Financial planning
Jun 26
min read

What should a woman ask for in a prenup?

Here’s what you should know about what a prenup is as well as what it does, how it functions, and how a prenup can impact your personal finances.
Brian Matthews, CFP®
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Marriage signifies a profound commitment, a journey embarked upon with hope and anticipation. However, amidst the joy and excitement, it's crucial to address the practicalities of merging lives, particularly considering the potential complexities of finances. This is where premarital agreements, often shortened to "prenups," enter the picture.

While not universally applicable, prenups can offer valuable benefits for couples seeking clarity and security in their financial future. Understanding the intricacies of these agreements empowers couples to make informed decisions and navigate the process with confidence. 

Here’s what you should know about what a prenup is as well as what it does, how it functions, and how a prenup can impact your personal finances.

What happens without a prenup?

Having a prenup in place is certainly no guarantee that your marriage will fail. By the same token, not having a prenup doesn’t mean your marriage will automatically succeed either. What is true, however, is that in the absence of a prenup, the division of assets and debts is governed by state laws upon divorce. These laws vary significantly across different jurisdictions and can be broadly categorized into two main systems:

  • Equitable distribution: This system is employed by the majority of states and mandates the division of marital property in a fair and equitable manner, though not necessarily equal. Factors such as the length of the marriage, each spouse's contribution to the marital assets, and the needs of any children are considered when making the division.
  • Community property: This system applies in nine states and dictates that all assets and debts acquired during the marriage belong equally to both spouses. This means that upon divorce, each spouse automatically receives half of the marital property and is responsible for half of the marital debt.

In comparison, having a prenuptial agreement in place provides a clear roadmap for the division of assets and debts in the event of divorce. Without this agreement, the process becomes more complicated and prone to potential conflict. Here are some potential challenges you may face without a prenup in place:

  • Disagreements over asset valuation: Determining the value of marital assets can be a contentious issue, especially for complex assets like businesses or real estate. Without a pre-existing agreement, the court will appoint appraisers to determine the value, potentially leading to further delays and expenses.
  • Allocation of bebts: Similarly, dividing marital debts can be difficult, especially when debts were incurred by one spouse but used for the benefit of the family. The court will need to analyze the nature of the debt and its purpose to determine how it will be divided.
  • Spousal support: The question of whether one spouse is entitled to spousal support and the amount of such support is determined by the court based on factors like the length of the marriage, the financial needs of each spouse, and their earning capacity. This lack of clear guidelines can lead to disagreements and uncertainty.
  • Emotional toll: The lack of a prenuptial agreement can add stress and emotional strain to an already difficult situation. The uncertainty surrounding the division of assets and debts can exacerbate tensions and make it more challenging for the couple to reach an amicable resolution.

What does a prenup do?

As a prenuptial agreement is a legally binding contract entered into by two individuals before marriage, this document effectively outlines the division of assets, debts, and spousal support in the unfortunate event of a divorce. While not a guarantee for a smooth separation, pre-nups can provide significant advantages when it comes to navigating a divorce settlement. A prenup is, therefore, one of the best protections for not just your own personal finances that you possess before marriage but also the finances of your spouse prior to the marriage as well. 

A good prenup does the following:

  • Safeguards Premarital Assets: Prenups ringfence assets acquired before marriage, ensuring they remain the individual's separate property even after the union. This can be particularly relevant for individuals with inherited wealth, family businesses, or valuable personal possessions.
  • Promotes Transparency and Clarity: By establishing clear guidelines for asset division and spousal support upfront, prenuptial agreements can prevent confusion and potential conflict during a difficult time. This pre-emptive approach allows both partners to enter the marriage with clear expectations and financial security.
  • Protects Against Future Uncertainty: Prenups offer peace of mind for individuals with complex financial situations or significant premarital assets. Knowing that their financial interests are protected can alleviate anxiety and allow them to focus on building a strong and fulfilling marriage.
  • Facilitates Open Communication: The process of crafting a prenup often encourages open and honest communication about financial expectations and goals. This dialogue fosters understanding and strengthens trust within the relationship.

