No one wants to think about ending a marriage before it even begins. However, the American Psychological Association reports that about 40 to 50 percent of married couples in the United States will eventually divorce. Unfortunately, that means that it might be a good idea to expect the best and plan for the worst. Getting a prenuptial agreement is like getting marriage insurance – of a sort.

What Is a Prenup and Do I Need One?

A prenuptial agreement is a written, legal contract you sign before you are married, determining how to divide assets and liabilities in the event of a divorce. It lists all the accounts, property, and debts owned by each person before the marriage takes place and what each person's rights will be to these if the union gets terminated.

Additionally, prenups can shield one party from the other party's debts. That means if one party has enormous student loan debts, those debts would be exempt from any divorce settlement, and the other party would not have to pay them.

Do you need one? If you have assets going into a marriage you wish to protect or shield your partner from your debt, then yes, a prenup is recommended. Prenups do not, however, protect assets or debts acquired during the marriage from divorce proceedings.

How Does a Prenup Work?

Laws vary from state to state about what can and cannot be in each state's prenuptial agreement. For this reason, it is best to work with an attorney familiar with your state's legal framework for prenuptial agreements. Some prenups can even restrain couples from speaking ill of one another after a divorce.

Essentially, couples can agree to any of the following in their prenup:

• Alimony
• Pet custody
• Assets and income for children from previous marriages
• Estate plans
• Managing and/or separating marital property
• Business ownership
• Debt and financial obligations

Remember that every prenup is unique, and you and your partner may have differing interests in the prenuptial agreement. Putting together a deal can be an important test for your relationship. There will be challenges as you determine who gets what if your marriage should end in a divorce.

Also, remember that just like in a divorce, you each need to have individual representation to protect your interests. A prenup is not about hamstringing either party. It's about creating an equitable dissolution of the marriage based on the assets and liabilities you brought into the marriage with you.

Advantages and Disadvantages

Before you decide a prenup is right for you, make sure you consider the potential advantages and disadvantages that go along with it.

Advantages:

• Protects the financial interests and wellbeing of children from former marriages.
• Creates financial transparency going into marriage and opens up conversations about finances ahead of time.
• Can be changed as new children are born and other changes occur.
• Prevents you or your partner from becoming responsible for the other’s premarital debts.
• Reduces the risks of lengthy financial battles related to finances, liabilities, and assets if a divorce becomes necessary.
• Allows you to preserve certain items to pass down to your children.
• Reduces the risk of financial surprises.
• Helps protect credit scores and financial interests moving forward after divorce.

Disadvantages:

• Negative connotations. Some view it as planning a divorce before the marriage takes place.
• May create resentment between both parties.
• Makes the commitment of marriage appear inauthentic and transactional.
• Can be emotionally unsettling for one party.
• May be biased towards one person. It’s always best to have your own attorney review the document before signing.
• Cost. Putting together a prenuptial agreement involves the use of a lawyer who charges a fee. Even if you prepare your prenuptial agreement document using an online platform, you will want to have an attorney review it.

Takeaway

• The request to sign a prenup may seem disconcerting at first. However, it might offer more protection than you realize, should your marriage eventually land in divorce court.
• The two of you will have to decide if a prenup is a right choice for your marriage and your peace of mind.
• Prenups, while not essential, offer many benefits to couples from all financial backgrounds.