prenup, prenuptial agreement, financial planning, marriage, divorce Close-up image of a seated couple holding hands with a marriage counselor in the background. Close-up image of a seated couple holding hands with a marriage counselor in the background. Close-up image of a seated couple holding hands with a marriage counselor in the background. Close-up image of a seated couple holding hands with a marriage counselor in the background.
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Celebrate Life Moments

Dress? Check. Reception hall? Check. Prenup? Check.

It's healthy to have a discussion about finances

Weddings are a major life moment, and involve thoughtful financial planning. In this series, Chase looks at smarter ways to approach the costs of weddings, presented by Chase Slate.

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Laurie Itkin met her husband, Dan, on when she was 35 years old and he was 41. They bought a house together in San Diego, and lived there for a few years before Dan asked Laurie to take a more active role in parenting his 10-year-old daughter from a previous marriage.

Laurie basically said yes, but only if they were legally married, and with a prenuptial agreement.

Prenuptial agreements are binding contracts signed before marriage, establishing the property of each spouse should the marriage end in divorce. A prenup stipulates how assets will be divided, what the financial responsibility of each will be, whether one will owe the other alimony, and more. Sometimes, prenups also include behavioral clauses, outlining financial ramifications if, for example, one spouse cheats on the other.

Laurie wanted a prenup to protect her assets. At the age of 24, she received a $1,600 inheritance. That may not sound like much, but Laurie spent 15 years living below her means building that small nest egg into a $1 million investment portfolio—all before Dan came into the picture.

“I made great sacrifices. I lived like a perpetual college student so I could achieve financial security," Laurie says. “The thought that I would have to subsidize a man if our marriage didn't work out made me very scared. He didn't share those sacrifices."

An uptick in prenups

Laurie isn't alone, either. Prenups are five times more common today than they were 20 years ago. But today's young people, after seeing many of their parents get divorced, are opting for prenups for practical reasons.

Money is still the primary asset divided in prenups. These days, 20- and 30-somethings are getting married with more acquired and inherited wealth than previous generations—about $30 trillion dollars from their baby boomer parents—so they want to protect it should something go wrong.

Laying the foundation for financial intimacy

While some are inheriting vast amounts of money, others are entering marriage with vast amounts of debt. (Young people owe $1.3 trillion nationwide in student debt.) Some millennials are also entering marriage with shared business interests. And prenups stipulate in advance how shares and stock are to be divided when a couple owns a company together.

As a financial analyst, Laurie recommends prenups for most of today's young couples. The exercise of documenting all your assets and debts before marriage sets an important foundation for financial intimacy, she explains, and that could help mitigate future fights over money.

“If you don't consider a prenup," she warns, “you are agreeing to comply with your state's law if you get divorced. If you don't like how your state addresses asset division and child and spousal support, then get a prenup."

Other financial experts agree. Terry Savage, a financial columnist, is pro prenup because it requires transparency around finances. All assets are disclosed and it forces couples to formalize their plans for the future.

Experts recommend that couples with real estate or business holdings, significant financial assets, student debt, or the intention to go back to school strongly consider a prenup. But, in the end, it's all about your comfort level. The ultimate factor in this decision should be whether it feels right to you and your partner.

Chase is sponsoring GOOD Money to help shape your financial future, at every step as you move from the haze of student debt toward the horizon of retirement. We are here to help the young and ambitious understand what the world of money is going to look like in the years ahead.

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