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Wedding rings and a prenuptial agreement

In Debt and Getting Married? Here’s Why You Need a Prenup. » Love and Money » In Debt and Getting Married? Here’s Why You Need a Prenup.



Most often, people think of a prenuptial agreement as something rich people use to protect their assets in case of divorce. But that’s not the full picture.

Though a prenup can protect your assets, it can also protect you from your partner’s debt. In an age of massive student debt and uneasy economies, this is arguably more important than any asset you could lose.

This guide will take you through the basics of prenups and reveal why they’re important for protecting yourself from your future spouse’s debt.

What is a prenup?

A prenuptial agreement is a written contract signed by two parties before they are married. It lists the properties and debts of each person and outlines what will happen if the marriage ends in divorce or either spouse dies.

This is not just for the elite with extravagant assets to protect, and it definitely doesn’t mean you expect the relationship to end! It’s legal protection for your family and the person you love if things don’t go as planned.

What does a prenup do?

It may be best to start with what happens when a couple doesn’t get a prenup. Without a prenuptial agreement, it’s assumed that spouses share ownership of all assets acquired during the marriage and it will be divided evenly if there is a divorce or death.

It’s also assumed that debts incurred during the marriage could be paid by the other spouse, whether they knew about the debt or not. If this sounds risky to you, that’s because it is.

Note on community property states

Some U.S. states are community property states. This means that every asset acquired during a marriage legally belongs to both parties.

Community property states include:

  • Arizona
  • California
  • Idaho
  • Louisiana
  • Nevada
  • New Mexico
  • Texas
  • Washington
  • Wisconsin

A prenuptial agreement should include terms for what happens to community property if the marriage ends. This means you can negotiate who will own what, plus who has the right to sell it or give it away.

Where does debt come in?

A prenuptial agreement acts as a legal shield between you and your spouse’s debts. In case of death or divorce, their debt may fall on your shoulders. A properly written prenuptial agreement can prevent that.

For example, let’s say you and your spouse live in a community property state. They go to medical school during the marriage and incur hundreds of thousands in student loan debt signed under their name. If you get divorced or they suffer an untimely death, you are now responsible for that debt.

Not so if you have a prenup that specifies you will not be responsible for your spouse’s debts in case of death or divorce. In that situation, you and your family would be protected from the student debt.

How much does it cost?

The cost of a prenup depends on how complicated it is and how much help you need to write it. You can usually expect to pay $1,000 or more, depending on the amount of assets, debts, and situations you want covered.

If you use a prenup template and only hire a lawyer to review it, however, the cost could be closer to $450. Select a lawyer carefully and ask about flat fees for reviewing prenuptial agreements.

These are averages, so be aware that your situation may differ. For example, if you have a very complicated prenup, it may take more hours of a lawyer’s time to review – and more money out of your wallet.

How to get a prenup

Financial conversations with someone you love are seldom easy. But especially if you’re about to make a lifetime commitment, you should be ready to work through it.

Follow these steps together to make getting a prenup easy.

Step 1: Talk it out

Before a prenup is ever drafted, have a conversation with your future spouse about what assets they currently own and what debts they owe. Get as detailed as you can and take notes.

Knowing exactly what you want to protect (or protect yourself from) will be essential when you actually draft the legal prenuptial agreement.

Step 2: Do your research

There are many online templates for drafting your own prenuptial agreements. Sites like Rocket Lawyer enable you to download a free template based on your state.

Review some example prenuptial agreements to get a better idea of the legal language you will have to use and the kinds of assets and debts you should cover.

Step 3: Write your draft

Either working directly with a lawyer or on your own, work with your spouse to draft an agreement. Definitely include what you want to happen to your current assets and debts in case of death or divorce, plus what you want to happen to any future assets and debts you may get during the marriage.

Here are some examples of clauses you may want to include:

Assets and debts from before the marriage
This will be the meat of the contract. Don’t be afraid to get very detailed here. It’s better to include too much than to accidentally leave out an important piece of property or type of debt.
Marital assets and debts

What will happen to assets and debts you and your spouse acquire during your marriage? Cover both your plans and your possibilities.

For example, you may have plans to buy a house together in the next few years. That’s an obvious contender for a paragraph in your prenup.

But what about things you may not see coming? Perhaps you lose your job and decide to take out loans to go back to school, or you incur medical debt after an unexpected surgery. It’s not always pleasant to think about these things, but it’s better to be prepared and protected.

Concerns about children from previous marriages
A prenup can help you solidify how children will be provided for or their rights to an inheritance. Along with pre-marital assets and debts, this is one of the top reasons to get a prenuptial agreement.
Concerns about family property
It may be important to you that an inheritance or heirloom stays on your side of the family. Use your prenup to ensure any family property you care about is properly cared for in case of death or divorce.
Property division in case of divorce

Everyone’s heard scary stories about messy divorces that end in former spouses fighting over property.

Even if you have the utmost confidence that your marriage will last forever, preparing for the worst is a very caring act. Use your prenup to determine how you and your spouse would split up your assets if your legal marriage ends.

Step 4: Have an attorney review your work

A prenup is an official legal document, and therefore needs approval by a court. While you may not need to hire a lawyer to guide you through the entire process, asking one to review your document before submitting it for approval is a wise choice.

Step 5: File your prenuptial agreement with the court

Prenuptial agreements need to be registered in the local civil court to be considered legally binding. Contact your local court for more information, or ask an attorney about your next steps.

What if I’m already married?

You may think it’s too late to protect yourself and your property if you’re already married. Fortunately, this isn’t the case.

If you’re already married and you want to protect your assets and shield yourself from debt in case of divorce, you can get a postnuptial agreement. This is basically identical to a prenuptial agreement except it happens after a legal marriage.

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