What is a Prenup?
A 'prenup' or 'prenuptial agreement' is a legal document that can be signed before marriage and lays out how assets, cash, and any spousal maintenance payments should be split in case of divorce - like a financial insurance policy for couples. Prenups have become increasingly popular over recent years, with some 20% of couples creating one before marriage.
How To Start A Prenup
Step 1 - Financial Disclosure: The first step in making a prenup is to discuss the possible terms of the agreement as a couple, with full disclosure of assets and earnings. Many legal professionals will offer to advise you on the terms, but having a good idea before seeking to draft the agreement can save time and money.
Step 2 - Get the Agreement Drafted: This can be done in-person with a law firm, or by using an online service such as HelloPrenup. Many companies offer "fixed-fee" price deals that include a consultation to outline the terms of the prenuptial agreement, the creation of the prenup, and any text corrections that follow. Not sure how to find a prenup lawyer? You could use our free comparison tool to get started.
Step 3 - Independent Legal Advice: To help make the agreement legally binding, both spouses should try to receive independent legal advice. Many companies offer relatively cheap prenuptial agreement review and advice services, which involve a short appointment or phone call to talk over the drafted prenup with a professional. You can use our comparison tool to find prenup lawyers that provide review services in your area.
Step 4 - Sign the agreement: Take the time to sign the agreement. Ideally, aim to sign at least 28 days before the wedding if possible because this can help to make the prenup legally binding.
The Power of a Prenup - What Can Prenups Include?
- Cash, Assets, and Inheritances: These could be owned before the marriage or expected in the future.
- Debt Defense: Outline who should be responsible for any debts.
- Spousal Support: Outline whether spousal maintenance payments should be considered in a divorce settlement, in addition to the amount and duration of these.
- Businesses: Protect businesses and avoid them being partially or fully sold during separation.
How Much Do Prenups Cost?
A simple prenup that states you both keep your respective assets will typically cost $1000 - $5000 when drafted by a lawyer, with higher prices applying when large amounts of assets are involved or the prenup needs to include unusually complex clauses. Online providers such as HelloPrenup ($599) will generally be cheaper for simple prenups, but may not be suitable if you need to include complex clauses or would like the reassurance of speaking to a lawyer in person.
To keep costs down and avoid surprises, we would generally recommend trying to use a provider who offers flat fees. There are several flat-fee options listed in our free comparison tool.
Are Prenups Legally Binding?
The majority of states recognize prenuptial agreements, however, the specific requirements and enforceability can differ. Here is a general overview of the status of prenuptial agreements - with states broadly categorised:
- Community Property States: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states. In these states, the law generally presumes that assets acquired during the marriage are considered community property, which means they are owned equally by both spouses. However, prenuptial agreements can modify the default community property rules.
- Equitable Distribution States: The remaining states in the U.S. follow the principle of equitable distribution. In these states, assets acquired during the marriage are not automatically considered community property but are subject to division in a fair and equitable manner upon divorce. Prenuptial agreements can be used to determine the division of assets and financial matters in case of divorce.
Following some simple guidelines can help improve the legal status of your prenup:
- Full Disclosure: Try to be totally upfront about your finances and assets when arranging the prenup.
- No Duress: The prenup should not be entered into under duress or coercion. Signing the prenup well ahead of the wedding (preferably at least 28 days) can help to show that there has not been any duress.
- Legal Advice: Both members of the couple should receive independent legal advice if possible. In practice, this usually involves one spouse arranging to get the agreement drafted by a legal professional and the other spouse arranging to get the agreement independently reviewed by a different professional.
How Popular Are Prenups? 🚀
Prenups are becoming increasingly popular globally, with demand surging amongst millennials and some 20% of couples now signing one before marriage. Some recent reports about the growing popularity of prenups are included in HarrisPoll, Mediate and The New York Times.
The rising popularity of prenups is also visible in worldwide internet search data for the last decade: