17 Pros and Cons of a Prenup

Prenups are short for a “prenuptial agreement.” It is a written contract that is created for two people (or more if permitted by law) before they enter into a legal marriage. The typical agreement will consist of all of the properties that each person owns before entering the marriage, specifying what the property rights for each person will be after they join together in case a divorce occurs later on.

In the United States, a prenup is sometimes referred to as an antenuptial agreement or a premarital contract. It differs from an agreement made during the marriage, which would be referred to as a postnuptial contract.

Although society often thinks of the prenup as being something that is only for the wealthy, it is a contract option that some family structures may find to be beneficial as well. You can use this agreement to pass separate property to children from prior marriages, clarify the financial rights of dependents, or reduce the issues that a divorce can bring since everything is outlined already.

Spouses can even use a prenuptial agreement to protect themselves from the debt of their partner. If you’re thinking about getting married or want to learn more about this process, then these are the prenup pros and cons to review.

List of the Pros of Signing a Prenup

1. You can protect your financial interests as you grow older.
Prenups do an excellent job of protecting the financial interests of people as they get older. Although this advantage often applies to a second, third, or subsequent marriage, it can be a contract that provides a layer of protection at any time there is substantial wealth in question. You are not stopping your spouse from accessing some (or all) of these assets when your marriage is active. The goal of the prenuptial agreement is to ensure that the people you want to be in control of this wealth when you are gone or divorced have the authority to do what you want them to do.

If you were to go through a divorce after signing a prenup, then the stipulations included in the contract would be binding unless state laws would override them for some reason.

2. You can limit the amount of spousal support that is necessary.
Every state has laws dictating the factors to consider when setting an alimony payment for spousal support during a divorce. There are three specific key points that judges consider when looking at this situation when there isn’t a prenup in place.

• The amount of income that each person could reasonably earn each month.
• What the expenses for each person will be moving forward after the divorce.
• Whether an award for alimony would make it possible for each to move forward with a lifestyle that is reasonably similar.

Most judges look for ways to help couples share the financial pain they’re experiencing with divorce equally. Leaving people with less than 40% of their income after paying child support is not usually something that the courts will agreed to do, but they could. Having a prenup in place may not dictate a child support award, but it could limit the amount of spousal support that you are required to pay after breaking up.

3. You can cover almost any aspect of the marriage in a prenup.
Although most prenups focus on the financial situation of the couple in the text of the agreement, you can also cover any of the other details of your upcoming marriage in this contract. That means you can put into writing who will be responsible for specific decisions in your relationship. There are ways to outline the responsibilities of each party to maintain the health of the marriage as well. As long as both parties agree to the circumstances that are outlined in the agreement, the stipulations are enforceable if state laws permit them.

4. You can ensure compensation for your sacrifices.
It is not unusual for one person in a new marriage to give up something that is lucrative to create the potential for a long-lasting relationship. That financial hit seems worthwhile at first because being with the person you love has more value than the net worth you give up in return. If you were to create a prenup for this situation, then you could ensure that your partner is placed into a position where they must compensate you for the loss of income that you experienced to form the relationship in the first place.

5. You have the option to protect yourself from the debt of your future spouse.
The amount of debt that a spouse carries with them is just as important as the amount of income someone may hold for the new relationship. Many states see the debts of one person becoming the problem of both parties once the marriage contract is finalized. If your partner has significant obligations, like $150,000 in student loan debts, then you can use the prenup to specifically dictate who is responsible for these charges. Although you may not escape a divorce debt-free because purchases that are mutually beneficial may not be covered, you can avoid having to assume the pre-existing obligations of the other person because of this contract.

6. You can protect your business from the divorce.
Jeff Bezos announced in January that he and his wife MacKenzie would be seeking a divorce. Because there isn’t a prenup in place for the relationship, the split in their marriage could transform what happens to Amazon in the future. The couple has an estimated net worth of $140 billion together. It will likely be the largest settlement in history, with the potential to disrupt how customers interact with the brand.

If you own a business before you get married, then you can use this contract to protect your interests. Bezos did not have this option because he and MacKenzie were married the year before he Jeff founded Amazon. This agreement allows you to prevent the company from being divided or subject to the involvement or control of the other after finalizing the divorce.

7. You can protect the inheritance rights of children or grandchildren from previous relationships.
It is essential to remember that a marriage is more than a romantic relationship. It is also a business partnership. That is why a prenup is often sought in the first place. You can protect the financial interests of your family while giving your future spouse the same privilege. Even though there are negative connotations associated with this option, you can ensure than any children, grandchildren, or other direct relatives can still receive the share of your estate that you want them to have with this legal option.

It is a way where you can prepare for the worst-case scenario should it occur. Many who request a prenup have seen their parents go through a divorce or had friends who experienced this situation. Planning for it, even if it doesn’t happen, can make future consequences be less severe.

