Prenups, while technically on the rise, are still very rare — and that’s a good thing, says Laurie Israel, an attorney and author of The Generous Prenup: How to Support Your Marriage and Avoid the Pitfalls. “Most prenups are driven by the wealthier spouse, and that sets up an unequal power dynamic that is hard for any couple to recover from,” she says. “Plus, the vast majority of couples really don’t need prenups at all.”
Beyond some questionable surveys, there isn’t good data on prenups (they aren’t public record), but Israel estimates that 1 to 2 percent of married couples actually have one, with more like 10 percent of people with a net worth of over $1 million. The most obvious reason that prenups are so uncommon is that they typically cost several thousand dollars in legal fees. Another is that most people don’t have a Succession-level fortune to protect from a money-grubbing spouse. But most important, according to Israel, most prenups aren’t a solution to marital money disputes — in fact, they’re usually the opposite.
Anyone in the pro-prenup camp will tell you that prenups can help couples sort out their money differences before they become legally bound to one another. They also require couples to be fully transparent about their finances (including their debt) before marriage. Both of those things are true, Israel says, but they can be done without hiring lawyers. Here, she talks about the problems that prenups can cause, and what she recommends instead.
You’ve represented clients in prenups for about 20 years now. What makes you believe that most prenups are bad?
When I started, I saw a lot of prenups that were overreaching, unfair, inflexible, and hurtful to the less-wealthy spouse. They would try to cut the less-wealthy spouse out of any potential benefit from a family business or inheritance that the wealthier spouse was going to get.
Usually the process begins with the wealthier spouse’s lawyer showing up with an entire prenup with all the terms they want, which can be very coercive. And if you’re representing the less-moneyed spouse, it’s all uphill to try to change that. It makes them feel less valued and less in control. I had a lot of bad experiences in the negotiating process.
The result is that it sets up a very unequal power dynamic, which is damaging to the relationship and the marriage from the beginning. It’s harmful to the goodwill that’s necessary for a healthy marriage. I believe that marriage is about sharing, and the more you share, the more likely your marriage is to thrive.
Do you think that most prenups, the way they’re traditionally done, can make it more likely that a couple gets divorced?
I do think that a prenup that’s unfair, in a very broad sense, can precipitate divorce because the unfairness will grow over time and cause bitterness, especially for the more disadvantaged spouse. But of course, I don’t have statistics. Nobody has statistics for that, because divorces don’t necessarily reference prenups.
I know from my clients that had prenups and have gotten divorced, many of them were very rankled by the whole thing. They said it set up a bad dynamic that lasted throughout the marriage. When one person sees the other person get very wealthy and it isn’t shared, that doesn’t make them feel good.
You’ve represented both the wealthier spouse and the less-wealthy spouse in prenups. What kind of advice do you give to the wealthier ones, to avoid the typical pitfalls of a prenup?
You have to ask: What’s more important, the money or the marriage? Because you might be protecting yourself, financially, but you’re creating more risk for your marriage. A marriage is many things, but one aspect is that it’s a financial partnership, a joint venture. And if you take that away, or make one person much less powerful in that partnership, then it can be destabilizing.
A lot of prenups also make it very easy for the wealthier spouse to get divorced, and very difficult for the less-wealthy spouse to do so. That’s bad for both parties. Even if you’re the wealthier one, do you want to feel like your spouse is with you because they’re trapped? That sets up another power imbalance. You want to organize your financial life in a way that’s fair, that gives both of you accountability.
What advice do you give to the less-wealthy spouse?
There’s often a gender dynamic. A woman doesn’t want to feel like she’s a gold digger, and a man doesn’t want to feel like he’s weak or dependent on his wife for money. I encourage the less-moneyed spouse to not sell themselves short. They’re choosing to marry this person because of the whole person they are, not because of their money. A lot of times people fall in love before they even know about the other person’s financial picture. And you never know what happens in a long marriage, in terms of how couples help each other and the value they add to the other person’s life.
