Nov 2022 Newsletter – The Rise In Prenuptial Agreements

Estate Planning:
The Rise In Prenuptial Agreements

In prior newsletters, we have discussed prenuptial agreements in the context of being a useful tool in estate planning and safeguarding your child’s future inheritance. On the average, the length of a marriage in the United States is seven to eight years with a divorce rate for the country around 50% for all marriages. Moreover, two out of three of second marriages end in divorce and 3 out of 4 third marriages end in divorce for a variety of factors ranging from lack of commitment or incompatibility to domestic violence or addiction and even unrealistic expectations.

During the past few years, we have seen a rise in the number of couples, especially among millennials, exploring and entering into prenuptial agreements as compared to previous years. This is due to a variety of factors. Previously, many clients mistakenly believed that prenuptial agreements were only for the very wealthy with millions of dollars of assets at the time of their marriage. However, this is not the case. Prenuptial agreements are an excellent tool to prevent any future issues in the event that the marriage ends in divorce, even if the parties are not “millionaires” or “wealthy.” Additionally, it can save both spouses the expense and emotional trauma and pain of a lengthy court battle over assets, support and debt in the event of a divorce.

Briefly stated, a prenuptial agreement is an agreement entered into by the parties to a future marriage prior to their marriage. These agreements can lay out the distribution of the assets of the parties in the event that they divorce and/or one of the parties dies. Prenuptial agreements specifically distinguish what is marital property versus what is separate property. Specifically, prenuptial agreements generally lay out what assets, including in some instances future earnings and/or future inheritance, are the sole property of one or both of the parties and what happens to that property in the event of a divorce or death.

These agreements also may detail:

1. How each party’s debt, including student debt, is to be handled;
2. The type and/or amount of support/alimony that will be paid to one of the parties in the event of a divorce immediately or after, for example, 5, 10 or 15 years of marriage;
3. What household tasks are the responsibility of each party;
4. Will or which spouse is to be the stay at home parent if, and when, a child is born;
5. Embryo ownership;
6. Pet ownership, and;
7. Detail estate planning, including protecting the inheritance of children from a previous relationship.

Prenuptial agreements are generally very customizable based upon the specific facts and circumstances of each individual couple, which is why it is important to discuss you and your future spouse’s specific facts and situation with an experienced attorney.

One of the main reason for the recent rise in the number of prenuptial agreements is that many people are waiting to get married later in life and/or are entering into second or third marriages at a later age. When this is the case, the parties often have more established careers and often more property and/or assets or an opportunity for future assets through stock options, especially in the tech industry, than someone just starting out and getting married in their 20s. Another interesting reason for the increase is couples people are becoming more aware and educated of prenuptial agreements as a tool to protect their property and exposure to additional debt in the face of rising divorce numbers, even if they are not considered “very wealthy.” The trend seems to be that prenuptial agreements are becoming less “taboo” and “unromantic” and instead being seen for what they are – a useful tool to prevent any potential future financial issues and save time, money and emotional anguish.

If you and your future spouse would like to explore your options in creating a custom prenuptial agreement, please contact our office to speak with an attorney and determine what would be the best path for your specific situation.