What is a prenup

1 min readLast updated November 10, 2023by Rachel Carey

In the bliss of engagement and wedding planning, imagining anything but happiness ahead can be challenging. However, a prenup can set clear expectations early on, negating the need for conflict in a worst-case scenario.

What is a prenup? 

A prenuptial agreement, to give its name in full, is a contract between two people who are to be married concerning how things will play out financially if they decide to divorce. Within a standard prenup, you’ll typically find: 

  • A list of each person’s assets 

  • A list of each person’s debts and obligations 

  • Directions in the event of a divorce for everything from division of property to life insurance benefits  

A prenup will be created by a lawyer or lawyers, presented to a judge, witnessed and signed before a couple tie the knot. Each state has specific laws and regulations regarding the enforcement and validity of prenups, so be sure to look into these ahead of time with the help of a trusted professional.  

What does a prenup do? 

When you decide to get a prenup, a financial advisor should look at both of your situations in detail, cataloging both your assets (valuable personal property, cash and bank accounts, education and retirement funds, investments, real estate, etc.) and any of your debts. You’ll then be able to define a fair split with all things accounted for.  

Prenups can be personalized to cover things like spousal support or to include provisions for children from past relationships. In short, these agreements can do whatever you’d like them to, with a few notable exceptions: 

  • Prenups cannot contain provisions surrounding anything illegal  

  • Prenups cannot include any decisions regarding child custody/child support 

  • Prenups cannot have conditions that “encourage divorce” (in the eyes of a judge) 

  • Prenups cannot stipulate personal preferences and should remain financial in nature 

  • In some states, prenups cannot or should not include waivers of alimony rights 

Who needs a prenup? 

Many people are hesitant about prenups, considering them “unnecessary” or “unromantic.” Only you can decide how you feel about this, but to argue the other side, a prenup can be a valuable tool for protecting both parties. It can ensure fairness and allow these financial decisions to be made with clear heads. Plus, it may flag up a partner’s hidden money issues, allowing you to head into the marriage with open eyes. 

Statistically speaking, according to Forbes, the latest data tells us that half of first marriages end in divorce, with second and third marriages failing at even higher rates than 50%. Planning for the worst-case scenario is never fun, but having a prenup in place can make things much easier and much less acrimonious if that scenario does play out. 

Here are a few of the most common reasons that couples decide to draw up a prenup ahead of getting married: 

  1. Both parties are wealthy, with many assets they might want to protect. 

  2. A notable financial inequality between the parties makes “dividing things equally” a less fair/less viable option. For instance, one is in a much higher tax bracket, or one has a lot of debt while the other does not. 

  3. The couple wants precise, direct control over how to split their assets. 

  4. There are children in the picture, and one or both parties want to make inheritance and asset provisions for said children. 

  5. One or both parties is a business owner who wants to retain complete control of their company. 

  6. One or both parties have been married before and, having been through a divorce already, want to ensure that it isn’t such a complicated process if the worst happens. 

  7. One or both parties want to make provisions to protect their privacy, for example, post-divorce NDA stipulations common among celebrities and public figures. 

How to get a prenup 

If you’d like a prenup, the first thing to do is broach the subject with your partner. It can be uncomfortable to bring up, particularly if the idea hasn’t occurred to them. Still, if you can calmly communicate your reasoning with patience for their questions, you’ll hopefully soon be able to come to a consensus.  

Once you agree to draw up a prenup, a financial advisor can help draft and sign off an official agreement. You’ll need to work with that advisor and other professionals, including lawyers (who they’ll be able to help you connect with), to tick all of the following boxes: 

  • The prenup is in writing and not a verbal agreement 

  • Both parties have signed the prenup voluntarily 

  • The prenup has been notarized 

  • The prenup has been witnessed 

It’s worth asking your own individual lawyers to review the prenup and check the validity and fairness of the terms, especially if they’re complex. It’s essential to confirm that you’re getting what you agreed to and what you deserve. 

How much does a prenup cost? 

The cost of drafting and formalizing a prenuptial agreement can differ significantly depending on where in the US you reside, how much your chosen lawyers charge, and how complex the document will be.  

It’s essential to be aware of and prepared for this cost (and to remember how much it might be worth in the end if it can simplify your divorce process and protect your important assets). 

Exact fees are impossible to define, but to give a rough idea, simple prenups might cost just $500, while more complex and detailed prenups might be up to $6,000 per person. Forbes states that the average cost of a prenup nationwide is $650.  

When should you get a prenup? 

Once you’ve decided you’ll get a prenup, it is best to start drawing the agreement up as soon as possible. Timings and legal requirements for completion differ from state to state. In New Hampshire, for instance, your prenup will usually need to be finalized 30 days before the wedding. 

If you miss the window in your location, or you’re already married but wishing you’d considered a prenup at an earlier date, there is such a thing as a “postnup,” a postnuptial agreement. This agreement can outline how things will work if you divorce and may have specific marital conduct provisions (e.g., monogamy) that affect the outcome. 

The bottom line 

It’s never easy to plan for a future you don’t want to come true, but in many cases, it makes financial sense to do so. Plus, it creates peace of mind for you and the person you love that all the complex legal stuff is handled. 

Contact an advisor through Unbiased today for prenuptial agreement advice or general financial planning support. 

Find your perfect financial professional today.   

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.