Meredith, a 32-year-old nurse based in Washington, D.C., is engaged to marry Ben, a 33-year-old city planner, this summer. They currently split the rent on their one-bedroom apartment, and they’ve never combined finances.
Although Ben lives humbly, his family has money, and he’s brought up the idea of getting a prenuptial agreement (Ben’s older brother and sister signed prenups in their marriages, too). This seems okay to Meredith; she’s proud of her financial independence and can’t picture a situation where she would want any of Ben’s inheritance. She’s debt-free, has a great job, loves her work, and plans to have a long and robust career. She also feels privileged already because her parents were able to pay for her college and help her during grad school so that she could pay off her student loans quickly.
However, she also doesn’t want to get screwed, and she’s heard scary stories about prenups leaving a less-wealthy spouse in a vulnerable position. How can she approach the prenup process without this happening?
This Christmas weekend, thousands of well-intentioned people with sweaty palms will squat down in living rooms around the country and propose to their loved ones. Every single one of these couples will go on to fight about money. Statistics show that roughly half of them will later divorce. And almost none of them — less than one percent, by some estimates — will have prenups. Would it have helped any of them to sign one? Perhaps, but it depends how they went about it.
Many people frown on prenups because, at face value, their purpose is to make provisions for a divorce, and that’s an icky way to begin a marriage. Prenups are also generally favorable to the wealthier spouse — in this case, Ben — as they’re usually designed to protect whoever has more assets. But the process also creates an opportunity for you and Ben to have a serious, honest discussion about where you’ll draw lines of responsibility and ownership, what you’re willing to share, and how you’ll deal with his money when he gets it. (And no matter what you do, Meredith, this money will affect you.) That discussion will determine everything about your prenup, and also help you decide if you need one at all, which is up for debate.
Terry Savage, the author of The Savage Truth on Money and nationally syndicated financial columnist, is avidly pro-prenup because the process legally requires both parties to disclose all of their assets (including any debt). It also helps couples formalize their plans for the future. “Forget about who gets what; this is about how you’re going to run your lives together,” she told me over the phone. “You start by sitting down and talking. It’s not a negotiation over a board table. It’s a candlelight dinner with a couple of glasses of wine and a genuine conversation. It’s when you ask each other, ‘What’s your priority with money? What’s your greatest fear? What are you saving for together, and who’s paying for vacation?’ Address these issues before you build hidden resentments that turn into marriage-busters.”
Savage also pointed out that prenups can provide a blueprint for discussing subjects you’d rather not. “Now is the time to think about the eventualities and possibilities that you don’t like — such as sudden death. A prenup should not be defined by ‘What if it doesn’t work out?’ Rather, it should be ‘What are the realities down the road?’”
We’ve all heard the clichés about women who stop working when they have kids because they believe their husbands will continue to support them — only for him to turn 50, drop all their savings on hair plugs, and run off with someone half their age. But here’s a story that might be more relatable to women like you: In 2014, my friend Kate Bahn — now an economist at a Washington think tank, the Center for American Progress — found herself in a surreal financial pickle. Just a few months after she and her husband agreed that he would support them both while she finished her Ph.D. (a choice she openly struggled with, as a woman who has studied the economic implications of women taking time out of the workforce), their marriage fell apart unexpectedly, leaving her with no income and a dissertation to finish. They did not have a prenup.
Kate was devastated, but she knew her rights and filed for alimony. “A lot of good research shows that women fare worse financially after a divorce than men do,” she said. “It’s partly because they make different career and personal financial decisions when married, but also because many women shy away from conflict in divorce and don’t ask for what they are legally entitled to. In my case, as the financially dependent person in our relationship, I was entitled to support during our divorce proceedings, and I was assertive about it.”
Although her divorce settlement granted her enough money to maintain her quality of life while she finished her Ph.D., she still regrets not signing a prenup. “I wish we had decided those terms in advance, because it was so emotionally traumatic to fight about them while we were also going through a breakup,” she said. This is a common pro-prenup argument: It’s better to plan for the worst before it happens and when you’re happily in love. Sure, exploring “What if?” scenarios about the doom of your relationship may sound like a romance-killer, but you’re both more likely to approach it with compassion than you would if things between you two weren’t so rosy.
