Key takeaways

• Prenuptial agreements define financial rights before marriage
• A prenup can cover assets, debts, and inheritance issues
• Couples with businesses or children often benefit from prenups
• State laws affect how prenups are enforced
• Legal counsel is recommended for fair, valid agreements

Prenuptial agreements (prenups) are legal contracts that define how assets and debts will be managed if a marriage ends. They can help couples clarify expectations, protect premarital assets, and plan for financial responsibilities. 

A prenuptial agreement is a legal contract signed before marriage that defines how assets and debts will be handled if the marriage ends. While not required, prenups may be helpful for couples with significant assets, businesses, or children from prior relationships.

According to a 2023 Harris Poll, about 1 in 5 married couples have a prenuptial agreement and 50% of Americans say they’re open to the use of prenups.¹ But how does someone know whether a prenup is a good idea for them? And if someone does get a prenup, what sort of protections should they include?

Read more: Money and relationships: How to talk about money with your partner

What is a prenuptial agreement?

A prenup — short for prenuptial agreement — is a legal agreement between two individuals that lays out what happens to their assets in the event the marriage ends, whether it’s through divorce or death.

Prenups generally dictate how the couple's physical and financial assets will be divided. If they’re drafted correctly, they supersede a state’s laws regarding who gets what after a divorce. Some things that can be included in a prenup are:²

• Property rights and obligations
• Division of property
• Property interests of children from previous relationships
• Spousal support obligations
• Rights to life insurance benefits
• Treatment of inheritance
• The impact of a will

What a prenup does and doesn’t cover

The most important function of a prenup is to determine how assets are divided after a divorce and what a surviving partner is entitled to if one partner passes away. They can dictate the treatment of assets such as:³

• Bank accounts
• Brokerage accounts
• Retirement accounts
• Spousal support
• Life insurance policies
• Business ownership
• Inheritances
• Real property
• Property owned before the marriage
• Property acquired during the marriage

In addition to stating how assets will be divided, a prenup can also state how debt will be divided. It can dictate the treatment of debt each couple came into the marriage with, as well as any debt the couple acquired during the marriage.

Prenups can also include clauses that come into play only in certain circumstances. For example, many prenups include an infidelity clause, which imposes a financial penalty on a partner who has an affair during the marriage.

It’s also important to note that while many people think of prenups as something that applies in the case of a divorce, they can also apply in the case of a death. Prenups with specific death clauses are especially important for people who may have children from a previous relationship who they want to protect. The prenup may dictate what assets will be inherited by the spouse versus which will go to the children.

Of course, it’s also important to talk about what a prenup doesn’t cover. Most importantly, a prenup can’t set the terms for child support or custody. That’s a matter that must be handled separately later on. A prenup also can’t include any terms that are against the law.

Finally, there are situations where a prenup may be signed but then later unenforceable. For example, if one partner can prove they were forced to sign the prenup or that the other person failed to fully disclose their assets, the prenup may be thrown out in court.

What happens without a prenup

If you don’t sign a prenup and then get divorced, your state’s laws will determine how your assets are divided. There are a few different ways it could be handled, depending on what state you live in.

Most states have what’s known as equitable distribution in cases of divorce. In a state with equitable distribution, assets will be divided in a way that’s fair but not necessarily equal.⁴

Additionally, it’s only property acquired during the marriage that will be divided up. Property acquired before the marriage is considered separate property and remains with the person who owned it before the marriage.

In a community property state, all marital assets are split evenly. Marital assets are considered to be anything acquired during the marriage, including both money and real property. However, as with equitable distribution, property owned before the marriage is generally considered separate and will remain with the original owner.

Read more: 5 ways to improve your financial relationship

Who needs a prenup?

There are plenty of reasons someone may want a prenup, regardless of their level of income. Here are some situations where a prenup may be a good idea, and circumstances where there may be downsides.

