Is a prenuptial agreement necessary?

[fineprint]

I'm getting married next year and I'm not sure whether or not to create a prenuptial agreement for both of us to sign. From a purely financial perspective, this would seem like a good idea, but it also seems like we would be entering in marriage thinking it won't work (why else have an agreement?)

I guess I'm looking for opinions on this. Did you have a prenuptial agreement when you got married? If you did, are you glad or was it a cause o unneeded stress? If you didn't, do you wish you had? I'm just trying to figure out whether this is the right action for me to take or not.

[QuarterMillionMan]

If either one of you has a high net worth or a significant amount of assets and the other one does not I would say yes. However, if both of you are in the poor house then no. Simple as that. You or your spouse should protect what you have already acquired. I can never understand why a high net worth person would want to get married without a prenup, or get married in the first place.

[fineprint]

That's kind of the problem. I'm kind of in the middle. I don't have a huge net worth, but I do have more money than my future spouse. It's about $75,000 whihc may not seem like a lot to many of you here, but we're both young and it's a lot of money to me. We're both in our early 20s.

[disneysteve]

I can never understand why a high net worth person would want to get married without a prenup, or get married in the first place.

You don't understand why someone would want to get married? Sorry to hear that.

[riverwed070707]

Full disclaimer: I did not have a prenup and I got married young but I was also a poor college student and my future husband had a negative net worth...

That said, if you're considering it, my thought is whats the downside? I don't necessarily agree with keeping finances separate after marriage because I think in most cases it creates more issues than it solves, but anyone not after your money shouldn't have a problem with you protecting the assets your bringing to the table. Anything you acquire after marriage, no matter how disproportionate, should be jointly split in the case of a divorce. Signing a prenup no more states that you preparing for a divorce than having a will says you're preparing for death or having car insurance says you're planning to get in a wreck. Life is full of uncertainties.

[ua_guy]

I'm getting married. We're not doing a pre-nup. We've been together for 12 years and have owned two homes together, and have shared finances, and we've lived in two different states. We've collected assets over the years. We're comfortable that if the marriage ever disolves, walking away with half, or however we agree to split it, that will be equitable enough.

A pre-nup isn't about what you have, or what your spouse-to-be has, it's how you view what you have. My question would be...if you're not willing to lose everything for the person you want to spend the rest of your life with--Do you really want to spend the rest of your life with them?

Marriage means different things for different people, in our case, 12 years down the road, it's some paperwork and some intangible legal benefits that we'd like to secure if we run into health issues down the road. That and a confusing tax headache come 2016. A legal certificate or a religious sacrament have no bearing on the meaning of our love for one another.

[disneysteve]

Signing a prenup no more states that you preparing for a divorce than having a will says you're preparing for death or having car insurance says you're planning to get in a wreck.

I think that's a faulty analogy.

I am 100% certain I'm going to die. I need a will.

As for auto insurance, first it's required by law. Second, lots of things can happen that are totally out of my control. My car could be stolen (has happened to me). It could be hit while parked (has happened to me). It could be damaged in a fire (has happened to me).

I have no expectation of getting a divorce so why would I do a prenup?

As far as I'm concerned, if I didn't totally and completely trust the person I was marrying, I wouldn't have married her. If I wasn't willing to share everything I had with her, I wouldn't have married her.

[riverwed070707]

I think that's a faulty analogy.

I am 100% certain I'm going to die. I need a will.

As for auto insurance, first it's required by law. Second, lots of things can happen that are totally out of my control. My car could be stolen (has happened to me). It could be hit while parked (has happened to me). It could be damaged in a fire (has happened to me).

I have no expectation of getting a divorce so why would I do a prenup?

As far as I'm concerned, if I didn't totally and completely trust the person I was marrying, I wouldn't have married her. If I wasn't willing to share everything I had with her, I wouldn't have married her.

In a perfect world, sure and in principle I agree with you. I married my husband because I wanted to spend my life with him and 10 years later I still feel the same. But sometimes people are deceptive and not who you thought they were. I don't think it makes sense in all cases (and as I said, I didn't have one) but if you went in with a half a mil and loved and trusted them fully but they turned out to be a crazy that was stealing your money, living a second life, dealing drugs...whatever the extenuating circumstances and two years later your life savings is half theirs? Or, in a more typical situation, maybe they just decide they're done and leave you a couple years down the road even if its not what you want? I just don't see the harm in protecting your assets. Why add salt to the wound? Circumstances beyond your control and even though you went in 100% maybe they only went in 50%. Obviously this is not your situation, but its happened to a lot of people I know.

We see people come in here ALL THE TIME with rose colored glasses about personal finance and we try to provide them guidance and reality - create an emergency fund, live below your means... why is it that if someone asks for a prenup they aren't all in?

