Prenups, short for “prenuptial agreements,” were traditionally thought of as a way for wealthy men to protect their fortunes in the event they divorced their wives. Because men usually earned more than women, the need for financial protection was logical. A prenup was also one way that a prospective marriage partner could assure their future spouse that they were not just “marrying for money.”
Sometimes, if the bride was better off than her husband when they married, her family might insist that she get the prenup to protect the family’s money. This was based on the premise that the woman in question was going from being controlled by her family, to being controlled by her husband.
But these views of prenups have become rather outmoded. For one thing, woman make up 56.8 percent of the U.S. labor force today.1 And while 55 percent of millennials under the age of 25 still live with their folks1, this is more a reflection of the economy than social norms.
Just consider these statistics.
- The percentage of women in the work force with college degrees has almost quadrupled since 1970 and is now more than 40 percent.
- In 2016, one of every three new lawyers was a woman.1 That percentage may be even higher today.
- From January to June 2017, Athenahealth surveyed 18,000 physicians and found that over 60 percent under the age of 35 were women. In the next age bracket – 35 to 44 years old – 51.5 percent were women. 2
- Mothers are the primary or only supporters for 40 percent of households with children under 18.1
- American women own close to 10 million businesses today accounting for $1.4 trillion.1
- By 2020, women are expected to hold $72 trillion or 32 percent of the total private wealth in the world.3
The pay gap between men and women may still exist, but women are clearly catching up in many ways.
What do prenups do?
Prenuptial agreements are contracts that help establish clarity around what happens to finances in the event of a couple’s divorce, or when one of the partners dies. Prenups are not only for the wealthy. When more than 66 percent of married couples depend on two paychecks to pay the bills4, a prenup should be considered by almost every married couple – with or without children.
Typically, a prenuptial agreement will establish which assets are marital assets and which are individual assets. How these assets will be divided, whether or not spousal support (alimony) will occur, and other provisions can also be spelled out. A prenuptial agreement allows both parties to set the financial terms of a future divorce together while they still care about each other. And these terms aren’t subject to provisions determined by a judge who knows nothing about them let alone their relationship.
Spousal support laws cut both ways
If you’ve earned more than your husband throughout your marriage and you divorce, some states require that the higher-earning spouse support the other spouse at the financial level they were accustomed to. California is one of these states.
Karen McCullah, a screenwriter whose movies include “10 Things I Hate About You,” “Legally Blonde,” and “The House Bunny,” found this out the hard way. Though she had little money when she first married at age 24, by the time of her divorce she had assets in the bank and a good income. Her husband got half of her bank account upon divorce. But what really drove her crazy was that she had to write him a $6,000 check every month for seven years.
Here’s Karen’s advice to future brides based on her own experience. “So, brides-to-be, I implore you—whether or not you have a penny to your name right now—make that man sign a prenup that spells out a fair division of the assets based on percentage of income earned and, most important, eliminates spousal support…for both of you. If he’s protected too, he can’t complain. Because some day, all of you fun, fearless women will invent something or write something or build something or sing something or paint something or design something or act in something or start a company that makes you a lot of money, and there is no reason on this earth why you should be penalized for your success by having to continue to support an ex-husband.”5
Till death do us part
Most states provide for the surviving spouse to inherit the couple’s total assets upon the death of the other. This is usually true even if the couple were separated but still married at the time of the death. But a prenup can waive this right. This could make it easier for the surviving spouse to marry again if children from the first marriage fear losing their inheritance to the second wife or husband.
A healthy conversation
In the early stages of planning a marriage, it may seem awkward to discuss money, let alone divorce and death. But even having a discussion about whether a prenup is needed, can be healthy for a relationship. For example, perhaps one partner plans to support the other while one or both pursue an advanced degree. It would be good to clarify the fact that both parties have a financial interest in the higher income such a degree will make possible. This can keep resentment at a minimum and, if the couple does divorce, there should be a fairer distribution of assets.
Though each state varies in its requirements for prenups, most states require that each person disclose their assets before they sign. Debts must also be divulged in a prenuptial agreement. Documentation of these assets and debts is usually required before signing the agreement. This level of disclosure prevents misunderstandings and avoids one partner claiming later that they were unaware of the terms of the prenup. Couples are forced to deal honestly with the financial aspects of marriage and divorce.
Why “prenup” became a dirty word, and why that’s changing
Many couples feared discussing a prenup, feeling that it would cause friction with their partner. Perhaps they wanted to avoid making embarrassing disclosures to their fiancé or to a lawyer about their debts or concerns for the future. Or, they may have simply feared that the discussion would be a romance-killer. However, there are signs that these attitudes are changing as more and more millennials consider the merits of prenuptial agreements.
According to the American Academy of Matrimonial Lawyers, there has been an increase in the number of millennials requesting prenups. More than half of lawyers surveyed say that they’ve seen an increase in prenups among millennials and 62 percent saw a rise in prenups overall from 2013 to 2016.6
One cause of the attitude change could be that millennials are putting off marriage until later, when they have already accumulated both assets and debt. In addition, many millennials are children of divorced parents, making them more comfortable with discussing assets and how they would be dealt with in the event of divorce. In addition, many millennial women have a much more independent idea of their role in a marriage. They’re seeking a life partner, not “a provider.”
The increased burden of student debt can also provide a rationale for a prenup. If you divorce without one, you may be saddled with paying back half of your partner’s student loan.6
Prenups in “The Year of the Woman”
Women have more wealth now than they ever have had before, whether from inheritances, alimony from previous marriages or their own earnings. Many women also often contribute significantly to their spouse’s business. While no one can predict the future when it comes to relationships, making a fair and equitable agreement while a couple is in love and still wants the best for each other, is a kind of insurance. It ensures that, whatever happens to the marriage, both sides will get a fairer shake if and when it ends.
As one young woman seeking a prenup explains, “Knowing what the future holds financially is empowering for everyone, but it seems to me, especially for women. After all, they are more likely to put their career on hold to have and raise children, take care of aging parents, and so on.”
Though many women are gaining financially, statistics show that they are still more vulnerable than men after a divorce. Women’s household income fell an average of 41 percent after divorce, which is nearly double the financial loss that men experience after divorce.7
How to have the prenup conversation with your partner
Opening up a conversation about getting a prenup agreement may seem a daunting task. But the experience of one young soon-to-be bride might give you an idea of where to begin. This is how she approached the topic with her boyfriend.
“I went into it the conversation with the mindset that he and I have been a team ever since we first started living together. So, before entering a legal arrangement like marriage, it seemed only sensible to build some structures together that would protect both of us. I’m self-employed, so outlining what is mine and belongs to my business, is not only important for my independence, but also for his security. It protects him from any liability from my company. So, I made sure he understood that I was working in his interest as well as mine.
Probably the most difficult part of the discussion was talking about what would happen to our dogs if we parted ways. We also talked about how we would handle our shared home and logistics like that. But over all, it wasn’t as upsetting as you’d think. After all, we love and care about each other. In the end, it gave us a sense of ease. Now we know that, if for some reason, things don’t work out between us as a couple, we won’t have to deal with a mountain of problems on top of the grief of breaking up. There’s a kind of intimacy in knowing that we were able to be mature and do this together. I think that both of us feel empowered knowing we have an exit plan, even if neither of us has any desire to use it. Crossing that bridge has actually made us stronger.” – Alexandra, 28
So, go ahead and have the conversation. You may find that it’s best wedding present you and your loved one can give each other.
Additional sources of information.
Why Sign a Prenup
How to Determine if a Prenuptial Agreement is Right for You
The Bad Business of Marriage