8 reasons to consider getting a prenup

When Melissa Dalgleish got married in 2014, she and her then-fiance decided to get a prenup. During her first marriage, Dalgleish and her ex-husband were poor grad students with practically no assets to split. With her second go-round, it was a different story.

Her husband had inherited his family home, which they lived in. However, Dalgleish was the breadwinner while her spouse was a stay-at-home dad who didn’t rake in any income.

“It was important to both of us that, if we divorced, we already had a plan in place to ensure an equitable division of family assets that wouldn't require us to sell the house to pay me out,” says Dalgleish, who is 38 and a research manager based out of Ontario, Canada. “But I also wanted the prenuptial to reflect the fact that I'm the primary breadwinner, and have contributed substantially to the increased value of the house and our investments.”

If you’re about to get hitched, a prenuptial agreement, or a legal contract that lays out the property rights of each partner in a marriage when it ends, is more common than you think. According to a 2018 survey of matrimonial lawyers, more millennials are getting prenups than before. In fact, 62% of lawyers have seen a jump in a short three years.

Here are several reasons, with some insight from legal pros, why you might consider getting a prenup.

1. Protection from debt

If either party is bringing debt into the marriage, you may want to clearly spell out who is responsible for that debt. A prenup can protect the other partner from any credit card debt, student loans, medical debt, and so forth.

2. You’ve been married before

If you have kids from a previous marriage, you might want to get a prenup to define which assets you want to pass on to your children should you die. In some cases, a prenup can actually reinforce what’s in a will, and can define more specifically how to divide the assets that belonged to each party before they entered the marriage, or which heir will receive it.

If you go without a prenup, the assets you had before the marriage and after the marriage could be lumped together and treated the same. Your spouse might have the right to the majority, which could in turn lead to a lot less for your kids.

3. You or your partner might get a big raise

You may anticipate that one or both partners in the soon-to-be marriage will increase their wealth significantly. For instance, maybe one partner is in school to become a lawyer or doctor, and is banking on a major bump in income after he or she lands a job. Or, perhaps you or your spouse expect to receive a generous windfall due to an inheritance.

Whatever the case might be, it might be a good idea to explore a prenup agreement. “For some couples, the motivation for a prenup is a belief that one or both parties will substantially increase their wealth through entrepreneurial endeavors during the marriage,” says Emily Pollock, partner in the Matrimonial and Family Law Department at Kasowitz Benson Torres LLP. “And they want to define to what extent their spouse may share in that increase.”

4. You already share assets

If you bought a house or car together, you might want to talk to a lawyer—even if you don't think a prenup is for you. That way, you’ll know your property rights and how your assets will be split. Depending on what you learn, you may want to spell out—or potentially expand—those rights, explains Kelly Frawley, partner in the Matrimonial and Family Law Department at Kasowitz Benson Torres LLP.

As far as assets in a marriage go, there’s common law property and community property. Note that depending on where you live and the type of asset, the property might be handled and divided differently. In a nutshell:

• If you live in a common law state, ownership is typically linked to whose name is formally listed as the owner on the document.

• In a community property state, everything you earn or acquire together during a marriage is considered community property. And assets you had before the marriage and brought into the marriage are considered separate property.

It could get a little tricky if, say, you opened a joint bank account. A prenup can define who owns how much of that money before the marriage as well as who owns money deposited from cash gifts, work bonuses, and side hustle income during the marriage. Talking to a lawyer and getting a prenup can help avoid confusion.

5. You have a business together

If you're co-owners of a business, a prenup can do a lot of things: It can help define the value of the business at the time of marriage, and if your spouse will share in your business’s profits and losses. It can also outline specifics on how your income can be managed and distributed. And should you divorce or there’s a death, a prenup can spell out exactly how much of your shared business you will be entitled to.

Even if you have solo ventures, a prenup can establish the same details on how the income, property, and other assets will be dealt with.

6. You own a pet

While you probably see your pet as a member of the family, under the law they are considered property. A prenup can spell out who is responsible for the animal in the event of a separation.

“Clarifying pet ownership is less common, but it does happen and if it is an important concern, it can save parties a lot of litigation cost in the event that there is a dispute as to with which party the pet will reside after divorce,” says Frawley.

7. Your parents got divorced

Sometimes your reasoning may be more personal than it is financially driven. In other words, you’ve witnessed firsthand a long, drawn-out, complicated divorce—perhaps with your parents.

Besides any confusion that might come with who gets what, you might want to set clear expectations and obligations to curb the duration and litigation costs of a potential breakup, says Pollock.

8. It could save you money

The average cost of drafting a prenup, according to data from Avvo, is typically anywhere from $800 to $2,500. It largely depends on how complex your situation is, and can cost up to $10,000. However, if you forgo this early step, the legal fees—plus any assets you might not have had to divvy up or part with if you had a prenup in place—could be far higher. The average cost of getting divorced in the U.S. is $12,900, and it typically takes a year to dissolve a marriage.

What happens if you don’t get a prenup?

So, does everyone need a prenup? Not necessarily. “But everyone should understand what their rights and obligations would be without one,” Pollock says.

Your property rights and determining who owns which assets will unfold according to the laws in your state. As we mentioned, if you live in a common law state, whoever owns that piece of property, earns that income, receives that inheritance, and so forth on paper is the rightful owner. So if that debt is under your name, you are responsible for paying it off.

If you live in a community property state, ownership of assets is a bit trickier. Income and property bought with that income is shared. Should you divorce, your assets will be split evenly, but only the assets you acquired together while married.

Debt incurred during the marriage is also shared, but not everything falls under this category: Gifts, inheritances, and property owned before entering the union are considered separate. So should one partner have debt, the lender can actually go after your joint assets and income, no matter whose debt that is.

Before you make a final decision, consider getting some professional legal advice to see what path best suits your situation.

“After each party has consulted with a matrimonial and family law attorney to learn the applicable law, a couple may decide that how the law would be applied in the absence of a prenup makes sense and is fair,” Frawley explains.

“Or they may decide that they want to specify and guarantee how certain issues or assets and liabilities will be addressed in the event of a divorce and move forward with a prenuptial agreement, which will require that each party retain their own counsel to help in drafting and executing the agreement.”