive. ReplyCancel

    • Well Heeled Blog - I don't think it's naive. I'd like to think that divorce isn't an option for us and that the good will outweigh the bad. ReplyCancel

  • Michelle - I don't have a prenup, and have never really thought of it. ReplyCancel

  • Money Cone - Legally a wonderful thing, but I don't know how many can follow through. Sorry a pre-nup just sounds wrong! Changing our idiotic laws could be a better alternative. ReplyCancel

  • Erika - I thought about this seriously before. And while the BF and I make about the same amount of money, he is drowning in loans and I have zero debt. Of course that will all change in the future once I go to grad school so that point is moot. I am not sure at this point whether we will have one or not. I'd like to have one for the sake of having something in writing just in case, but I can see why he would think it would sort of allude to something. Great post!ReplyCancel

    • Well Heeled Blog - My understanding is that premarital debt is generally separate property… but debt that you incur after marriage can be held by two people jointly & severally, which means the lenders can come after both people for the loan. Maybe a prenup can clarify those issues? ReplyCancel

  • femmefrugality - I'm so glad you looked into this. I know when you're engaged everything is butterflies and roses, but I'm also a divorcee. I don't necessarily wish I had a pre-nup, but I do wish my mother had had one. You never know what's going to happen. People grow and change, and unfortunately it's not always together. I have no opinion about having one or not, but I am glad to see someone researching it and being prepared. ReplyCancel

  • Brianne - We talked about getting a pre-nup before we got married last year. Turns out he was just worried that if things went south I might want his drum set and electronics. I convinced him that was sincerely not the case.

    We don't have nearly enough assets for a pre-nup to matter. ReplyCancel

  • krantcents - I think whenever two people come into a marriage with unequal assets, they need a prenup. When my wife and I married we were equal in terms of assets and net worth. With a 50% divorce rate, you need to protect yourself. ReplyCancel

  • Simple Rich Living - I would consider it if/when I am in that shoe. It will largely depend how much debt/asset/earning each of us bring into the picture. ReplyCancel

  • Independence - Honestly, I am thinking that if you are thinking about prenup – you should have not getting married.
    Forget about it. Just live together and enjoy it.

    Perhaps old fashioned, but financial independence is last thing on my mind, when I want to spend my life with somebody else. ReplyCancel

  • waterbuffalo - I look at a prenup as a recognition that people can and do change with time – and that you realize that it COULD happen to you no matter how much you “know” it won’t at this current moment in time. I don't think it necessarily has anything to do with one person (or both) having doubts about the marriage. Its more about saving each side hassle during a divorce and can help a marriage end amicably if and when it does end.

    I don’t have one, but I was very young when I married so I never even thought of it.
    ReplyCancel

  • Camille - Well timed post! My co-workers have urged me to really research marriage laws here in Cali and to consider getting a prenup. Mostly from the stand-point that if you were to get divorced and one or both of your were to remarry, do you have a fair plan of how to divide assets and continue providing for your children.

    I didn't know it cost thousands of dollars to do this. I'm going to look into joining my company's auxiliary legal plan for a year (if the cost is right) and maybe use the network to draft a prenup and a will before opting back out. ReplyCancel

    • Well Heeled Blog - I was surprised as well when I looked into how much it would cost. Attorney fees add up! One thing to keep in mind is that both sides should have independent legal counsel to make the prenup as enforceable as possible. That way one party cant say they were coerced or they didn't know what was going on. ReplyCancel

  • Miss T - I have never been a huge fan of prenups, especially when you get married when you are young before kids. To me marriage is a permanent commitment anyway so a prenup seems unnecessary. Call me a traditionalist but when I commit to someone, it is for life. ReplyCancel

    • Luis - You can be a traditionalist and still get a prenup as a just in case. You never know if something were to happen that was inexcusable to you such as domestic abuse and money laundering. A traditionalist is also someone who will not be made a fool.ReplyCancel

  • Friday grapevine: best of the blogs - TotallyMoney - [...] Well Heeled Blog weighs up the pros and cons of prenups. [...]ReplyCancel

  • Little House - Mr. LH and I have been married 11 years – no prenup. Our finances were very similar when we married, so there wasn't any reason to sign one (and we went into the marriage thinking 'this is it.'). We also didn't have children from previous unions or large sums of wealth. I'm sure there are circumstances that require one, like one person has a huge amount of wealth or assets or children from a previous marriage, but for us there wasn't a need. ReplyCancel

  • Interesting Links « Leigh's Financial Journey - [...] Well Heeled discusses whether a pre-nup is necessary or not. [...]ReplyCancel

  • eemusings - I could see myself, in all honesty, turning resentful if we were to split up. I know my faults. But I am 99.99% sure he wouldn't, because he's just not that kind of person (money doesn't mean the same thing to him as it does to me).

    But no, we're not planning on a prenup. ReplyCancel

  • Kevin McKee - I have a friend going through a divorce right now, and his lawyer asked him, "Do you want her to have half of your student loans? Just say the word."

    She found someone else, left him immediately, and she's not even getting a lawyer. He can pretty much do whatever he wants. He's a good guy and isn't going to be unfair (even though she's cheated on him), but it's just terrifying that a good lawyer is all it takes to saddle your ex with thousands of dollars in your debt.

    I would very much like a prenup if I were married today, but my current girlfriend very much doesn't want one. We'll just have to see. Thanks for linking to my post! ReplyCancel

  • Laura - I got married 3 yrs ago (im 28 now) and we decided the same thing. We have almost the exact same amount of student loans, literally nothing but what we saved for the wedding and neither of us will ever get any inheritance(both of our families aren’t well off). So thought it was a waste of money. We also would like to think divorce isn’t an option. ReplyCancel

  • The Deal on Prenups |SheBloggs - [...] been lots and lots of talk about prenups in the PF community lately. I personally believe that whatever is acquired [...]ReplyCancel

  • Our favourite posts from our Twitter Friends | DINKS Finance - [...] Well Heeled Blog  is getting ready to get married and wants to know if she should protect herself.  Well Heeled Blog asks “Do We Need a Prenup? 7 Questions You Should Ask Yourself” Follow her on Twitter @WellHeeledBlog [...]ReplyCancel

  • Well Heeled Blog – Best of the Best Blogger Series - [...] an utterly fascinating character to know and to follow. A few of my favorite posts from WH include Do We Need a Prenup?, What Losing Money Taught Me About Saving Money and Income, Goals and What’s [...]ReplyCancel

  • Paige Zandri, Esq. - I am a matrimonial and contracts attorney in NYC and I advise my clients to, at minimum, discuss the elements of prenup with their future spouse (even if not in the context of whether your fiancé is interested in getting a prenuptial agreement). The exercise alone of discussing your expectations with regard to income, expenses, assets and debt is a sign of a healthy and honest relationship, and frankly, if you are not having that conversation with your fiancé prior to putting at least 50% of almost everything that comes into your possession after marriage "up for grabs", then I would want to spend some time peeling away the surface to ask yourself the real reason "Why?".

    The fact of the matter is that the law protects your financial interests in the case of divorce, not your love for one another. Couples with simple finances can get a prenup for under $2,000, which is a small price to pay compared to the average minimum of $20,000 needed to finance a contested divorce. If after you discuss the elements of a prenup with your fiancé you discover that the two of you prefer to determine your financial futures in a way that deviates from the default operation of the law (and most do), you can think of the $2,000 as a prudent investment.
    ReplyCancel

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