8. You can force full financial transparency through prenup negotiations.
If you are thinking about a prenup for your relationship, then the negotiation process must be open and transparent. You will want to talk about your current credit score, what accounts are in your possession, spending patterns, debt, and whatever assets are under your control. Not only will this advantage reveal the various sources of income that your partner may have, but it can also reveal their debt patterns. Going into a marriage with this information can make it easier to leave without severe repercussions later on because you have a better understanding about the person you are marrying.

9. You can have this agreement finalized without a significant expense.
The average attorney in the United States will charge about $2,500 per person to draw up an effective prenup that works for both parties. Your costs may be less or more depending on the number of assets you wish to protect before entering into a marriage. You can even create these documents online through some providers, offering prenuptial planning for less than $1,000 – and express options are even available if you plan to tie the knot in 14 days or less.

List of the Cons of Signing a Prenup

1. You might be required to give up the automatic right to inherit your spouse’s estate.
A prenup agreement changes the structure of what automatically happens when one spouse passes away. The surviving member of the marriage typically gains control of the estate, which means they control the finances and properties that were left behind. A will is one way to make changes to the structure, but it is the prenup agreement that typically offers the most strength. If you want to be in a marriage and your partner wants this contract signed first, then you may be asked to give up your right to inherit – even if you would be otherwise entitled to do so.

2. You might not be able to claim a portion of business profits.
In the United States, a spouse that contributes to the growth and success of their partner’s professional practice or business is entitled to receive their share of the profits that occur from such an arrangement. Many states consider the increase in value to be divisible property during a divorce. If you were to sign a prenup that prevented you from accessing this value, then you may not be entitled to make a claim for your share when would have been able to do so otherwise. If this disadvantage is something that weighs on you, then consider the amount of effort you put in for that growth to occur.

3. You might not trust your partner as much after a prenup.
When you convert a dating relationship into a marriage, then you are beginning a new relationship with a written contract. It sets forth all of the particulars that will happen if something happens to the other person or you go through a divorce later on in life. Forcing someone into this decision-making process early can feel liberating and helpful to some, but it can also communicate a lack of trust in others. Because of this issue, only 11% of couples say that they decided to go through with a contract like this before getting married.

4. You may not be able to account for everything that might happen in the future.
When you start the creation process of a prenup, then you are guarding against the loss of your current property and possessions. After you enter into a legal marriage, then there may be additional properties and possessions that you wish to protect as well, but it is impossible to know what they might be. You don’t know how some potential issues might be handled after several years of being together because people can change. What seems like a compromise that is inconsequential today could have substantial financial consequences in the future for some couples.

5. You might experience a change in your lifestyle because of a prenup.
Prenups typically happen because one spouse earns more or has more wealth than the other. It is not unusual for one partner in the marriage to be a low wage earner – if they even earn an income at all. If a death or divorce were to happen after signing this contract, then it may force you into lifestyle changes that are very different compared to what you are accustomed to having. You will want to review what limits there are for spousal support in this situation to ensure that you’re fully protected in case something happens to your relationship.

6. You could agree to something that is not in your best interests.
Many prenups are offered during what is called the “honeymoon” phase of a relationship. It is a time when the love and passion for one another is at its strongest, creating an emotional bond that you can be afraid to lose. When you are in this stage, it is easier to agree to terms that are not in your best interests because it feels like it is more important to be with that person than to look after your potential future financial situation. Although 15% of couples say that they wish they had a prenuptial agreement in place, over 60% say that the presence of one is a bad omen for a relationship.

7. You might have your partner call off the relationship.
It is not unusual for future spouses to feel insulted, angry, and uncomfortable if they are presented with a surprise prenup before exchanging vows. Some interpret the presentation of this document as a lack of faith in the relationship or themselves as an individual. You never really can predict how someone will react to the situation if you have not been talking about it before the negotiation process starts. Several couples have decided to split before their wedding date because there was a real or perceived outlandishness because of this agreement. You can literally build a minefield that may be impossible to navigate in the future.

8. You might have a prenup that only benefits one person.
If you are not involved in the writing of a prenuptial agreement, then you will want to read the contract terms very carefully before deciding to sign anything. Make sure that you bring an attorney to review the document as well. No matter how much in love you are with the other person, it is essential to remember that they crafted this document without your input or consultation in this situation. If you do not agree with any of the terms, then try to find ways that they can be changed in your favor. Focus on shared property, your assets, and the alimony payments should a divorce occur.

The pros and cons of a prenup involve what you expect your future financial situation will be if something happens to your current relationship. Some people can’t imagine that their marriage might one day come to an end, so they don’t take this legal contract seriously. If you have children from a previous marriage which need to be included with your estate, substantial property, cash, or possessions to protect, or you want a complete structure in place before getting married, then you will want to give this agreement a closer look.

Blog Post Author Credentials
Louise Gaille is the author of this post. She received her B.A. in Economics from the University of Washington. In addition to being a seasoned writer, Louise has almost a decade of experience in Banking and Finance. If you have any suggestions on how to make this post better, then go here to contact our team.