With wedding season looming, “prenup season” is upon us
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With wedding season looming, “prenup season” is upon us
While it is believed prenuptial agreements have been in use for at least 2,000 years, they’re still fairly misunderstood. Many people think only a small percentage of the population, presumably the rich and famous, get prenups before they marry. But that has changed in the last decade.
“Do you not love each other? Are you planning to get divorced,” were the thoughts Sarah Wright, 28, had at her best friend’s wedding when she was told the couple had gotten a prenup. Wright and her partner — who was with her at the wedding — were taken aback when the bride and groom casually mentioned the prenup. But now that Wright and her partner are engaged themselves and have done some research, they’re also planning on getting a prenuptial agreement.
“No one has in the back of their mind, ‘We’re gonna get a divorce,’” she said. “The thing that me and my partner like to talk about is, we have a lot of life ahead of us … we want to do it together and grow in the same direction. But it doesn’t always happen.”
Wright, who has been with her fiancee for three years, said all of their finances are currently separate. Despite any raised eyebrows coming her way, she believes this is the best way for her marriage to begin.
Who is getting prenups?
According to a survey conducted by Harris Poll in 2022, of 1,073 married or engaged adults, 15% reported signing a prenup. A similar study done by the same agency in 2010 reported 3% of Americans surveyed had signed one. The recent survey may also indicate that prenups will only become more popular with time — according to the survey, four in 10 U.S. adults support the use of prenups.
The more recent Harris poll also found that nearly 40% of married or engaged people between the ages of 18 and 34 have signed prenups, while just 13% of people between 45 and 54 had done so.
“I would recommend a prenup for anybody,” said Adam Citron, a partner at Davidoff Hutcher & Citron Divorce and Family Law practice in New York. He agrees that prenups are becoming more prevalent, and he believes a lot of it has to do with people getting married later — between their late 20s to mid-30s. He also mentions that prenups are becoming more common because people are divorcing and remarrying at an older age, and usually that comes after taking a hit financially with the first marriage. Another reason may be that more women have careers and assets to protect when they get married, said Florida-based family law attorney Sara Singer.
Right now, it’s prime “prenup season,” Citron explained, as couples begin to plan their agreements a few months before tying the knot in the summer. He encourages his clients to sort out their agreements as soon as the beginning of their engagement.
“You’re pre-determining a lot of the issues before the marriage,” he said, explaining that couples aren’t necessarily planning to separate but are being realistic about what could happen. Everything is figured out on the front end, and a couple can save a lot of money that can come with a divorce. Plus, issues like someone stalling a divorce because they do not want the marital residence to be sold can be avoided by getting a prenup.
“When you’re in love … it’s a lot easier to negotiate at that point rather than [when] dealing with a divorce, where emotions are high and you’re not necessarily in the most rational state,” Citron said.
As for cost? According to a Business Insider article from 2022, the typical cost for a prenup could be around $2,500, but that also depends on location and attorney. Citron, based in New York, said depending on how amicable the process is and what negotiations are like, the entire process can cost between $5,000 and $10,000. He said clients could also go to nearly any attorney and get a boilerplate agreement for a lot less.
What’s included in a prenup?
The process typically begins with each partner in the relationship retaining their own lawyers, which is recommended by both Citron and Singer. Some couples could also enlist a legal mediator that meets with both of them to discuss all of their financial information. After initial consultations, a draft from both sides is made showing what financial matters should be addressed in the agreement.
“Most of the time people come to me saying my soon-to-be spouse and I have decided we want a prenup,” Singer said, adding that people generally come into her practice with an idea of what they want included in their agreement. “And then they walk away from the conversation with like 300 other things to talk to their spouse about.”
Singer said prenups are not designated for the mega rich and there are many things that people who make an everyday living can consider in a prenup. For instance, one spouse coming into the marriage may have plans to create their own business.
Sarah Wright’s fiancee is a shoe designer and recently started his own business doing freelance design work. They’ve had multiple discussions about the potential value of the business and the skills he brings. She’s also had a hand in helping organize his business by managing the checking account, invoices, taxes and so on. But they are still navigating how best to include the business within their prenup agreement.
“I would hate for him to build up his business to be some big successful thing … and he’s put all this sweat equity into it,” she said “And later down the line, he has to split it with me just because I’m his wife.”
It’s important to remember what is considered premarital and marital property when divvying up a prenup. According to Citron, marital property is any money earned during the marriage — income, retirement, and so on. Premarital property can be anything from real estate, investment accounts, and debt that were acquired prior to the marriage. And if one person wanted to use premarital property money for a marital purpose — like a house — they would receive that amount back upon divorce. A clause detailing this avoids any commingling of assets.
According to Citron, all assets and liabilities are clearly listed within the agreement — real estate, securities, cash accounts, retirement accounts, jewelry, artwork, and even pets. Along with this, specific clauses are created that outline how contributions to an asset are treated.
“For example, an agreement may provide that a separate property residence remains separate property, as well as any appreciation in value, regardless of contributions by the other spouse,” Citron said. (Normally, in a divorce, that spouse would be entitled to make a claim against the property based off of any contributions they made during the marriage for upkeep and other expenses.)
After full financial disclosure and negotiations, the couple is then ready to sign.
What are the misconceptions?
Singer said in her experience dealing with divorce cases, the amount of financial distrust is “astronomical,” and a prenuptial agreement actually helps couples create a solid foundation and equal footing in the marriage.
Apart from financial matters, Sarah Wright said she and her fiancee also want clauses on how to manage their marriage. For example, if they are having relationship issues, they’ve discussed a clause requiring a certain amount of therapy visits before moving onto the divorce stage, which is possible according to Citron.
For some professionals, prenups are not the end-all-be-all of a couple’s financial future.
“I don’t recommend them as a rule in the same way that I might say, make sure you’re getting the employer match in your company 401k,” said Kevin Mahoney, financial advisor based out of D.C.
He said the biggest criteria in deciding whether or not a prenup is appropriate for a couple is having a “discrepancy.” Meaning, if there is a significant imbalance in personal finances for both people, then bring on the prenup.
On the other hand, Mahoney explained that the earlier a couple can establish open lines of communication about finances, the better. And if a couple can master this, there’s really no need for a prenup.
“It’s easy to celebrate financial wins when things are going well,” he said. “But when there’s uncertainty or when there are hard times or frustrations, having that kind of line of communication in place [is key], so that you can ride those things out together.”
For Wright and her fiancee, they’re still figuring out what they want out of their marriage. They haven’t contacted a lawyer just yet, but they do have a financial planner who was supportive of the idea to get the agreement. She said one misconception people have about prenups is that they are selfish, but she doesn’t agree.
“I truly feel like we’re both looking out for each other and we truly want what is best for the other person,” she said.
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