The Hidden Value of Prenup Money Conversations

Rick KahlerAdvisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Imagine for a moment that you and the love of your life are young, starry-eyed, and newly engaged. Someone asks, “Do you plan to get a prenup?”

You would likely stare at them in stunned disbelief and say something like, “Are you kidding? Of course not! We don’t have anything to split up! Besides, if we wanted to plan for a divorce before we even get married, we shouldn’t be marrying in the first place.”

A prenup, short for a prenuptial agreement, is a written contract signed by partners before they marry. It is the financial game plan they agree to follow in the unlikely event the marriage fails, outlining how they will divide their assets, debts, and financial responsibilities in case of a divorce or legal separation. While often associated with protecting significant assets, prenups can benefit any couple, regardless of income level.

For most younger couples with no previous marriages, a written prenup is probably unnecessary. What is essential, though, is having open and honest pre-wedding conversations about both partners’ personal finances and attitudes about money. Considering a prenup can be one way to frame and begin those conversations.

Unfortunately, too many couples fail to have those open and honest money discussions prior to marriage. Many of them regret this mistake, according to a study discussed in a NerdWallet article, “54% of Engaged Americans Disagree With Partner on Financial Goals,” from September 19, 2023. It says, “Three in five married Americans (60%) say there are financial topics they didn’t discuss, but wished they had, before getting married. This could be because more than half of married Americans (53%) say they have found it difficult to have a serious financial conversation with their spouse.” The study also found that 54% of engaged American partners disagree on their financial goals, while 26% regularly argue about money. Fewer than 8% of couples discuss life insurance and wills before marriage.