Prenuptial Agreements: An Overview

No longer limited to the rich, prenuptial agreements have become more accessible and widespread.

Made famous in the 1990s by Wall Street players who made fortunes and exchanged old wives for new ones, prenuptial agreements have become some kind of financial instrument. Today, when you think of prenups, you probably think about rich celebrities and their crazy prenuptial terms. People speak of how frivolous their prenups have become with the likes of Kim Kardashian receiving a whopping $1 million from Kanye for every year the couple were married and Nicole Kidman promising her husband $600,000 for every year of marriage if he can keep his alcohol and drug addiction under control.  

However, recent statistics show that interest in prenups is on the rise, and they are no longer exclusive to the rich. While they’re still not for everyone, you may consider a prenup if you or your partner: 

• Own a property or a business, 

• Have children from a previous relationship, or have been married before, 

• Plan to take time off to raise children, 

• Hold significant debt, 

• Have robust retirement accounts; or  

• Will receive stock options during your marriage. 

A prenuptial agreement, commonly referred to as a prenup, is a legal contract entered by a couple before their marriage that outlines the rights, responsibilities, and division of assets in the event of divorce, separation, or death.

Prenups are primarily intended to protect assets that are owned at the time of the marriage but can also address the treatment of future assets that may be acquired during the course of the marriage. In general, prenups can be helpful for couples in which there is an existing wealth imbalance – or there might be one later on. Even if people are not wealthy now, some clients have reason to believe they will be, for example if they’re expecting an inheritance or even if they’re a startup founder.