Pros of a prenup

• You have significant assets: One of the more frequent reasons that someone gets a prenup is because they are coming into a relationship with significant assets and want to protect those assets. This may be more likely for people who have successful careers or come from wealthy families.
• You or your family own a business: If you own a business, you may want to protect that business by stating that if you get divorced, the business is all yours. Similarly, many people who come from family businesses may get a prenup to protect their family’s greatest asset.
• You have kids from a previous relationship: Blended families may be more likely to need prenups because of their complex situations. If you have children from a previous relationship, you are likely to want to make sure they’re protected and that your ex-spouse can’t take their future inheritance in the event of a future divorce (or your death).
• You expect to receive a large inheritance: If you expect to receive a large inheritance in the future, you may want to have a clause in your prenup that ensures that money will remain yours and won’t be intermingled with your marital assets.
• You receive a large gift from a family member: Suppose your parents gifted you a large sum of money for you and your future spouse to buy a home. You may decide to get a prenup to say that anything purchased with gift money from family is a separate asset, not a marital one.
• You or your partner has significant debt: Generally speaking, debt acquired before the marriage is separate debt. However, if your spouse has large debt (or expects to take on a large amount of debt), you may want a prenup to protect yourself from that debt.
• You have (or plan to) financially support your spouse’s career growth: Sometimes one spouse financially supports the other while that person invests in their career by going to medical school, law school, etc. The person who pursued higher education ends up with a higher income, but only because the other spouse financially supported them. The spouse who supported their partner during their lower-earning years may want a prenup to ensure they’re paid back for that support.
• You have pets: Animals are treated differently than children under divorce law. Rather than being treated as dependents with a custody schedule, they are treated as property that is awarded to just one person. If you and your partner have a pet before getting married, it may be worth getting a prenup to dictate who gets that pet in a divorce.
• You want to avoid a fight in court: If you want to avoid court in the case of a divorce, you could draft a prenup to ensure you and your spouse come to an agreement.

Cons of a prenup

Yes, a prenup can be beneficial to people of all income brackets. But there are also some downsides. These don’t necessarily mean you shouldn’t get a prenup, but they may help you decide how to approach the drafting process and what to include.

• There’s the potential for an unbalanced prenup: Not all prenups protect both parties. In fact, many prenups may be drafted to specifically protect just one spouse, especially if one person (or one family) takes the reins in the drafting process. For the other party, the prenup could end up being far less favorable than state law.
• It could cause hurt feelings in the relationship: Many people look at a prenup as a sign the marriage is doomed. After all, can someone really be committed if they’re already planning for the end of the marriage? And if your future spouse feels that way, asking for a prenup could cause a rift.
• You can’t predict the future: A prenup determines how you’ll divide your assets in the case of a divorce, which could be years — or even decades — into the future. There’s a good chance your life will be drastically different if that time comes. Your prenup may no longer seem appropriate or fair, but it will probably be binding.

What if you’re already married?

Maybe you’ve read this entire article and realized a prenup might have been a good idea in your situation. It's not too late (as long as your spouse is on board). Once you’re married, you and your spouse can sign a postnuptial agreement — or postnup, for short — which outlines the same things as a prenup.

Read more: Living happily ever after: Finances after the wedding

FAQs about prenuptial agreements

What is a prenuptial agreement?

A prenuptial agreement is a legally binding contract couples sign before marriage that outlines how assets, debts, and responsibilities will be handled if they divorce or separate.

Who typically needs a prenup?

Prenups are common for people with significant assets, business ownership, inheritances, or children from prior relationships.

Are prenups legally enforceable?

Yes, but enforcement depends on state law. Courts may reject prenups if they are unfair, signed under pressure, or missing disclosures.

What can a prenup cover?

Prenups may address property division, debt responsibility, spousal support, and inheritance rights. They generally can’t decide custody or child support.

Do both spouses need a lawyer for a prenup?

Each party having independent legal counsel can help ensure fairness and validity.

Can prenups be changed after marriage?

Yes. Couples can create a postnuptial agreement to update terms once married.

Is a prenup public record?

Generally, no. Prenuptial agreements are private unless entered as evidence in legal proceedings.