By Laurie Israel, national prenuptial agreement mediator, consultant and lawyer. Author of "The Generous Prenup: How to Support Your Marriage and Avoid the Pitfalls."
The internet is flooded with the message that people getting married should have a prenuptial agreement in place before marrying. There are websites that promise a DIY prenup for a low fee. You just have to answer a bunch of questions and choose your terms – much like choosing options from a menu at a restaurant. Web magazines, financial websites, and publications offer the same advice: that having a prenup is crucial to providing certainty and protection in an upcoming marriage. Titles like “10 Reasons You Need a Prenuptial Agreement” abound. Lawyers chime in on their websites saying things like, “protect yourself when you get married” and “make sure you don’t lose your assets when you marry.”
The media messages make people think that a high percentage of couples have prenups before marrying. This is not true. For most of the population, the prevalence of prenups is very low. (An exception may be prenups for later-in-life second marriages, for people with assets and children from prior marriages.) Also, it is not true that prenups will create fairness and equity in a marriage, as some people will tell you. In fact, the opposite is true: prenups, in general, are actually dangerous to the well-being of most marriages. Here’s why.
A prenup does not require that the terms dealing with property ownership and division, divorce settlements or provisions upon the death of a party to the marriage are fair and/or equitable. In most jurisdictions, a prenup is enforceable if, at the time it is signed, the terms are not “unconscionable.” Unconscionability is a very low bar – it is a much lower bar than fairness. In order for a court to find a prenup unconscionable, more than a one-sided contract must be found to have existed. The unfairness and inequality must be so one sided as to “shock the conscience.” Further, a lawsuit would have to be filed at the time of divorce to determine unconscionability. The party asking that the prenup be found unenforceable is usually the one who has less money, hence that person cannot afford to go to court to contest the prenup.
Prenups are actually allowed to be unfair. When you’re married, you have an implicit duty to care for each other which includes the duty to protect your spouse’s financial interests. This is called a “fiduciary duty” and is similar to the duty owed by a trustee of a trust to the beneficiaries or an attorney to their clients. This duty means that the fiduciary (the spouse, in this case) must act in their spouse’s best financial interests, not just in their own financial interests.
A prenup turns this concept on its head. Future spouses negotiating a prenup are not legally considered to have a fiduciary duty with respect to the other because they are not married. They are legally considered third party strangers. It’s treated as if you are bargaining with a house painter or someone who is going to renovate your kitchen. Does this make sense? No, it doesn’t. These are people who love each other and may have already spent years in an intimate relationship together, and who want to be married to each other for a lifetime. They care for each other. They are not strangers.
Added to this, is that there need be no “consideration” in a prenup. That’s a legal term meaning an exchange of payment for goods or services. In the case of a prenup, that means one of the future spouses can simply take something (or many things) away from the other without giving anything in exchange. So prenups can be very one-sided, and many are. Not a good way to begin a marriage, right?
Another problem in formulating a prenup is that often the advice-givers (lawyers, financial planners, friends, family) are people who may have never been in long-term marriages (whether ongoing or ended in divorce). Sometimes the advisers are very young without extensive life experience. These advisers often encourage people to give up the generations-long wisdom of the established law and instead “invent their own law” to form the basis of the prenup rules about property in marriage. Long-term marriage is a special relationship that involves sharing and trust, and consideration in the broadest sense of the word. When a marriage starts with withholding something, that may put a spouse’s future in jeopardy, it shows lack of caring and can obviously cause a wound can never be healed.
So, how to make it right:
Use a prenup sparingly
Prenups are not usually suitable for first marriages of relatively young people with no children. It detracts from the joint venture of marriage. One of the purposes of marriage is to build marital property together to provide the funds to cover living expenses, creating a family, saving for old age, and providing for mutual security whether the marriage ends in divorce or death. Couples’ efforts need to be 100% focused together on this goal in order for the marriage to work. Prenups detract from this.
When used, be careful about the method
Starting with lawyers is not usually a good idea. Lawyers often view prenup negotiation as an asset protection exercise, and only care about the well-being of their client, not necessarily the ongoing marriage. A better way to view a prenup would be as a financial plan that will protect the marriage itself and help it thrive, not just a plan that will benefit one spouse to the detriment of the other.
Start with mediation
A good way to begin the process of exploring a prenup is to use a mediator (generally a lawyer/mediator). The mediator will facilitate open discussions with you and your future spouse about your post-marriage finances and property rights. They can help you sort out the possibilities of separating, sharing, and blending property during a marriage. These are the benefits of having an experienced and knowledgeable facilitator who can provide you with all the information you will need to create the right prenup for you. This is much different than going to a DIY website and choosing your terms or heading directly to a lawyer. Also, a good mediator can level the playing field so that the future spouse with less assets can express their views and concerns freely. This is very helpful to the process of getting a sound prenup (and not injuring your relationship) if you need one.
When you’re done, the prenup should feel good to both of you, not just one of you
A well-done prenup is a nuanced prenup, that has been crafted after all the pertinent facts are known and discussed fully. Every prenup is different. There are ways to create conditions and financial structures that will apply during the marriage that can show mutual consideration and caring, even when one of the future spouses is much better off financially than the other.
So, if you’re embarking on a prenup, tread carefully. Think about the ramifications of having one for your marriage, not just for your own pocketbook, but for your marital relationship. In marriage, sharing and mutual security are important values that can be degraded when a prenup is in place.
In the next article, I’ll discuss situations in which having a prenup might be helpful, if it’s the right kind of prenup. After that, I’ll post an article on good and bad provisions in prenups.
Laurie Israel is a Series 5 Modern Husbands Podcast guest.
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