When you're falling in love, divorce probably isn't on your radar. You can't really avoid the possibility that things might fall apart one day, however. And friends and family might be whispering about how premarital agreements — financial contracts made by spouses before marriage to determine financial issues — take the guesswork out of property division in a divorce.
But not everybody needs a prenup. Divorce specialist Ji Y. Park, founder and managing attorney of Park Family Law in Beverly Hills, Calif., said many if not most couples can do just fine without a premarital agreement. "The media hype surrounding prenups has made it so that everyone now thinks they need a prenup when they actually do not," Park said.
Ultimately, only you can answer the question, "Do I need a prenup?" But, it helps to consider common circumstances in which the costs of a prenup — both in terms of attorney fees and relationship strain — might not be worth it. If you fall into one of these categories, you might not need a prenup.
1. You Are a Dyed-in-the-Wool Romantic
There is nothing romantic whatsoever about a prenup. You understand perfectly well that nothing lasts forever, but must you think about all that during those blissful days before you say "I do"?
If romance is more important to you than finance, the personal price you pay for a prenup might be too high. Prenuptial agreements require a stern and serious discussion of how to address finances if you divorce, and the negotiation takes place before you are even married.
Chattanooga, Tenn., family law attorney Ryan C. Smith wrote about this issue. "If you believe discussing the topic with your future spouse may have a negative impact on the relationship, then a prenuptial agreement is probably not for you," he said.
If you go against your instincts and negotiate a premarital agreement to protect you against divorce, you might ruin your big day — and your romance. Even if you can afford the monetary price tag, the financial security might not be worth the personal price you pay in love and trust.
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2. You Have No Financial Assets Yet
Premarital agreements are intended to protect your finances in case of divorce or death, so if you have no financial assets, you might not need one. If you don't own real estate or have any investments or bank accounts, why worry about divorce? Worry about saving for retirement instead.
Park lists zero-asset couples as the No. 1 situation where it might not be worth it to get a prenup. "A prenup is likely not worth the time or effort if the parties do not have any assets," she said.
So if you are just starting out in life and all the dials are set at zero, why shell out big bucks for an attorney to draft up a prenup? If you do, you'll still be in that zero-asset category with an attorney fee to deal with.
And remember, if circumstances change, you and your spouse can sign an agreement after marriage (postnuptial agreement) that is just as binding as a contract before marriage.
3. You Live in a Community Property State
Some states, like California, have laws about marital property division called community property laws. These laws divide property between separate property (belonging entirely to one spouse) and community property (belonging equally to both spouses.) All income earned by either spouse during marriage is community property.
If you like the idea of pooling income and acquiring assets together, you don't need a prenup in a community property state. Sharing income and assets, you decide everything with your spouse as a partnership.
Park gives this example of how community property works: The husband brings home $100, the wife brings home $200, and they buy something together for $300. The asset belongs 50 percent to the husband and 50 percent to the wife if there is no prenup. This works for many people.
"People like pooling income and acquiring assets together because it falls neatly within their idea of what married life is supposed to be," Park said.
Contrast this result to what would happen with a prenup agreement that each spouse's earnings remain separate property. "In the above scenario, the husband would own one-third and wife would own two-thirds of the asset." Parks said. "In my opinion, this is more like living with a roommate than living with a spouse."
4. All You Are Worried About Is Child Support
Perhaps you don't care about dividing up money with your spouse in case you split. And you aren't concerned about alimony or asset division. But, you do want any kids you have to get child support if you divorce, and you'd like to get an agreement on custody and parenting time.
Forget the prenup for this issue. You can't determine child support or custody matters by prenup, according to Shakeb A. Razai, a family law attorney with Razai & Nefulda in Orange, Calif.
"Trying to address issues of child support in a premarital agreement would make no sense," said Razai. "Child support cannot be limited in a prenup in California as it would violate public policy. The same holds true for custody and visitation issues of potential children if and when the marriage dissolves."
And that isn't only true for California. A prenup cannot make decisions about child support or child custody issues, since the courts determine both using a "best interest of the child" standard. So if you waste time arguing about it in a prenup, you gain nothing.
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5. Your Religious Beliefs Prohibit Divorce
If both you and your spouse are practicing members of a religion that forbids divorce, a prenuptial agreement might not be very important to you. A prenup addresses property division if you divorce.
Even matters of separate versus community property relate to who will walk away with property after divorce. So if you are both resolved to making your marriage last a lifetime, a prenup is an expensive and unnecessary bother.
And don't consider negotiating a premarital agreement to organize your married life. A prenup is not the place to specify who is responsible for what chores during or how many times a year you will visit the in-laws.
Courts will not uphold these kinds of personal preferences in a prenup. Premarital agreements are intended to address financial issues.
6. Your Finances Are Already Tied Up Beyond the Reach of Divorce
If you get most of your income from a trust or similar legal instrument established before the marriage, you might not need a prenuptial agreement. This is the advice of Theresa Lyons of Lyons & Associates, a New Jersey family law and divorce lawyer.
Prenups are not necessarily worth the trouble, Lyons said, "when the spouses' assets are otherwise protected by trust or other safe-guarding legal instrument such that if there is a divorce, the assets are already separated and protected even before the marriage begins."
In community property states, property interests acquired before marriage are the separate property of that spouse. So if you are the recipient of distributions from a trust or other fund or instrument created before the marriage, the trust/retirement/pension funds are already established as separate property, and the incoming funds are also separate.
7. You Can Work With the Marital Property Laws in Your State
Community property and equitable division laws are both quite complicated systems of marital property division. And the exact provisions of each of these types of laws vary from state to state. Understanding the basics is not the same as being able to navigate your way around the different rules.
For example, you might know that property you own before marriage is your separate property. But once you are married, you also have to keep that property separate rather than co-mingling it with community property in order for it to retain the status of separate property.
If you have legal training or otherwise have become truly conversant with your state's laws — and you like them — a prenup might not be necessary for you. You can make do with the laws and regulations in place and work around them.
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8. You Can’t Afford It
It isn't cheap to get a valid and enforceable prenuptial agreement. First, each party should have their own attorney, and some state courts require this before enforcing a prenup. That means you'll have two attorneys negotiating with each other, typically getting paid by the hour.
Prenup price estimates are all over the map. One California firm says the average prenuptial agreement its attorneys write costs between $2,000 and $6,000 per person. Some charge a set fee; many charge by the hour.
If you have no money, you have no prenup. It is definitely not worth the cost to you, since you have no assets or income to protect. Instead of considering a prenup, grow your paycheck.
9. You Just Don’t Know What Financial Issues Lie Ahead
When you are considering the downsides of a prenup, friends might tell you it's better to fight early over a prenup than later in an expensive divorce battle. But things are not always that black and white.
While the intention of signing a prenup might be to provide financial certainty, certainty is not possible when it comes to the future. It's impossible to anticipate all of the issues and financial configurations that you might be facing if or when your marriage ends.
Prenups are generally based on a couple's situation at the beginning of a marriage. Changed circumstances might cause a prenup that was fair at the time it was drafted to have detrimental effects on one spouse.
For example, take the situation of a middle-aged professional woman who decides to leave the workforce and return to school for her Ph.D. Her husband supports this, but six months later, the marriage falls apart. If the couple has no prenup, she can ask for spousal support during the period it takes her to get her degree. But if she signed a prenup waiving alimony that didn't discuss the possibility of further schooling, she has no legal recourse.
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