What is a prenup and how does it work?

You’ve bought the wedding dress, picked out the flowers and booked the caterer. But before couples walk down the aisle, there may be other matters to consider. For instance, how will they marry their finances? And how would they unmarry them if the marriage ends?

No one wants to spoil the romance by thinking about that possibility, much less discuss and plan for it. But it could be easier to agree now—before the nuptials—on how to divide assets, pay expenses, settle debts and decide on alimony and attorney’s fees. 

So if you’re getting married, you might want to consider binding those decisions in a contract called a prenuptial agreement—to help avoid legal issues and protect your financial future.

Key takeaways

• A prenuptial agreement—or prenup for short—is a legal document two people sign before they get married. 
• Prenups detail each person’s rights to assets and responsibilities for debts if the marriage ends.
• They can be used to address finances before and during marriage.
• Prenups could benefit both partners, even if one is wealthier than the other.
• It’s generally advised that couples work with financial and legal advisers on a prenup.

A prenuptial agreement, or prenup for short, is a legal document drawn up by lawyers on behalf of two people who plan to get married. Prenups are also referred to as premarital agreements.

Couples typically sign the contract before their wedding. And it generally goes into effect on the day of the marriage. 

The point of a prenup is to define each person’s rights and responsibilities if the marriage ends—either through death or divorce. 

By outlining who keeps what, who pays for what and who’s responsible for what, a prenup could help you protect your assets and shield you from your partner’s debts.

Like any contract, a prenup could also help prevent legal disputes—possibly sparing couples years of litigation and thousands of dollars in attorney’s fees.

You may be wondering what to include in a prenup. It can have as much or as little in it as you need. You can also set an expiration date for it, if you like. 

Prenups can assign ownership to your belongings, including:

• Businesses
• Property, like cars, houses, art, jewelry and furniture
• Money, including savings, stocks and bonds, retirement accounts, gifts and inheritances

Prenups can assign responsibility for the things you owe, including:

• Expenses, such as household bills, memberships and subscriptions
• Credit cards
• Auto, mortgage, student and medical loans
• Bankruptcies and foreclosures

Prenups can assign liability for:

• Attorney’s fees
• Survivor or death benefits
• The other’s income, called alimony or spousal support

But legally, a prenup can’t cover everything. For instance, there could be laws that prohibit you from including child custody, visitation rights and child support payments in a prenup.

Lawyers also might advise against including infidelity clauses, big payouts or anything that could make divorce more tempting than staying married.

So is getting a prenup a good idea? 

You might consider a prenup if you live in one of the nine states with community property laws. A prenup could override the legal requirement that divorcing couples split all assets and debts equally.

Prenups can also be beneficial for those getting married when any of the following circumstances exists:

If you’ve been married before, you might want to protect the assets you acquired in the divorce.

And if the person you’re marrying has been divorced before, they may still have debts, alimony payments and attorney’s fees to consider. 

A prenup can detail who would inherit your money or property in the event of your death. People with children and grandchildren from a previous marriage may want to leave their assets to them instead of to their new spouse. 

There’s a common misconception that prenups are only for people who don’t want a spouse to get their money in a divorce. 

But a prenup could also be used to benefit someone coming into a marriage with few assets. Negotiating a share in the partner’s assets—a successful business, for example—could grow that person’s wealth in a marriage.

Love may not be enough to conquer high credit card bills, outstanding loans or a bankruptcy filing. But a prenup could specify you’re not responsible for your partner’s debts from before the marriage.

If you’re both bringing debt into the marriage, you could talk to your legal or financial adviser about consolidating your debts. A prenup could specify how much each person should pay, perhaps depending on how much each person owed.

If you’re expecting a significant inheritance, a prenup could help you avoid losing the estate in the event of your death or divorce. The terms could specify those assets would remain with you or your children.

Now that you know what’s involved, how do you get a prenup? 

It’s possible to save on legal fees by creating your own first draft. But you’ll still need a lawyer to review it to make sure it’s valid. Because if a prenup is contested, judges might look for signs that both parties:

• Signed it voluntarily—not under duress or coercion
• Were open and honest about their finances
• Negotiated a fair outcome for themselves
• Had their own lawyer review it on their behalf
• Had enough time to decide whether to sign it, negotiate some more or cancel the wedding

When should you ask for a prenup? Whether you’re contemplating marriage, are already engaged or are planning your wedding, you might benefit from talking about your finances sooner than later.

“Money dates” are one way to broach the subject. You could dim the lights, put on some mellow music and get comfortable on the couch. Or discuss your finances over a nice dinner. 

Consider setting aside enough quiet time—maybe 15 to 30 minutes per session—until you’ve covered everything.

If the conversation becomes too uncomfortable or reaches an impasse, you could ask a financial adviser to help bring an objective eye to a sticky situation.

In some states, including California, courts can invalidate a prenup if one person didn’t have legal representation.

Even if it’s not required by law, it could be a good idea for each person to hire their own family law attorney to advise them on their individual interests.

After you’re married, if you find mistakes or regret decisions in your prenup, it may be difficult or even impossible to change unless your spouse agrees. Even then, that could cost more in legal fees.

Trying to rush negotiations may not be a good idea either. Some courts could require a certain period of time—seven days is common—between when you receive the final prenuptial agreement and when it’s executed.

There’s no set price for a prenup because every couple’s situation is different. The cost of prenups can vary depending on a variety of factors, including:

• How simple or complex your finances are
• How many back-and-forth negotiations you have
• How much time and work are involved
• How much experience your lawyers have

A prenup could help protect your assets, shield you from debts and avoid litigation. Before saying “I do,” consider the pros and cons of prenuptial agreements to determine whether a prenup is a good idea for you.

As with any insurance policy, you may hope you don’t have to use it. But prenups can help prepare you for and protect you from life’s unexpected curveballs—like death or divorce. 

Before you get married, consider learning more about how marriage can affect your financial assets and how to set a wedding budget and stick to it. Or explore a few tips to help you plan and budget for the big day.