Should You Get a Prenuptial Agreement?

A prenuptial agreement, or “prenup” as many call it, is a legal document couples agree to sign before they marry. A prenuptial agreement is typically used to specify what might happen in the event of divorce or death. Most often the Agreement specifies what happens to assets and debts acquired during the marriage in the event of a divorce. A prenuptial agreement can also address spousal support. 

Once considered a tool for wealthy people, the practice of prenuptial agreements has grown in recent decades among couples at all income levels and is considered a sound financial move. 

Why Should I Think About a Prenuptial Agreement?

Prenuptial agreements deliver financial solutions if problems in marriage lead to divorce. They give couples a clear understanding of one another’s attitudes and beliefs about how to address finances; disagreements over money are, after all, the leading cause of divorce in Arizona. 

Many people who request a prenuptial agreement do so to protect family assets, especially if they have adult children or adult heirs. These assets may include family businesses and property they want to leave to a specific person or party upon their death or to make sure those assets stay in the family if there is a divorce. 

↣ Prenups are important to ensure debts and assets each spouse holds coming into marriage never become the responsibility or property of the other partner if they divorce. 

Arizona is one of nine states that follow community or marital property laws where couples equally share finances – both assets and debts – acquired during a marriage. It does not matter if one person is a greater wage earner; the income generated during the marriage is included in the “community.” This means that both parties share good and bad financial outcomes. Problems can arise when divorce proceedings begin and one partner discovers hidden debts. Those, too, are shared, unless the surprised partner can prove the debt did not benefit the marriage; this can rarely be proven. A prenup anticipates such circumstances and the parties agree in advance on how assets and debts during the marriage will be handled. 

Similarly, without a prenup, a divorcing spouse in a community property state like Arizona can’t claim an asset obtained during the marriage solely for themselves. Those are also shared regardless of who earned more money.

Prenuptial agreements are difficult for some people to consider. Few people marry with the expectation of divorce, let alone imagine financial disasters brought on by a beloved spouse. 

Still, it’s a smart move for anyone to get a prenup, says divorce attorney Andi C. Lawrence of the law firm Lawrence & Jecmen PLLC. “A prenup forces both partners to address, in advance, what a divorce looks like from a financial picture,” she says. “Clients who come to us for a prenup have already had pretty detailed conversations about this and understand that both will benefit from one.”

Prenups Insulate Spouses Against Future Debt 

Prenuptial agreements are particularly useful, Lawrence observes, for couples who plan to marry but can’t agree on important issues like saving versus spending. In situations like these, a prenup protects individuals whose spouses aren’t financially savvy or otherwise more likely than not to fall into debt. It’s also worth noting that financial disasters can happen in a marriage even when neither partner has poor financial management.

Debt can strike suddenly. Losing a job puts many people – and couples – in debt. When a person becomes seriously ill, debt is far more likely. In fact, medical debt is considered one of the leading causes of bankruptcy. A prenup, though, may prevent at least one partner from facing financial ruin.

• A July 2022 New Yorker article on the rising use of prenups profiled an Arizona woman whose partner was diagnosed with brain cancer. She agreed to marry him but required a prenup to protect herself against medical debt he would no doubt incur, even with his catastrophic health insurance. 

They signed an agreement that separated each spouse’s possessions – including ten acres the wife owned in the southeastern part of the state – and that stipulated that if one spouse fell into debt, the other would not be responsible for it. This agreement preserved the woman’s assets from creditors, protected her from assuming significant debt, and allowed her partner to feel perhaps a little less alone as he battled illness. 

• In another Arizona case cited in the article, a bank sued a married couple for repayment of a bank transfer the husband had made. The wife stated she had been unaware of it. They divorced. Still, a judge ruled that the bank could garnish her wages to repay half the debt since it was incurred while she was still married. A prenup could have helped her avoid any responsibility for her husband’s financial actions.

Prenups Can Be Highly Customized

There is no such thing as a typical prenup, Lawrence says. The details in prenuptial agreements can be very specific and can run from just a few pages to more than 50. For this reason, both Lawrence and her partner Tabitha Jecmen advise individuals to hire separate attorneys before signing a prenup. Some states (not Arizona) require this.