What to expect in a prenup

Prenuptial agreements are not one-size-fits-all documents. Their specific content varies depending on individual circumstances and priorities, and each prenup can and will be vastly different from one to another. However, there are some commonalities to most prenuptial agreements. Generally, they address the following key elements:

  • Separate property: This section clearly defines which assets and liabilities belong to each individual and remain their separate property regardless of marriage. This may include premarital savings, inheritances, and individually owned businesses.
  • Division of marital assets: This section outlines how assets acquired during the marriage will be divided in the event of divorce. This can include real estate, bank accounts, investments, and other jointly owned assets. Different approaches like equal division, percentage-based splits, or predetermined ownership structures can be implemented.
  • Spousal support: This section determines whether either spouse will be entitled to spousal support or alimony after divorce. The amount and duration of such support, if applicable, are also specified.
  • Debt division: This section clarifies how premarital and marital debts will be allocated and repaid in the event of divorce. This ensures fair distribution of financial obligations.
  • Inheritance rights: This section addresses whether inheritance rights are impacted by the prenup. It specifies whether pre-existing wills remain valid or require modification.

Questions to ask when navigating the prenup process

A prenup is a major step to take before marriage. You and your future spouse need to consider some important things very carefully if you are unsure of whether you need one. That’s why, before entering into a prenuptial agreement, it's crucial to ask yourself and your partner several critical questions:

  • Do we truly need a prenup? Carefully consider your individual financial situations and potential concerns regarding asset protection and spousal support.
  • What are our financial goals for the future? Define your individual aspirations and how a prenup might support or affect them.
  • What are the specific assets I want to protect? Identify your premarital assets and ensure they are explicitly listed in the prenup.
  • What are my expectations for spousal support? Discuss your preferences and concerns regarding potential alimony payments in case of divorce.
  • Are there any potential tax implications? Consult a financial advisor to understand any tax consequences associated with a prenup.
  • Do I fully understand the terms of the agreement? Carefully review the prenup with your own lawyer to ensure you comprehend its nuances and are comfortable with its provisions.
  • Am I comfortable discussing this with my partner? Open and honest communication is key to successfully discussing and negotiating a prenup.

Why have a prenup?

It’s time to address the elephant in the room. Some may believe that asking for a prenup, or even having one in place, is a major red flag for the relationship. The truth, however, is that having a prenup does not necessarily mean that your marriage will fail. In fact, there are several reasons why couples choose to get a prenup that have nothing to do with a lack of faith in their marriage. Here are some of the most common reasons:

  • To protect premarital assets: A prenup can help ensure that assets acquired before marriage, such as inheritances or family businesses, remain the property of the individual who owned them before the marriage. This can be especially important for people who have significant premarital assets.
  • To manage debt: If one spouse has debt before getting married, a prenup can help protect the other spouse from being responsible for that debt in the event of a divorce.
  • To provide clarity and peace of mind: Knowing that the division of assets and debts has already been agreed upon can help to alleviate stress and anxiety for couples. This can be especially beneficial for couples who are entering a second marriage or who have children from previous relationships.
  • To facilitate open communication: The process of discussing and negotiating a prenup can encourage open communication about finances between partners. This can be beneficial for any marriage, regardless of whether or not a prenup is ultimately signed.
  • To minimize potential legal fees: A prenup can help to minimize legal fees in the event of a divorce. This is because the division of assets and debts has already been agreed upon, which can save time and money during the divorce process.
  • To protect yourself from future liabilities: A prenup can help to protect you from future liabilities that your spouse may incur. This can include things like business debts or gambling debts.

A prenup can be a positive for a marriage

As already mentioned, it is important to note that a prenup is not a guarantee that your marriage will succeed – nor is it a sign that your marriage is doomed to failure. However, it can be a valuable tool for protecting your financial interests and promoting clarity and peace of mind in your relationship. 

No matter what the future holds, however, there are many positive aspects of having a prenup. In fact, studies have shown that couples who get prenups are no more likely to get divorced than couples who do not. Additionally, a prenup can actually help to strengthen a marriage by providing a foundation for open communication and financial transparency. Finally, prenups can be renegotiated at any time during the marriage, if both spouses agree to do so.

In the end, however, the decision of whether or not to get a prenup is a personal one. There are pros and cons to consider, and the best decision for one couple may not be the best decision for another. If you are considering getting a prenup, it is important to talk to your partner about your concerns and to consult with a lawyer to understand your legal options.

Ultimately, the decision to enter into a prenuptial agreement with your partner is a personal one based on individual circumstances and goals. When approached with transparency, understanding, and mutual respect, prenups can serve as valuable tools for enhancing financial security and fostering clarity within a marriage. By delving into the details and asking the right questions, couples can make informed decisions and navigate the process with confidence, paving the way for a secure and fulfilling journey together.

Remember, a prenup should not be viewed negatively but rather as a proactive approach to ensuring financial stability and preventing potential conflict in the unlikely event of divorce. By understanding its purpose and engaging with your partner, you can make informed decisions that protect your financial interests and contribute to a secure and fulfilling marriage.

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