Why prenups are essential
BY JIM BROWN
Marriage: to have and to hold…unless life throws a curveball and then you better be prepared! After all, what could be more romantic than discussing prenups with your betrothed?
Not fun to talk about, I know. But unfortunately, people in relationships that start out seemingly idyllic sometimes part ways. And the financial consequences for the unprepared can be quite steep. Losing a significant portion of your assets – accumulated before or during a marriage – in a divorce settlement can set your retirement and savings goals back years, possibly decades…
Call out: “If your son, daughter, or grandchild is getting married in the near future, I encourage you to strongly urge them to look into a prenup. It’s a dreaded, but extremely necessary conversation.”
Consider this: the average legal cost of a divorce is $15,500 over 10.7 months in the U.S., but legal fees can be as high as $25,000 on average for divorces involving children in states like California and New York.
Here are three insights to help make your case:
- Once you realize this is something that needs to be done, it’s much easier to get past the awkwardness. The reality is, the average cost of a prenuptial agreement is $2,500, which is a lot less than the cost of a divorce. Look at it like an insurance policy – no one wants to go to the hospital or get into a car accident – but at the same time you recognize the need for health and auto insurance. The same financial precautions apply to entering into a union with another person.
- Keep in mind you can amend a prenup once married. Chances are, if you’re getting married in your 20’s or early 30’s, you may have only begun to accumulate significant assets, but that can change as your career progresses. So, as your assets or household members increase, you may want to revisit your prenup. Prenups can be amended or revoked, but both parties must agree. Couples can decide on an option that works best for them right now, without being saddled with it for life. This certainly adds some relief to what can be a daunting situation.
- You need to get comfortable talking about money with your spouse because it will be an ongoing topic. Consider getting a head start on discussing money issues, including: Will you have a joint bank account, maintain separate accounts or will you decide on some other banking arrangement? Who will handle bill payments and how much should you save each month? Let’s face it, money is going to be a recurring topic in your marriage, so the prenup is really just the beginning of that ongoing discussion.
For more information on finding a prenup that is right for you or your loved one, I recommend looking at Legal Zoom along with consulting a local attorney who specializes in family law.
ABOUT THE AUTHOR
Jim Brown is the founder of Your Best Mindset and the creator of Jim Brown Investing, an investing course that simplifies successful investing in the financial markets for retail investors. Jim holds a B.A. in accounting from New York University and currently lives in New York City with his wife and two children