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Prenups aren't all bad: Here's why they're becoming more common

Posted at 8:58 PM, Aug 30, 2022
and last updated 2022-08-30 22:58:07-04

Prenups, or pre-nuptial agreements, don't always have the most positive connotation. 

While they are legal agreements entered into by couples before marriage — often to keep finances separate despite being otherwise legally joined  — they can be a touchy subject for couples starting to build a life together.

But that stigma seems to be fading away. A new report from The Harris Poll said that this year, 15% of U.S. adults surveyed signed a prenup, which is up from just 3% in 2010. It also found that 35% of unmarried people say they're likely to sign a prenup in the future.

In the Americas, prenups go back to 17th century Canada, when French colonist men married women who came to the country with financial assistance from King Louis XIV. These women were so highly sought after that they were able to convince their husbands to sign prenups. This came at a time when men outnumbered women, so women had a leg up. Eventually that gender ratio evened out, and prenups went away.

They got popular again in the U.S. much later. A 1970 Florida case Posner v Posner ruled that prenups should be a standard practice.

One big possible factor in their usage today is the fact that millennials now have more debt than previous generations. One survey found that nearly three quarters of millennials have over $100,000 in debt on average, not including mortgages. 

The most common debt is credit card debt followed by student loans. There's also medical debt and personal loans. 

Prenups can protect your partner from taking on your debt in the case of death of divorce. In some states, your spouse can be held accountable for all of your debt acquired during the marriage.

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Kelly Chang Rickert is a family law attorney in California who specializes in prenups, and she sees debt come up in divorce cases all the time.  

"It's not unusual for me to have a divorce where one side has a Neiman Marcus card and charged up $70,000, and the other side... they are responsible for half the debt because it was acquired during the marriage," Chang Rickert said.

But the breakdown of who's responsible for what differs from state to state. For instance, some states are community property states, meaning unless you sign a prenup, everything acquired during the marriage must be split 50/50. That's how things work in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In other states, laws differ. There can be different rules around what makes prenups enforceable. For example, in Connecticut there's a specific window of time between when the prenup is presented and when the marriage happens for it to hold up. So, it's important to see what a state requires beforehand.

Another reason more people could be getting prenups is because they're getting married later in life and have more assets to protect coming into the marriage. According to Pew, in 2019 the average age a man first got married was 30, and for women it was 28. That's three years later for both men and women compared to 2003 and four years later than 1987.

"These days, a lot of people work for themselves," Chang Rickert said. "If you're a social media influencer or you're an artist or you're a writer, a lot of people make money off their creative efforts. So if they have a business coming into the marriage, a lot of them don't want to share that in case it doesn't work out."

This leads to the question of how finances are split. This determines what a prenup could look like. In the 70s and 80s, it was common practice to put all your money into shared accounts with your spouse. But over the past several years, the number of married couples who keep some of their finances separate has risen.

Experts say if couples have a joint account for things they share, they can opt to keep everything else separate, and in the case of divorce, they'll only have to worry about dividing the joint account. But it's important to note that separate accounts won't stay separate unless a prenup is signed stating that.  

"Even if you don't have a prenup, you kind of do: It's called the law," Chang Rickert said. "So if you don't have a prenup, you're just going by what your state law says. California says community property, so your debt is my debt. That's what the state law says. So if you don't like that, then you should craft your own."

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Rickert Chang recommends getting a prenup ideally a year before your wedding. She also points out a few pros of prenups. For one, the stereotypical scenario we see in movies where a rich guy asks his fiancé to sign a prenup — it could actually be a good thing.  

"If you were smart about it, and the guy's like, 'I want you to sign a prenup saying I don't want community,' then what you could do is you can negotiate it," Chang Rickert said. "You could be like, 'Fine, I won't touch your stuff, but in lieu of that, I would like 50,000 a year or 1,000, 100,000 a year,' and that way you can negotiate, and you can actually get money by agreeing to sign a prenup."

There's also certain professions where it's strongly encouraged to protect the other person. 

"Definitely lawyers or doctors, I think you should always get prenup," Chang Rickert said. "Not just only because it's my business — I don't want you taking half of it, but also it's a business that I can get sued on. So, I would like to protect you from any lawsuits that I might get."

As prenups have become more common, more people have dug into this topic on social media platforms like TikTok. Chang Rickert has an account of her own where she educates people on prenups to help break down myths and stigmas, including that they aren't just for rich people and not just in case of divorce.

Now, there aren't necessarily more divorces now. CDC data shows that divorces declined between 2000 and 2020. 

However in the case of a divorce, not signing a prenup could really pile on to the cost of divorce, which can already be pretty high, costing between $15,000 to $20,000 on average.

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