Welcome to CNBC Select's advice column, Getting Your Money Right, where financial advisor Kristin O'Keeffe Merrick will be answering your pressing money questions. You can read her last installment here on how to stop living a lifestyle you can't afford. Have a question you want to ask? Send us a note at AskSelect@nbcuni.com.
Dear Kristin
I am getting married! I am thrilled about this and am excited to spend my life with my new fiancé. However, I am concerned because I think I should probably explore a prenuptial agreement and am not sure if it makes sense for me. I am also a little nervous about bringing it up with my future spouse. Could you help?
Signed,
Engaged in Englewood
Dear Engaged,
Congrats! Marriage is wonderful and I wish you the best. But you raise an incredibly important question that is worth addressing — repeatedly. First and foremost, it is my opinion that the "prenup" needs a rebrand. They're often associated as being exclusively for celebrities and other wealthy people and I'm here to tell you that's nonsense.
Let's talk through some facts. People are getting married later in life according to a recent study by the Pew Research Center, and that means more couples are bringing with them to the altar significant wealth or debt. That's the kind of financial baggage that a prenup can take care of. Other reasons include having children from a different relationship (you want to make sure they're financially protected), owning a business, having a family inheritance coming your way, and more.
Bottom line: If you have accumulated a certain amount of wealth and professional status by the time you marry (or if you or your spouse are drowning in debt), it is very important to consider a prenup.
What does a prenup actually do?
A prenup is a legally binding contract that determines how spouses will divide assets and debt in the event of a divorce. A prenup doesn't stop you from growing wealth with your spouse during your marriage. If you get married and buy a home together using your mutual (co-mingled money), then that asset will belong to both of you if that is what's in your document.
Prenups generally protect assets that you have before the marriage. This pertains to debt as well. If one of you has an extraordinary amount of debt, it's only logical that you would take steps to protect the other from assuming that debt in the event of a divorce. And yes, this is a reminder that your debt becomes your spouse's debt during marriage so make sure you talk about what you owe before walking down the aisle.
Essentially what this means is that as soon as you "merge" your money (think joint bank accounts, joint investment accounts, property purchases that you make together, etc.), they will be split 50/50 in the event of a divorce. If you enter a marriage with personal assets and you do not want them to belong to your spouse, you should make that clear in a prenup and keep the account in your name only. Also, this is a reminder to check the state laws to find out if your state is a "community property state". This is where an attorney can come in very handy.
Be communicative and honest
Marriage is supposed to be all sunshine and rainbows — at least this is what my husband always says. When you are proposing the idea of a legal document to protect yourself from the demise of your marriage, it is not generally well received.
If you feel nervous about talking to your fiance about a prenup, you're just having normal human feelings. My advice is to have this conversation earlier—perhaps prior to an engagement. Do not do this as the wedding invites are on their way out. Your fiance should have ample time to understand your reasoning and hire an attorney to review the document. In fact, there have been cases where prenups have been invalidated as the divorcing spouse said they were put under undo pressure to sign without enough time to review the document. When discussing this with your fiance, treat it as a matter of fact and a reality of life. While we want marriage to be romantic and lovely, it is also a merger and a legal agreement. Treat it as such.
One of the main impediments to getting a prenup is hiring an attorney. Attorneys cost money and you both have to hire your own. This can be annoying, time-consuming and costly. But as I mentioned earlier, the fee that you will pay now will be a fraction of what you pay down the road to divorce attorneys.
Bottom line
Prenups are becoming a lot more standard. It is far less taboo than it was when Kanye wrote his lyrics. According to The Harris Poll, in 2010 only 3% of those married or engaged had signed a prenup — in 2022 that number had grown to 15%. Prenups are hopefully starting to shed that terrible reputation they have and becoming a bit more normalized.
I hope this was helpful. Remember that talking about money and finances in any relationship is crucial. Be honest, open and shame-free and you will be alright.
Good luck
Kristin
Kristin O'Keeffe Merrick is a Financial Advisor and money expert at her family-run firm, O'Keeffe Financial Partners, located in Fairfield, NJ.
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