Webinar: The Brooklyn FI Guide to Prenups
Getting married is a big step in any relationship—and a super exciting time! On top of pledging your love and commitment, you’ll likely be blending your finances. For most couples, this means merging your income and acquiring new assets and debts together as you move through the years ahead. It’s easy to forget about that when planning a wedding, but overlooking this stuff could have major financial consequences down the line. That’s where a prenuptial agreement comes in.
Talking about the possibility of divorce might feel uncomfortable (we get it), but drafting a modern-day prenup is a fairly straightforward process that can protect both parties. It’s sort of like an insurance policy. You get one hoping you never have to enforce it. But if the unthinkable happens, you’ll be glad it’s there.
Busting Prenup Stereotypes
Before we get into the nuts and bolts, it’s important to mention that prenups have evolved a lot over the years. Movies often portray an older gentleman marrying a younger woman. His children then swoop in and insist on a prenup to protect their inheritance. This story is about as outdated as it gets. In reality, more and more women are moving up in their careers, starting businesses, and earning more. Prenups protect everyone involved, regardless of your age or gender.
There’s also this myth that asking for a prenup suggests you don’t trust your partner. It’s actually the opposite. Prenups are designed to look out for your partner’s best interests so you can both come into the marriage with clarity and transparency. Instead of one party serving the other a prenup, it’s about collaborating together to create an agreement that feels right for both partners.
Should You Merge Finances with Your Partner?
It’s always best to talk about finances sooner rather than later. If you’re engaged or living together, now’s the time to figure out if you and your partner will eventually use separate or joint accounts. It’s a personal decision that reflects your personalities and spending styles.
You might also be wondering if it’s smart to max out your Roth accounts before tying the knot. In theory, doing so makes sense—it’s a fantastic tax-deferred way to save money. Just remember that your income has to be below a certain threshold to contribute to a Roth account. If you anticipate your tax bracket or income level bumping up drastically once you’re married, you might want to tread lightly here.
Beyond that, here are some other important things to talk about with your partner before the wedding:
Share your income, debts, assets and credit scores. Put it all on the table so there are no unwelcome surprises later on.
Discuss the way you view money. How did your childhood shape your money mindset?
How do you see yourself living 10 to 15 years from now? What are your financial goals?
How will you be paying for the wedding? Perhaps you’ll split the costs in a way that’s fair based on your earnings.
Is a Prenup Necessary?
Prenups aren’t just for the super wealthy. Everyone can benefit from one, regardless of your financial status. As you move forward in your life with your spouse, you’ll likely begin earning more and acquiring assets. You may even come into an inheritance at some point. A prenup makes a plan for how these things would be divided if the marriage were to end. Think of it as just another important financial planning tool.
“A lot of people don’t realize that if you don’t have a prenup in place, you essentially have a default prenup based on your state’s laws,” says Julia Rodgers, CEO and co-founder of HelloPrenup. “If they knew what those rules looked like and how they’d control how their assets and income are divided upon divorce, they’d probably get a prenup because it allows them to decide for themselves.”
HelloPrenup is the premier online platform for affordable, fast, and comprehensive prenuptial agreements. Founded by Julia Rodgers, Esq. and Sarabeth Jaffe, HelloPrenup has been featured on Shark Tank, Forbes, GeekWire, and The Boston Globe. Check out their free e-book: The Ultimate Prenup Guide.
At Brooklyn FI, we’re always looking for tech-forward solutions to problems. And as much as we often recommend that our clients explore a pre-nuptial agreement, when it comes time to pay the thousands of dollars in lawyer fees, many of our clients end up giving up, and we don’t blame them. That’s why HelloPrenup is a game-changer. It’s a platform that asks each partner a series of important financial questions and creates a legally binding document that works in most states for a fraction of the cost of a traditional lawyer.
A prenup provides a post-divorce financial roadmap. It can include all kinds of terms, like lump-sum payments doled out over time to the lesser-earning spouse. You can also incorporate a sunset clause. This basically allows the prenup to expire after a certain date. This is all to say that you can tailor your prenup to fit your needs. One sidenote: things get dicey when you start getting into child support and custody. Rodgers suggests leaving it out of your prenup altogether because courts will end up overriding it anyway.
How Do I Get a Prenup?
The traditional route is to hire a local attorney who’s familiar with your state’s unique laws. The only problem is that this can cost thousands of dollars. Platforms like HelloPrenup have popped up in recent years to streamline the process. It typically involves both partners completing an online questionnaire to generate the agreement without an attorney. Of course, if you have questions or a tricky financial situation, you could always run the draft by an attorney before signing. Either way, it will likely need to be notarized when you’re ready to give it the green light.
“You don’t have to have a lawyer to create a legally binding contract, unless state statute requires you to,” says Rodgers.
If you’re planning a destination wedding, you’ll want to create your prenup in the state you plan on residing in. If you split your time between different states, you can weigh the pros and cons of each state’s laws and decide which one you like better.
“California is a community property state, while New York is an equitable division state,” adds Rodgers. “You have to think about how each views divorce and alimony. For example, New York is probably a little bit more liberal in how they’re contracting and upholding prenups.”
Different state laws can be confusing. Check out this webinar we recently hosted that unpacks prenups in greater detail.
I’m Already Married. Can I Still Get a Prenup?
Technically no, but you could seek a postnuptial agreement.
“Post nups are great and are accepted in many states, but they are not as readily accepted as prenups are,” says Rodgers. “Courts view them very differently. That clock is already ticking, and those assets are already part of your marriage. There are many states that won’t enforce them at all.” In other words, you might want to do a little digging to see what your state laws look like.
In the end, there isn’t a one-size-fits-all approach to this stuff. When it comes to drafting a prenup, what matters most is collaborating with your partner to create an agreement that feels right for both of you. We’re here to give you a hand if you need it.