Tuesday, December 12, 2006

Prenup or not?

Bringing up the idea of prenuptial agreement seems to bring a bad taste to many people's mouths. It implies that you lack trust in your partner and the future you may have together, actually the linked study above 15% of Americans believes it dooms a marriage. Yet with the divorce rate in the US at 50%, with the leading cause of divorce being financial issues, gives rise to the question why don't more people have a prenup?

Of course, 50% of divorced people think prenups make sense while only 21% of married people believe in prenups. Although 50% of all people the benefit of a prenup is to keep assets divided equitably and protect the assets brought into the marriage. 25% of people say they would never sign a prenup, while 27% say they would if their significant other insisted. So if all about half of the people out there believe in prenups, then why are there are only 1% of couples with a prenup?

I think the problem is that we still believe in romanace and love, but talking finances before marriage takes away the rose-colored glasses. It forces the couple to communicate about finances and future values and ideas before the walk down the aisle. Sure, ideally every couple would do this anyway but the reality is that most don't. So are prenups a good idea?

Personally, I don't have one, but think they are an excellent idea depending on the circumstances. I feel they are appropriate for couples who are older with substantial assets, someone with a large inheritance, or a divorced person. This way these people are able to protect their current assets and decide how to allocate their new lives with their spouse.

However prenups are not necessary for people who are young without any assets, debt, or inheritances. I fell into this category, we had absolutely nothing to fight over. We came in with our respective cars and not much else. However if I were to be single now with my current assets, I think I would definitely consider a prenup.

That being said would you get a prenup?


Wanda said...

I actually wrote on this topic a while ago - I think everyone, including young people, should strongly consider getting a prenup. Although you may not have significant assets or liabilities right, you will almost certainly accumulate them as you progress in your careers, go back to school, stay home with the kids, etc., etc. If Spouse A supports Spouse B through law school, or if Spouse B gives up a big time law career to stay-at-home for 3 years - those are moves with real financial consequences. Of course, you always hope the prenup will just end up being a piece of paper. :)

Living Almost Large said...

Thanks Wanda, I actually think it's largely unnecessary when you are so young like 18 or 20 (my age when I meet DH). Because you change so much. A lot of people haven't even picked careers so how can you really write down going to law school if you don't know that's what you want to do?

I think it's important to discuss the financial aspects of life, but you change so much between 20 and 30, it's tough to have a prenup.

You may not want kids at 25, but radically change your mind at 35 (it happened to a coworker), and the negotiated prenup means squat. You suddenly want to be a SAHM, but that wasn't even considered at 25. So it's a tough call and more why I think it's appropriate for older couples rather than young people.

PS I work with a women who is 27 married to a 42 year old man. They have a prenup, and she says now she doesn't want kids..but everyone at work says she didn't get her tubes tied, so she might change her mind.

Another friend tied her tubes at 24 after 2 kids, no more...so I think it's tough to decide your life so young.