Valentine’s Day advice: Even if they’re not romantic, prenups are for everyone

Key Concepts

• Prenuptial Agreement (Prenup): A contract entered into before marriage outlining the division of assets and debts in the event of divorce or death.
• Equitable Distribution: A system used in most US states where marital assets are divided fairly, but not necessarily equally, during divorce.
• Community Property: A system used in a minority of US states where assets acquired during marriage are owned equally by both spouses.
• Postnuptial Agreement (Postnup): A contract entered into after marriage, similar in function to a prenup.
• Marital Asset: Property acquired during the marriage that is subject to division in a divorce.

Understanding Prenuptial Agreements: A Valentine’s Day Discussion

This segment of ABC News explores the often-stigmatized topic of prenuptial agreements, advocating for their increased consideration by couples. The discussion centers on demystifying prenups, outlining their legal aspects, and highlighting their potential benefits beyond simply protecting wealth.

What is a Prenup and Why Consider One?

A prenuptial agreement, as defined by Brian Buckmeer, is “a contract before you enter a marriage where you're deciding how to deal with your assets, your debts or any kind of financial plan that you might have upon the end of your marriage, whether it be through unfortunately death or divorce.” The conversation emphasizes that prenups aren’t solely for the wealthy; they are increasingly relevant for couples at all financial levels. Rebecca Jarvis points out that many couples are entering marriage with existing debt, making a prenup a practical tool for managing financial obligations.

The core argument presented is that a prenup provides clarity and control, preventing potentially messy and expensive legal battles in the event of divorce or death. As Brian Buckmeer states, “If there is a divorce, someone’s going to decide how assets are divided. It’s either going to be a judge based on how that state decides or it can be the two of you deciding on what you want to do and how you want to do it early on.”

Assets and Considerations for Inclusion

The discussion details the broad range of assets that should be considered in a prenup. These include not only traditional assets like “heirlooms, jewelry to your bank accounts to your investments,” but also debts and increasingly complex issues like “fertility, embryos.” The latter point is particularly relevant as people are marrying later in life and may have pre-existing arrangements regarding assisted reproductive technologies.

A key point raised is the importance of distinguishing between assets acquired before the marriage and those acquired during the marriage. Rebecca Jarvis stresses the value of having these conversations “when you love each other, when you hope the best for one another.”

Legal Frameworks: Equitable Distribution vs. Community Property

The segment clarifies the differing legal frameworks governing asset division in divorce. The US operates under two primary systems:

• Equitable Distribution (41 states + DC): Assets are divided “whatever is equitable between the two parties based on their lifestyle, their work, whatever it may be.” The outcome is not predetermined and is subject to a judge’s discretion.
• Community Property (9 states): Assets acquired during the marriage are owned equally by both spouses.

Understanding which system applies in a given state is crucial when drafting a prenup.

Amending and Postnuptial Agreements

Prenuptial agreements are not static documents. Brian Buckmeer notes that they “can amend that and and people probably should amend it if there's big changes in your life.” Significant life events such as starting a business, a liquidity event (selling a business), having children, or caring for aging parents necessitate a review and potential amendment of the agreement.

Furthermore, the discussion introduces the concept of a postnuptial agreement (postnup) – a similar contract entered into after marriage. This can be useful when couples didn’t create a prenup initially but later recognize the need for one, perhaps due to a change in circumstances like an inheritance.

Costs and Accessibility

The segment addresses the cost of creating a prenup, noting that traditional attorney fees can range from $6,000 to $8,000. However, it also highlights the emergence of more affordable online resources, with costs potentially as low as $600. This increased accessibility aims to make prenups a viable option for a wider range of couples.

Logical Connections & Synthesis

The conversation flows logically from defining a prenup and its purpose to detailing its legal implications, the types of assets it should cover, and the practical considerations of cost and amendment. The initial lighthearted framing (“What better way to kill the mood than to discuss prenuptial agreements”) serves to break down the taboo surrounding the topic and encourage open discussion.

The central takeaway is that prenuptial agreements are not about anticipating divorce, but about proactively planning for the future and fostering open communication about finances and values within a relationship. They empower couples to define their own financial destiny rather than leaving it to the discretion of a court.