[disneysteve]

why is it that if someone asks for a prenup they aren't all in?

I believe that married couples should combine their finances. That being the case, how would a prenup actually work? Let's say I had $500,000 when I got married. My wife had nothing. Once we were married, would I not touch any of that money for our mutual benefit? Would I not tap into that money to buy a home together, to travel, to buy gifts, etc? Could I never touch that money again unless our marriage ended?

I understand what happens if the couple gets divorced, but what happens if they don't?

[snafu]

Your question surprised me. Have you and intended talked about your views on money, savings and debt? Are you on the same page or is one of you a saver and the other a free spender? Do you anticipate taking couple counselling as part of pre marital religious requirements?

What has developed your level of concern? What is your earning capacity? What do you anticipate GF's contribution to financial health as a couple? Do you expect GF to have debt coming into marriage? How should that be handled?

How do you see making spending decisions? Would you expect to pool your earnings and work from budget categories whose sums were negotiated? Would you prefer to split expenses which each of you taking responsibility like you pay your cell phone bill, DW pays her cell bill etc? Would you be amenable to splitting common expenses according to income percentages? If you make 20% more you pay 70% and she pays 30% for rent or mortgage, utilities and food?

What reaction do you anticipate when you ask SO to sign a pre nuptial agreement? Can you sell it as Disney Steve suggests, like car insurance or a Will?

[riverwed070707]

I believe that married couples should combine their finances. That being the case, how would a prenup actually work? Let's say I had $500,000 when I got married. My wife had nothing. Once we were married, would I not touch any of that money for our mutual benefit? Would I not tap into that money to buy a home together, to travel, to buy gifts, etc? Could I never touch that money again unless our marriage ended?

I understand what happens if the couple gets divorced, but what happens if they don't?

I mean I guess that's something that needs to be outlined in the agreement and somewhat is determined by your intentions for the money and current place in life. If it were me, I was young-ish and the money was set aside and invested for retirement, my thought would be let it grow and if you make it to retirement as a couple you both reap the benefits. If its not for retirement and we're just talking general savings, it becomes a joint decision how to spend it, and you're right, both may benefit especially if it becomes a down payment for a home, etc. Personally, I think once you've spent it as a couple, anything purchased with it becomes joint property and therefore divisible in a divorce but I'm sure some people have clauses outlining specific details, especially if its a really substantial amount of money.

On the other hand, if I was older and close to retirement, maybe part of it is intended to be spent on living expenses (jointly) but maybe some I want to be left for my kids or some other benefit I've spent my life saving for.

Just a couple scenarios but I don't think there's one hard and fast answer.

[Bob B.]

A prenup is designed to protect substantial premarital assets.

$75K just does not qualify as a substantial premarital asset. It is a significant asset for a 20 something year old. I applaud that you have held on to it. Almost no one your age has $75K in assets.

But it's just not enough to protect with a prenup, unless you get divorced in a year or two. After you've been married for a decade or two, I would bet that the 75K is a fraction of your net worth. The majority of your assets will (likely) be marital assets.

In my opinion, the 75K is not enough to broach the subject of a prenup. Unless there is a strong likelihood in getting divorced in a year or two. Then you should really examine how good an idea it is to get married.

[Tabs]

It's about $75,000 whihc may not seem like a lot to many of you here, but we're both young and it's a lot of money to me. We're both in our early 20s.

I think you are doing great!

I also think it's better to have it and not need it than to need it and not have it. Plus, remember that you can always mutually change the terms of the pre-nup (and replace it with a post-nup).

[rennigade]

You don't understand why someone would want to get married? Sorry to hear that.

Well in his defense...what is marriage really? A legal binding piece of paper that an authority recognizes?

I was with my now wife 7 years before marriage...been married 5 years. Besides the large gathering of people on our wedding day and a few short spoken words at the ceremony...I feel absolutely no different now than whey I did before we were married. I was all in before and im all in now. Our love is just as strong now as it was before...actually more so as time goes on...but that doesnt take a legal binding paper to accomplish that. We completely trusted each other before as do we now.

What changes besides the fact I now have her on my health insurance and I can now call her my spouse rather than girlfriend.

As for a prenup...it all depends how much much assets you have coming into a relationship. If you live in CA, dont even bother with a prenup...they never hold up anyway.

[feh]

A prenup is designed to protect substantial premarital assets.

$75K just does not qualify as a substantial premarital asset.

+1

OP - if you were somehow forced to forfeit your $75K in order to marry, would you still do it? If the answer is no, then you have the wrong partner.

If the answer is yes, forget about the prenup and congrats!