Prenuptial agreements. Should you get one?

Prenuptial agreements

I didn’t have a prenuptial agreement. My story.

I didn’t write a prenuptial agreement when I got married to Cheryl. Did you? Will you?

When I got married I had a little bit of money, but not much, a few thousand dollars. Cheryl had a few thousand dollars of her own. We were poor and were not worried about the possibility of losing this or the other in the case of a divorce. In fact, we didn’t think about divorce either.

When we got divorced, we didn’t separate everything equally, but it was close enough. We did some kind of inventory of what we have brought into the relationship and what we had created while being together and without any dispute, we distribute our money.

Our divorce was very amicable. We are still good friends and we still work together. She kept everything in the apartment and I just left to another place with my two most valuable physical possessions, my phone, and my laptop.

We were lucky we didn’t have any money problems after the divorce, but many people are not so lucky, many people go through painful divorce proceedings and have fearsome money fights.

What are prenuptial agreements

A prenuptial agreement is a contract between a couple, agreed and signed, before getting married or living in a civil union. The contract specifies how the common property will be divided in case of a divorce or separation. At times couple enters into a postnuptial agreement (an agreement after getting married).

Each country/state/province has their own rules for how a prenuptial agreement is put together, but the common practice in North America is to have an attorney representing each of the parties and often times it’s signed in front of a judge to make sure there is no coercion.

Prenuptial agreements are not only about money, they could also dictate behaviors such as no children; whether the children will be raised vegetarian/vegan; whether the children will practice one religion or the other. There are many funny restrictions agreements, some of them specify how often a couple should have sex, how much each partner should weight, how much TV or sports should be watched, and so on.

What if we break up?

At the beginning of any relationship, most couples are thinking and hoping to spend the rest of their lives together. They are not thinking about the possibility of breaking up.

In most cases, the couple are from the same economic background and are contributing similar assets/skills to the relationship. When they marry as financial equals and divorce as financial equals, not having a prenuptial agreement doesn’t have major consequences. It is my belief that most couples don’t need a prenuptial agreement.

The general rule when a couple gets divorced is that all the assets acquired before the marriage and after the marriage get divided equally. For example, if one partner has $1 million dollars before the marriage and the other partner has $0. If they get divorced one year later, that $1 million dollars get divided equally. In my opinion, one of the partners could have benefited from a prenuptial agreement.

Another example: a couple gets married. Both of them have a similar amount of wealth. They have a baby together. One of them decides to continue working while the other one decides to become a stay at home parent. After a few years, the person who has a job or a business accumulates $10 million dollars while the stay at home parents accumulates nothing. If they get divorced, I believe that the 10 million dollars should be divided equally.

The problem with prenuptial agreements

The biggest problem with a prenuptial agreement is that it’s VERY unromantic. Here you are, promising to love your partner forever and ever and at the same time, you are asking them to sign an agreement to separate assets in case of a divorce.
It feels as if the couple is negotiating a divorce before getting married. It could be very tense, especially if you have attorneys one each side negotiating each penny.

This is what Donald Trump has to say about prenuptial:

“Believe me, there’s nothing fun about it. But there comes a time when you have to say, ‘Darling, I think you’re magnificent, and I care for you deeply, but if things don’t work out, this is what you’re going to get,’”

The good things about prenuptial agreements

Everything is out in the open. Both partners get to see, in details, each other’s possessions and what they are willing to give up in case of a divorce.
It preserves family inheritances money.
Children from a previous marriage get to protect their assets
And the most important reason, in case of a divorce, it makes everything more simple.

Conclusion

Most couples don’t need a prenuptial agreement. Most couples have a similar economic background and most couples are starting from zero. It logical that whatever they build in the marriage, they should split equally, even if one partner was the wage earner and the other one was a stay at home spouse.

When there is a great disparity of wealth, a prenuptial agreement makes sense. If a partner is bringing an over a million dollar (that’s my psychological definition of wealth) and the other one is bringing nothing, the question should be asked: “How are we going to split this if our relationship doesn’t work out” and write the agreement.

When one of the partners is bringing wealth and kids from a previous marriage.

What about you?

Under which condition you would consider a prenuptial agreement necessary?
Under what conditions you would consider a prenuptial agreement a deal-breaker?
Have you ever written a prenuptial agreement?

Let us know in the comments below.

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