If you’re a devotee of People and US Weekly—or you know someone who has gotten divorced—you’ve probably heard of the notorious prenup.
Part financial planning, part legal document and part romance-killer (or so say some people), a prenuptial agreement isn’t just for celebrities. It’s for anyone who likes to have stuff down in writing … before the divorce hits the fan.
We talked to LearnVest Planning Services certified financial planner™ Ellen Derrick and New York estate planning attorney Ann-Margaret Carrozza for their unbiased and expert opinions on the sensitive topic.
1. What is a prenup?
It’s a casual term for “prenuptial agreement” or an agreement you execute before getting married. In legal terms, “the most common purpose for a prenup is to determine who gets what in the event of a divorce,” Carrozza says.
If you get divorced, and you don’t have a prenup, state law may determine who receives which marital property—like money, the house, the car, etc. But if you have a prenup, the division of assets can be tailored to your specific situation, as agreed upon beforehand. It can make the divorce process go much smoother and faster—and hopefully save you money in the process.
2. Does getting a prenup mean that my fiancé doesn’t trust me?
“It absolutely doesn’t mean that they don’t love or trust you,” Derrick says. “Rather, it means that you’re trying to protect yourself and the other person—and you’re thinking about all of the possibilities. Nobody goes into marriage expecting to get divorced, but you want to think about the repercussions if that does happen.”
Carrozza looks at it even more positively. “It’s an opportunity for the couple to create a financial mission statement. Within a prenup, you go much further than just who gets what. You also outline your financial goals and priorities during the marriage, and use it as a blueprint to design your financial future with your partner.”
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3. But I’m not wealthy. Do I really need one?
“It’s very common for someone with a degree of wealth to request a prenup,” Carrozza says. “But it can also be helpful to a partner with fewer assets because individuals will often quit a job or relocate prior to a marriage, and a prenup can ensure that they are made financially whole in the event of a breakup.” So if you quit your job to raise the kids, a prenup could specify that you get financial support from your spouse, since you may have a harder time finding new employment.
Derrick brings up another common scenario: Let’s say you’ve agreed to support your spouse through college, you’ve paid the tuition or you’ve helped to pay off your spouse’s student loans. Then, five years later, you’re divorced, your ex has gotten a free education … and you’re out several thousand dollars. “You can fight over that in divorce court,” Derrick says. Or you could spell things out before you find yourself in such a sticky situation.