Prenups. Some may argue they’re not all sexy and glam, and we get that. But we also understand they can be an important part of marriage, for some couples. When you know enough about them, you might start to see them as a smart plan that protects all parties involved.
There’s a lot of confusion out there about what does a prenup do, how much does a prenup cost, or even how you would go about getting a prenup. One thing’s for sure, when you’re armed with the information we’re about to give you, you can feel confident in the choices you make when it comes to being informed and protecting your marriage. We’ll even give you a few examples of high profile prenups, as we take a look at how some of the biggest names in Hollywood drafted theirs.
Ready to get started? Read on, as we cover:
What is a Prenup?
A prenuptial agreement is also sometimes referred to as a premarital agreement or an antenuptial agreement. It’s essentially a written contract that couples agree to prior to legally marrying or entering a civil union. It generally covers issues related to rights, assets and property for each party.
Commonly Asked Questions about Prenuptial Agreements
Now that you know what a prenup is, let’s look at some of the most common questions people have when they’re considering creating one.
What Does a Prenup Do?
A prenup can protect both parties should a marriage dissolve and end in divorce. It’s really a simple concept - it’s just a business contract between two people in a marriage or civil union. You can cover a variety of issues inside your prenup, including:
Instructions for division of property
Retirement funds that were saved before marriage
Education funds that were saved prior to marriage
Finances for each party
And much more
What Cannot Be Included in a Prenup?
There are several things you cannot include in a prenup.
Custody or visitation agreements
Non-financial requirements (like weight restriction clauses or other relationships)
Who Are Prenups For?
Traditionally, prenups have a pretty bad rap. But while there’s a negative stigma surrounding the concept, the truth is, a prenup may actually be a very smart option for several reasons.
You or your spouse have children - If you or your future spouse had children prior to marrying, a prenup can protect them in case either of you passes away. Note, your prenup should not take the place of your Will or Trust, but it can be a good way to establish what you would like to leave to your children while ensuring there’s a financial plan in place.
You or your spouse have been married before - If either member has been married before, a prenup can prevent assets from a previous marriage from being confused with new assets moving forward.
You or your spouse have significant debt - If either one of you has a significant amount of debt (or even just has more debt than the other), a prenup can be a good way to safeguard against becoming responsible for anything should you divorce.
You or your spouse have a significant amount of wealth - If either party is significantly more wealthy than the other, a prenup is a solid way to protect assets in advance. It may not feel sexy, but it can be smart.
You or your spouse own a small business - If either of you is a small business owner or an entrepreneur, you can protect your business interest with a prenuptial agreement.
You or your spouse want privacy in regards to finances - A prenup can include something known as a confidentiality clause, which could help guarantee that your financial interests and status would not be shared in anyway - through television, social media, a book or memoir or in any other public way that could result in negative attention.
You had a very short engagement - Nothing is more romantic than love at first sight, but if you have a short engagement and you don’t truly know your future spouse all that well, you might want to consider a prenup. That way, you’re protected should your partner end up not being who you think he or she is. Note you could also get what is known as a postnup – which would be essentially the same thing as a prenup, except it’s put into effect after a marriage.
Do I Need a Prenup?
In general, prenups are not necessarily a bad idea. That said, they also aren’t always necessary. However, if you fall into any of the categories discussed above, you may want to seriously consider protecting yourself with a prenup.
We live in a day and age when any type of protection is a plus. A prenup might offer a safeguard for you, your interests, your children, your assets and your future legacy. When you think about it this way, it might be something you’re more willing to consider. Most of us can’t ever imagine our marriage ending, but Estate Planning is all about preparing for the unimaginable. If you’re a planner and you want to ensure the safest future possible, regardless of what may happen, a prenup might be a good idea.
What Happens If I Don’t Get a Prenup?
Many people choose not to get a prenup, and they may never regret it, which is great! But thinking through what happens if you do end up going through a divorce might change how you feel about prenuptial agreements.