However, plenty of prenups can be damaging, too, both financially and emotionally. It’s worth noting that Kate’s divorce, while painful, still resulted in a settlement she could live with; if she’d signed a prenup that didn’t make provisions for her situation, there’s not much a court could have done. Many prenups — particularly for young and optimistic couples — don’t account for the nuances of a divorce the same way that a judge can, and that’s why some people strongly discourage them.
Laurie Israel, a lawyer and marital mediator based in Boston, believes that prenups not only erode the security of the less-monied spouse — usually a woman — but that they can also weaken a relationship irreparably. “Most prenups can be very destructive to long-term marital health,” she said. “One of the big problems is that marriage is a joint venture with an economic basis. And when you say, ‘I’m going to be independent, and our marriage isn’t going to have this economic basis,’ you cripple the relationship. Marriages thrive on contribution and generosity.” (Indeed, a UVA study found that generosity was even more important than sex when it came to marital happiness.)
She also pointed out that a prenup probably isn’t necessary to protect Ben’s inheritance. “Generally, state laws treat inherited and gifted property as separate from marital property. A premarital agreement is written right into the statute,” she said. “By mucking around with a prenup, people don’t give credence to how the laws have been developed over many years, by lots of knowledgeable judges taking into account the various situations in which people find themselves.” In other words, you may not even need a prenup at all, and that’s one reason why most people don’t get them — although it’s best to consult a lawyer to make sure.
One thing you should definitely watch out for is what’s known as a “boilerplate prenup,” which both Israel and Savage deemed terrible. “I call them scorched-earth prenups,” said Israel. “They say, ‘Everything I have now or later is mine, including what I make during the marriage. And when I die, I get to give my property to anybody I want to, even if we’re still married.’” These types of prenups are generally the quickest, dirtiest, and cheapest; Israel almost always sees them come from the lawyer of the more monied spouse, often at the behest of that spouse’s parents. “If you’re in your 20s or 30s, having that land on your desk from somebody you love can be very hurtful,” she said.
If Ben presents you with one of those, don’t sign it. Instead, Israel recommends that you and Ben begin with mediation, together. “If you’re going to have a prenup, start with a blank slate, and go through the issues with a mediator. Once you’ve figured out what you want, the mediator can draw up a term sheet, which each of your lawyers can then review. It’s better to start from scratch than to have his lawyer send a scorched-earth prenup that your lawyer has to chip away at.” (Yes, you need your own lawyer, and that lawyer should not be someone that Ben or anyone in his family has recommended.) Mediation will cost a bit more than the traditional lawyer-to-lawyer format — Israel ballparks it around $5,000 for the mediator and $3,000 to $4,000 for each of the reviewing attorneys, as opposed to about $5,000 to $6,000 per party if you go the straight lawyer route.
What do you ask for? That may be the weirdest, toughest, and most terrifying part. The way you address financial differences — and construct systems to bridge them — can make or break a marriage. This will call for self-examination, as well as a stern appraisal of how marriage might affect your income.
No matter how proud you are of your own earnings, you need to confront the uncomfortable truth of the gender wage gap, which is particularly vicious toward married women. Statistics show that while married men command higher wages than unmarried ones, married women make 10 percent less than single ones, even after controlling for other biases and factors like education, experience, IQ, race, and number of children (this is also known as the Female Marriage Penalty). As Kate put it, “Women need to move beyond this narrative of a bitchy ex-wife punishing her husband by seeking support and consider that they are owed monetary compensation for the gendered economic effects of marriage and divorce.”
Regardless of whether you proceed with a prenup, you should work with Ben to hammer out your respective estate plans and living trusts, also known as your will. Savage also suggested that you take out a life-insurance policy on Ben, which will remain in effect even if you don’t stay together. Finally, bear in mind that prenups are always up for renegotiation, as long as you both agree on the changes and follow proper legal protocol.
As Sheryl Sandberg once said, “The most important career choice you’ll make is who you marry.” I’d argue that how you marry is equally essential. Women are taught to prioritize love and relationships at the expense of their financial security, and it can impact everything from legal decisions to dinner plans. If you choose to go forward with a prenup, the objective should be to have a series of productive conversations in which you are both heard equally — so that you’ll never have to look at those documents again.