Maybe one person doesn’t bring as much money to the marriage, but that doesn’t make them or their contribution less important. So I always want the less-moneyed spouse especially to think about all potential eventualities, and think about what is legitimate and fair for them to want, for things to be equitable.
Even though you’re wary of prenups, you still specialize in them, both as a lawyer who represents one spouse and as a mediator who works with both spouses. What’s the best way to do them, to make them fair?
I still do legal representation for prenups in Massachusetts, which is where I live. But mainly what I do now is mediation, via Zoom, all over the country. And in my opinion, mediation is the greatest way to do a prenup. In mediation, I am not representing either member of the couple. Instead, it’s collaborative. I’m a neutral facilitator, working with the couple together so they’re not pitted against each other. I have a bunch of chats with them, and get all their financial information, and then I come up with a “financial plan,” which is a very neutral way of saying a prenup. At the end of the mediation, we come up with a term sheet that they can each bring to their respective lawyers to officiate.
Everyone should be well represented in a prenup because it’s something that will potentially last the rest of your life. That’s major. It’s the most major contract you might ever sign. So it’s important that everyone understands and pays attention to it and doesn’t just have their lawyers do it for them.
What’s a good reason to have a prenup?
If they are done well, prenups can be very good in certain cases. Being in a family business is a good reason to have a prenup. You don’t want to have to break up the business if you get divorced. That would be unfair to the spouse who is in the business and to his or her family. But you have to give the other spouse a fair shake, too. If the business gains a lot of value during the marriage and the less-moneyed spouse is cut out of that, that’s not fair. Yes, the spouse who owns the business should keep it, but they should also pay the other spouse at least something for a portion of its increase in value.
Another good reason to have a prenup is in second marriages, when people have money and kids from a previous relationship and they want to make sure that they can give money to their existing children. You can discuss how this will work in a prenup and create guidelines for it.
And finally, a good thing about a prenup is you can include something called an alternative-dispute resolution. I try to put them in all my prenups. It means that if there is a divorce, there’s a pecking order of mediation, collaborative law, and binding arbitration to the extent available. Basically, it keeps you out of court. Some people get a prenup because they had a terrible divorce with lots of litigation, or their friends or family members did. So having an alternative dispute resolution is a good reason to get a prenup, just by itself. I have done some prenups that didn’t even include very much beyond that.
Some people think they need a prenup if one spouse has a lot of debt. But they don’t realize that they’re already protected from premarital debt by existing laws. Is debt ever a good reason to get a prenup?
If someone comes to the marriage with debt, that’s premarital debt, and the other spouse is not required to pay it. And if you get divorced, that debt still belongs to the original borrower — you don’t need a prenup to say that. The law already covers it. And even if one person takes on debt during the marriage, it’s rare that the other person is on the hook for it if it isn’t in their name. In most states, separate debt is separate debt.
But I also think that it makes sense for couples to pay off one person’s debt together. Let’s say one person has $100,000 in student loans. Is it fair to saddle that one person with paying it back on their own, so they can’t contribute as much to the household? Or does it make more sense for the marriage to say, “Okay, let’s pay that off together so that we can move on to our other financial goals”?
Do prenups ever get overruled or contested?
It’s very rare that prenups get thrown out. Also, it’s typically the less-wealthy spouse who wants to contest it, and it costs money to do that. And usually in these disputes, whoever loses has to pay the other person’s legal fees. So the less-moneyed spouse can’t afford to contest it.
Can prenups determine anything about what happens if the couple has children?
In terms of children, the prenup can’t rule on what happens in a divorce. What happens with the kids is always subject to the court jurisdiction in every state as a policy matter. A prenup could maybe say that the wealthy parent is responsible for paying for their education, but it can’t say anything about custody or visitation and basic child support.
This interview has been edited and condensed for clarity.
The Cut’s financial advice columnist, Charlotte Cowles, answers readers’ personal questions about personal finance. Email your money conundrums to [email protected].