A prenup allows couples to separate their debt from the debts of their spouse. Kevin Mazur via Getty Images
A prenuptial agreement can seem like something only high-profile people like Jeff Bezos – with his US$138 billion fortune to protect – actually need.
But prenups – contracts entered into before marriage that detail how assets will be divided in the case of divorce – can be a good idea for anyone going into a marriage, according to lawyers and marriage counselors. They have been in regular use since 1983, when a group of attorneys and law professors drafted the Uniform Premarital Agreement Act, a set of rules regulating prenups that 28 U.S. states have since adopted.
A recent poll showed that the percentage of couples with prenups has risen from 3% in 2010 to 15% in 2022. Nearly 40% of married or engaged couples between the ages of 18 and 34 have signed prenups, while just 13% of couples between 45 and 54 have done so.
As a law professor who specializes in family law, I teach my students what prenups are and how to make sure they stand up in court. I also write about what happens to property when couples get divorced, especially unique forms of property like family businesses or trust funds.
A shield from unwanted debt
But prenups can be about more than what you own – they can also be about what you owe.
Millennials have accumulated more debt than previous generations, and prenups can help millennial couples navigate some of the concerns about debt in marriage. They can help couples address questions about the shared debt incurred during the marriage and who will pay what if the marriage ends. For example, couples can agree in a prenup to allocate student loan debt to the person who took out the loan.
They can also choose to protect one person from the other’s medical debt, especially if they know that large medical bills are on the horizon. Prenups can insulate one spouse from potential debt and financial risk from their partner’s business.
Prenups allows couples to make their own rules rather than being at the mercy of state laws.
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A shield from state laws
Couples may also be drawn to prenups because these agreements allow them to make arrangements that, if executed correctly, take precedence over state laws.
When you get divorced, you can either follow the terms in a prenup or the terms that state law provides and be at the mercy of a divorce court’s estimation of who should get what.
State rules that generally divide all assets and debt equally were initially created for divorcing couples with conventional and gendered household patterns. For example, stay-at-home mothers raising children, working fathers with full-time employment, and assets like a house, life insurance and pension.
Younger couples are likely to organize their households much differently. Both spouses generally work. Expectations about who is responsible for child rearing are more varied. Millennials and Gen Z workers are frequently freelance employees or independent contractors, with less income security and fewer benefits like employer-provided pensions or health and life insurance.
Prenups are a helpful way to address these emergent work-life arrangements. For example, one spouse can choose to keep their income or pension benefits as separate property, not to be divided upon divorce.
New ways to draft a prenup
New platforms like Hello Prenup – a “Shark Tank” success story – can be helpful for younger couples. The company aims to make the prenup process more accessible and less costly – think Turbo Tax but for prenups. Online platforms like Rocket Lawyer or Legal Templates, which provide outlines for all kinds of legal documents, also offer a prenup template.
These platforms provide state-specific documents and explain the process, walking clients through things like financial disclosure rules that are important if a prenup ever ends up being questioned in court.
A valuable conversation
Prenups make the news because of celebrity agreements and sensational provisions, like fidelity clauses or sobriety requirements. However, for most couples, these items are less important. Many people draft prenups to feel financially safe and know what will happen if they divorce.
One of the most significant benefits of prenups is that they get couples to talk about their financial lives and what it might look like to merge – or separate – finances as a part of marriage. And, considering conflicts around money are one of the biggest causes of divorce, prenup conversations may be the best kind of wedding planning you can do.
Allison Anna Tait does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
