Prenups Are Not Just for Rich People

When we think of prenuptial agreements, aka prenups, we often think of rich heiresses and big business owners with tons of cars and multiple estates. But the idea that you have to be rich to get a prenuptial agreement is a total myth.

In fact, a prenup is a good idea for anyone going into a marriage—with assets of any kind. Kris Balekian Hayes, a lawyer in Dallas, Texas explains that "a signed contract in place before walking down the aisle can give couples a sense of security and will reduce the risk of expensive litigation down the road."

Yes, no one enters a marriage expecting it to end in divorce. You don't expect to need a hospital stay, either—but you still have health insurance, right? A prenup is a marriage insurance policy.

Law and order

Keep in mind that every state has different laws for divorce and therefore, different laws regarding prenuptial agreements. However, Hayes says "most state divorce laws are no longer applicable if a prenup is in place." Emily Rubenstein, a lawyer in Beverly Hills, Calif. says a prenup allows couples to "choose their own rules to govern their relationship" instead of being at the mercy of state laws, which can change at any time. A prenuptial agreement will likely hold up in any state, regardless of where it was made or where you are residing at the time of the dissolution of marriage.

A legally binding prenuptial agreement is drawn up by a lawyer. The cost depends on your location and the complexity of the agreement, but you can plan to budget a couple thousand dollars or so for a prenuptial agreement. Consider calculating your net worth and deciding if it's worth it to pursue a prenup.

Remember: Having a prenup in place may save you many more thousands of dollars in the case of divorce because, to a lawyer, time is money. The less time you spend going back and forth about assets, the less money you will spend on a potential divorce.

Cover your assets

You may not have the assets of a celebrity when you get married, but you will have to share or negotiate anything of value in a divorce. If you have a car, house, inheritance, or even a particularly valuable piece of furniture, art, jewelry, or other possession, you can cover it in a prenuptial agreement to make sure it stays in your family no matter what. Intellectual property can also be covered in a prenup; if one partner owns a business at the time of the marriage, designating its value and the non-owner's potential contribution to that value is crucial.

Even custody of pets can be accounted for in a prenup—but note that custody of actual human children cannot. However, if you already have potential children in the form of fertilized or pre-implanted eggs, a prenup can stipulate what happens in the case of divorce (whether that means egg/embryo disposal, storage, or possible future use).

Protect yourself from debt

You are not responsible for covering debt from credit cards or student loans your spouse incurred before the marriage. That said, with a prenuptial agreement, you can protect yourself from getting stuck paying for any of that after marriage. Kem L. Marks, a lawyer at Just in Time Legal Solutions in Alabama, says, "The non-borrower might use a prenup to require some form of refund if the marriage does not survive." Especially if one of you plans to rack up debt in the form of education during the course of the marriage, it's wise to protect the other spouse via a prenup.

Clauses

Sure, prenuptial agreements in movies show up with all kinds of interesting stipulations, such as being required to stay with a partner for a certain amount of years before being entitled to any money in a divorce. These clauses are possible, though maybe not as seen on TV.

Marks warns that "clauses that seek to reward domestic conduct, like marital longevity or childbearing—and punish other conduct, like infidelity or weight gain—can be a waste of time and money." Because they're terrible and prejudiced, perhaps? And also because, as Marks explains, "terms like that will be expensive for a lawyer to draft on the front end and expensive to pursue in court on the back end, with little chance of enforcement."

Think of the children

If you're getting married and already have children of your own—and/or exes from a previous relationship—that can certainly complicate things in the event of a subsequent divorce. It's a good idea to set aside some financial agreements in a prenup just in case.

A prenup protects the children of a previous relationship, of course, but it can also protect the new spouse. "Premarital agreements can determine which assets will be protected or allocated for the children of a prior relationship, and which assets will be safeguarded for the new spouse," says Kyung (Kathryn) Dickerson, a lawyer in Virginia and Washington, DC. Things like property, estates, or other monetary assets can all be protected.

Another thing to consider when getting married is whether you're going to combine all of your money into one account or maintain separate accounts for personal spending, business, or any other reason. "A prenuptial agreement can be used to specify how the couple's household expenses will be managed, including who will be responsible for paying the bills and how much each party will contribute financially to running the household," says Michele Lee Fine, founder and CEO of Cornerstone Wealth Advisory in New York.

So if you and your future spouse are planning to maintain your own bank accounts, your prenup can dictate where the common and individual money goes. Will one of you pay the future mortgage or will there be a joint account for that? Will one of you be in charge of childcare or will you each contribute from your own accounts? Also, if one of you leaves the workforce to raise kids, you can account for that as well.

Dickerson adds that "premarital agreements can also protect the new spouse's assets from being used to pay the arrears or debts arising out of their spouse's prior marriage." If you're heading into a second marriage as a solo homeowner, for example, you may want a prenup to prevent the home from ever becoming marital property—precluding "the new spouse from ever laying claim to that first home, even if the blended family lives there throughout the marriage," Marks explains. The division of assets can be a hotly contested subject when a previous relationship is involved, so the more clearly laid out the finances are, the better.

'Til Death Do You Part

"While most people think 'divorce' when they hear about premarital agreements, such agreements can also protect your assets in case of disability or death," Dickerson says. "Premarital agreements can prevent or provide a remedy if an estranged spouse retitles or liquidates assets during their spouse's disability." A prenup might be able to protect you if you die or become disabled before a divorce is finalized.

Fine also points out that "a valid prenuptial agreement ensures that both parties' individual estate plans will be carried out according to their wishes, and cannot be altered by the surviving spouse." So even after you die, your prenup can protect your last will and testament.

If they refuse to get one

If your spouse-to-be bristles at the idea of a prenup, try to phrase it gently, telling them how much you love them and want to create an open, honest path into marriage from a monetary standpoint as well. Also, you can always change the conditions of a prenup later on, if you both agree on that.

If they still refuse, it's time to think about why that is. Marriage is all about honesty and trust, so have frank conversations about finances early, make sure you agree about your joint financial life together, and come up with a plan that makes both of you feel protected, safe, and loved as you embark on this huge life step.

As a final note, Dickerson brings up a valid argument for getting a prenup even if you aren't a billionaire. She says a prenup when you're not rich "can make the most difference" because "the effect of the division of assets and debts can have a substantial and potentially devastating effect on a person's life." Her point is that billionaires still end up with billions in a divorce, but a regular person living in the 99 percent can have their future stolen by a litigious ex if legal protection is not in place. If your inheritance is your safety net, for example, think of the impact losing it would have on your plans.

While it can be scary to have these conversations with your beloved leading up to your wedding day, think about the peace and comfort you'll feel dancing at your reception knowing you and your spouse are united about your financial future, no matter what.