Future assets are among the complexities that come up with divorce or death that a prenup can address:

• Trusts and inheritances 
• Significant monetary gifts 
• Business ownership

Spousal maintenance, or alimony, can also be decided in a prenup. This can be particularly difficult to determine in advance, especially for younger couples. Without a prenup, though, maintenance is decided by a judge (unless you and your spouse are able to reach agreements during the divorce process). Courts look at factors like how long a nonworking spouse has been out of the workforce and the amount of time needed to get re-established when they consider the amount and length of support to award. In some cases, a spouse may not be able to return to work because of age or disability. These are potential issues a prenup can address to save time, legal costs, and perhaps emotional turmoil.

Challenges to Prenups Rarely Succeed

It’s hardly uncommon for one party in a divorce to challenge a prenup’s validity but few succeed. The burden of proof is on the challenger, and courts set a high bar for them. Examples of failed challenges include:

• They didn’t understand the agreement at the time they signed it
• They received bad advice from their attorney
• They were not given enough time to review the prenup
• They felt pressured to sign the prenup

Even challenges brought by people who claimed they did not fully understand the agreement because English was their second language have been struck down, with courts noting that legal translation services and counsel are available. Objections from spouses who say they were presented with a prenup the night before a wedding or even en route to the ceremony have also been rejected. Courts have also ruled against women who argue that they were pregnant and under duress when asked to sign a prenup.

More Individuals and Engaged Couples Say They Would Agree to a Prenup

Once considered a taboo topic, prenuptial agreements are gaining more acceptance, particularly among younger couples. 

A Harris Poll on prenups conducted in May 2022 for the New Yorker article cited above found that 15% of adults it surveyed had signed a prenuptial agreement, compared to a scant three percent in 2010. 

• Four in ten – more than 40% – had no objection to prenups
• 35% who were unmarried said they would probably sign one

The New Yorker reported that younger couples signed prenups far more often than older ones:

• 40% of respondents ages 18 – 35 had signed prenups
• 13% aged 45 – 54 had also signed one
• Fewer than 5% over age 55 had signed one

Researchers who study Generations Y (born between 1981 and 1996) and Z (born between 1997 and 2012) fall into the first category that’s clearly most open to signing a prenup. Of course, many in Gen Z are still too young to marry. Still, researchers who study Gen Z say they plan to marry later in life, after they feel financially sound and settled into a career.

How does marrying later in life impact the likelihood of signing a prenup? Here are two theories cited by Business Insider:

1. They come into a marriage with a healthy understanding of how debt can be ruinous and don’t wish to assume additional debt – remember, many in this age group already have sizable student debt.
2. Many grew up in single-parent homes and are more conscientious about keeping assets separate, forever.

Prenups Can’t Cover Everything That Can Arise in Divorce

There are also a few circumstances that a prenup cannot address , Tabitha Jecmen says. They include future child support, parenting time, and legal-decision-making as it relates to minor children. Arizona courts require parenting plans in the event of a divorce, but those parenting plans cannot be drafted in advance of the divorce filing. 

When is a Prenup Not Necessary?

There may be times when a prenuptial agreement is less beneficial for you. For example, if one spouse stands to earn a lot more money than the other, a prenup may not be in the best interests of the lower earner. Any future spouse who will likely earn less than their partner or who plans to stay home with future children should consult a financial advisor before signing a prenup. Otherwise, a prenup could leave them with few assets in the event of a divorce.

Couples who plan to marry and have no assets or debts to protect can probably skip a prenup as well unless one or both partners have substantial fears about future debt. It’s also possible to enter into a postnuptial agreement after marriage to determine responsibility for debts and assets, however, the standard for an enforceable postnuptial agreement is much greater.  Like prenuptial agreements, these agreements do not address child support payments or parenting plans.

We Can Answer Your Prenup Questions and Design an Agreement for You

If you or your partner are considering a prenuptial agreement, contact Lawrence & Jecmen for a personal consultation to answer any questions or concerns you might have.