3 Main Reasons You Need a Prenup

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Societal standards and romantic comedies may have led you to believe that once you are married, nothing else happens except happily ever after. However, in an effort to be open and honest with yourself and any future partner you may have, it’s wise to consider other options — like if your marriage were to end in divorce.

When you get engaged, your first thoughts likely go to planning your dream wedding, finding the perfect dress and picturing what the rest of your life with your partner will look like. You likely are not thinking about a prenuptial or premarital agreement — but depending on your circumstances, this is something that should go on your pre-wedding checklist.

Whether you have significant assets, crippling student loan debt, expect a large inheritance or manage a wide real estate investment portfolio, protecting what’s yours in the case of divorce is not unwarranted. Here are the three main reasons you might need a prenup, and why it’s OK to get one.

You or Your Partner Have Kids

Many financial advisors and family law attorneys would agree that a prenup is a must if either party has children from a previous relationship. To align with this concept, ensure you understand your future spouse’s financial obligations to their children and/or ex-spouse. This could include child support, spousal support, alimony or an obligation to pay for college.

A prenuptial agreement can ensure that you and your partner can fulfill any financial responsibilities to your kids, and yes, the dreaded exes, no matter what happens down the line. You should also factor in the expense of supporting a stay-at-home parent during or after the marriage.

You or Your Partner Have Substantial Assets

Although everyone enters a marriage hoping it will be forever without considering all financial disclosures, sadly, this is often not the case. This means you need to take steps to ensure your assets will be safe if things don’t work out.

People are getting married later in life than they did decades ago, which means they have built up more of an estate, investment account portfolio or other assets. If a person in their 30s is getting married for the first time, there is a better chance that they could have accumulated some wealth, such as a 401(k) or equity in a home. 

During the prenup process, each party discloses all their assets and debts. Simply put, their net worth, including any real estate or business ownership, would be on full display. State laws vary regarding what is considered separate property in the event of a separation or divorce, so knowing what you came into the marriage with and taking steps to protect your pre-marital assets is essential for protecting your overall wealth.

You or Your Partner Have Substantial Debt

The third circumstance that would make a prenup a good idea includes income disparities between you and your future spouse or coming into the marriage with a lot of debt. Though you are generally not responsible for your spouse’s debts incurred before or during the marriage, this doesn’t mean you will be on equal footing financially if they have a massive amount of credit card debt or back taxes. 

However, if you co-sign or open a joint account, or live in a community property state like Texas, California or Wisconsin, most debts from the marriage are shared. Even in common law states, you may be responsible for debts for family necessities, and in community property states, you may be responsible for nearly all debts acquired during the marriage.

Final Take To GO: There’s No Shame in Signing a Prenup

The bottom line is that after taking an objective look at your financial circumstances with your partner, you may decide that a prenuptial agreement is a good idea. If this is the case, you should discuss your desire openly with your partner. In this day and age, so many people will jump into a lifetime commitment with someone, yet are too embarrassed to discuss money.

Sometimes being romantic is making sure everyone is on the same page and knows exactly what they are signing up for, without worry of surprises or financial shocks down the road.

Gabrielle Olya contributed to the reporting for this article.

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