Not-so-fun fact: The national divorce rate is 7.7 which means that 7.7 out of every 1,000 American women aged 15 and up got a divorce in 2018, the most recent year to see a data release from the U.S. Census Bureau's American Community Survey (ACS). And while the divorce rate is down from 10.5 in 2008, the statistic is a sobering reminder that not all marriages end in happily ever after.
Is that to suggest that your particular union is doomed to be immortalized in census data? No, but it should give you a reason to stop and ponder the what-ifs. What would happen if you and your spouse split five, 10, or 20 years down the road? Would you be able to support yourself without your ex's income? Would your children's inheritance rights be protected? Who would gain control of your investments? The answer to all of these questions—and then some—can be found in a prenuptial agreement.
What Is a Prenuptial Agreement?
A prenuptial agreement (or "prenup") is a written contract created by two people before they are married, typically listing all of the property each person owns (as well as any debts) and specifying what each person's property rights will be after the marriage.
If you and your betrothed decide against a prenuptial agreement and then change your mind after you're married, you can still get a prenup. In this situation, the contract is known as a post-nuptial agreement. The prenup addresses the distribution of income and property acquired during the marriage, if alimony (a.k.a. spousal support) will be offered, and if each party is to be exempt from the other's debts, among other topics.
Read on for more info about prenuptial agreements, including reasons why it's a good idea to get one before walking down the aisle—even if you're not exactly rolling in cash.
7 Smart Reasons to Get a Prenup
Many are of the opinion that anyone who marries should have a prenuptial agreement along with a strong understanding of the laws of their state pertaining to divorce. If you've read up on your state's family laws and you're clear on how your state divides property post divorce, then maybe you don't need a prenup. But if any of the below reasons to get a prenup resonate with you, then you should consider signing on the dotted line.
To simplify (and hopefully shorten) the divorce settlement process: State divorce laws regulate what is and isn’t a marital asset. However, you have to prove in court which assets you brought into the marriage ("separate property") and which assets you gained after marriage ("marital property"). A prenuptial agreement helps streamline this process because it provides an all-inclusive list of each party's premarital assets.
A prenuptial agreement overrides state divorce laws, so if you and your spouse want to make a special stipulation, you're free to do so! Isn’t it best to set your own rules as opposed to depending on those adopted by the state?
To get on the same financial page as your partner: Because prenups require both parties to provide a full-disclosure view of their assets and debts, it forces couples to have a candid (albeit sometimes difficult) conversation about their current and future financial state. Reviewing everything with a fine-tooth comb now helps prevent unwelcome surprises down the road.
To keep assets separate: If you're bringing wealth into the marriage (in the form of money, real estate, a business, and the like), a prenup will prevent your ex from taking these assets should you divorce. The same applies to gifts and inheritances you receive during the marriage, plus investments such as stocks and retirement funds.
To secure your financial future: Prenups can benefit the lower-earning partner, too. For example, say you put your career on pause to raise the children, or you work two jobs so that your partner can go back to school. The prenup can outline alimony terms to ensure you're compensated fairly for these sacrifices and are able to maintain the quality of life you were accustomed to during your marriage.
To protect your children: Prenups come highly recommended for brides- and grooms-to-be who have children from a previous relationship. In the event of divorce or death, the prenup can dictate how, exactly, the estate will be divided between the children and the surviving spouse.
To divide debt: Prenuptial agreements can limit your responsibility as far as your spouse’s debt at the time of divorce and during the marriage. Determining how debt will be handled and who is responsible for that debt can save time and money if the end of the marriage means extensive litigation.
To promote your own peace of mind: Even if you and your partner are destined for a fairytale ending, you'll enjoy the assurance of knowing that your assets are protected. And if you do eventually split, you can sleep easier at night knowing that you'll have a fair settlement.