Millennials are often known to buck convention, and that may be true with prenups. While prenups have been most common among celebrities, the rich, and couples entering second and third marriages, more young people are requesting them.
Closing Time
The term Millennials generally refers to the generation of people born between the early 1980s and 1990s, and as the Wall Street Journal reports, younger adults of all income levels are drafting prenups.
Millennials are not only trying to protect assets accumulated before and during marriage but to address societal realities that weren’t necessarily present or common years ago, such as a desire to keep finances separate, student debt, social-media use, embryo ownership and even pet care.
Experts point to the fact that many millennials are children of divorced parents and have had an intimate look at what can happen financially when a marriage dissolves. At the same time, the stigma or taboo that used to be associated with discussing money before marriage is slowly disappearing.
Some millennial couples who want to maintain a clear separation of their finances during marriage are using prenups as a workaround for state laws that would otherwise treat certain assets as marital property.
This mind-set change is even true for clients who don’t have significant assets to protect going into the marriage, lawyers say. Some millennials want to keep their finances—current and future—separate and businesslike, which would allow them to leave a marriage, if necessary, without many strings attached.
Florida Prenups
I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just exploring the strange new world of marriage. A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce.
If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.
That’s where prenups come in. Prospective spouses may limit or expand state laws by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce.
All the Small Things
As the Wall Street Journal article further explains, for young couples who haven’t been married before and don’t have children, prenups need to anticipate all sorts of questions related to potential alimony payments, such as: Will one of you stay home with children or do you both plan to continue working? What might each of your potential incomes be? Will you need job training?
Many younger professionals might think to waive alimony completely, especially if they both have their own careers and lead separate financial lives. However, if there is a chance that one spouse could be out of the workforce for a considerable time, beyond a standard maternity or paternity leave, to raise children, it could impact future employability and earning capacity.
Many millennials are also going into a marriage with significant student and credit-card debt, which also is a change from the past. A recent Fidelity Investments report, for example, found that millennials in 2020 had an average loan balance of $52,000.
As a result, handling debt issues are making their way into prenuptial agreements. One couple, where a wife-to-be had $75,000 in student-loan and credit-card debt, the couple added a provision to their prenup that said any marital assets used to pay off her debt had to be reimbursed in the event of the divorce.
Another couple used a prenup to address how any future student debt taken on during the marriage would be handled. They agreed that this type of debt would be considered the borrowing party’s personal debt, not a marital debt.
As more couples decide to delay having children until later in life, more prenuptial agreements are including directions for dealing with genetic material in the event of divorce. In a prenuptial agreement, a couple can agree that in the event of a divorce, their embryos would be donated to stem-cell research through a local stem-cell bank. Neither party could use the embryos without the consent of the other party.
Pet provisions also are becoming more commonplace in today’s prenups by people who view their pets as their de facto families. A prenup can be crafted with a visitation schedule, a plan to split vet bills and pet insurance costs and address what would happen if one of the partners moved far away from the other.
Some millennials want to address social media in prenups to ensure that one spouse can’t write nasty things about the other in the event they break up. However, it is easy to run into First Amendment issues.
The Wall Street Journal article is here.