Without any sort of formal legal agreement, the state you live in would ultimately dictate how property acquired during your marriage would be divided during a divorce. In fact, some states even have laws that rule what would happen to property you had individually before you were married. Most often, if there’s no prenup specifically stating otherwise, your spouse could have the right to shared ownership of properties, shared debts and management or control of property (potentially including the right to either give away or sell assets).
Why is a Prenup Bad?
As we mentioned previously, there tends to be a stigma attached to prenups. Some would argue, this perception comes with good reason. We enter into a marriage thinking it’ll be forever. Preparing for it to end can feel and seem counterintuitive for some people.
But do prenups ruin marriages? We’re in the business of preparing for things that are out of your control. When you view the idea of prenuptial agreements through that lens, it might be a bit easier to see that if a prenup agreement ever were to come into play, the focus could be on the fact that you don’t have control over every single circumstance in your life. So if things do change in a marriage, even if it’s not your fault, a prenup might just be your guiding light.
In the end, there’s really no right or wrong answer to whether a prenup is good or bad.
What is The Role of a Prenup in Retirement Planning?
A prenup can allow you to keep your retirement assets separate from your spouse. Without one, it’s not uncommon for retirement funds to be divided in the event of a divorce. Many states consider retirement accounts community property, which means anything earned during the marriage would be equally split, despite the fact that one person’s name might be on an account, or that one person may have solely funded most or all of it.
These days, prenup, or even postnup, agreements are becoming more common for those close to retirement age. Without having an agreement in place, any contributions to the plan that were made during the marriage could be split 50-50 should you get divorced.
How Much Does a Prenup Cost?
Prenuptial agreements usually cost anywhere from around $1200 to up to $2500.
The cost to create a prenup can widely vary depending on where you live and how complicated your finances are. Areas with a higher cost-of-living will generally cost a bit more. In some very high-end places across the United States, for example Manhattan, a basic prenuptial agreement can cost anywhere from $7500-$10,000, each
Other factors that could influence cost might depend on what you’re including or protecting, as well as how high-profile your lawyers are.
Famous Celebrity Prenup Agreement Examples
We live in a culture that thrives on celebrity. Learning the ins and outs of our favorite famous icons’ daily lives, their romantic relationships, and of course their marriages and divorces, is something we can’t seem to get enough of. When you’re talking about a celebrity who has tens of million of dollars at stake, it can be very interesting to see what type of agreements they put in place before they get married.
Mariah Carey - Mariah Carey’s prenup with James Packer in 2016 garnered so much attention in part because the wedding never actually even happened. Regardless, Packer initially offered Carey $1 million per year for each year of marriage. Reportedly, Carey’s team laughed at the offer, given her star power and earning potential.
Jessica Biel and Justin Timberlake - Justin Timberlake and Jessica Biel have a prenup in place that includes a harshly outlined infidelity clause.Some reports claim Timberlake would need to pay Biel $500,000 if he’s ever caught cheating.
Mark Zuckerberg and Priscilla Chan - It’s unclear whether or not the King of Facebook and his wife Priscilla Chan signed a prenup, but rumors swirled when they married in 2012 that Chan had instituted a relationship contract that clearly stated her terms for the relationship prior to marriage.
Jeff Bezos - Amazon guru Jeff Bezos did not have a prenup with his wife of 25 years. And we don’t know if the two ever created a postnuptial agreement. But when they decided to divorce they were living in Washington, which is a Community Property state, meaning Bezo’s former wife may have been legally entitled to half of everything Bezos earned during that 2 1/2 decade marriage.
How to Get a Prenup
If after reading this guide, you’ve decided a prenup may be something you want to move forward with, your next step should be to hire an attorney to help you draft a solid, fair agreement that both you and your future spouse can agree to.
It’s never too soon to think about your future, and we firmly believe that preparation is the best protection, in all aspects of life. Ready to look at creating or updating your Will or Trust documents to go along with your new prenup? Reach out to Trust & Will today to learn more about how we’re helping people just like you prepare to create a legacy they can be proud of.
Life can be messy. Marriage, kids, saving for retirement, planning for your future...it’s a lot. But when you’re prepared enough to decide if a prenup is right for you, all those hard things might just seem a bit easier.
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