They’re certainly not as romantic to discuss as your dream house or your honeymoon, but prenups and postnups can be a financial lifesaver in the event your marriage does come to an end.
Both prenups and postnups are about figuring out who gets what if you and your spouse get divorced.
But these two types of agreements have some important distinctions, and circumstances may make one better suited to your relationship than the other.
Here are some key things it can be helpful to understand about prenups vs. postnups, plus how to decide if you and your significant other might benefit from getting one.
What is a Prenup?
Short for “prenuptial agreement,” a prenup is a legally binding document set up before a couple gets married — hence the “pre” suffix. Prenups may also be known as “antenuptial agreements” or “premarital agreements,” but the bottom line is, they’re contracts drafted before vows are made.
These contracts typically list each party’s assets, including property and wealth, as well as any debts either soon-to-be-spouse might carry.
It then details how these assets will be divided in case the marriage comes to an end, either through a divorce or the death of a spouse.
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Who Needs a Prenup?
Couples who are getting married for the first time and are bringing little to no assets into the marriage may not need to bother with drawing up a prenup.
However, a prenup can be particularly useful if one spouse is coming into the marriage with children from a previous partnership, or if one partner has a large inheritance or a significant estate, or is expecting to receive a large inheritance or distribution from a family trust.
These types of agreements aren’t just used in case of divorce, but also death, which can be particularly important for couples with children from a previous marriage.
If that partner dies, the prenup can define how much of their wealth should be passed onto their children versus their surviving spouse.
Prenups can also be useful for protecting assets earned and property acquired during the course of a marriage, which, without a prenup, are generally considered “shared ownership.”
If one partner wants to maintain a separate claim to acquired wealth or possessions, a prenuptial agreement makes that possible.
A prenup can also keep a high-earning partner from being required to pay alimony to their partner in the case of a divorce — though in some states, a spouse can’t give up the right to alimony, and the waiver may not be enforced by a judge depending on the way the prenup is drafted.
In the event of divorce, a prenup can also help protect a spouse from being liable for any debt the other spouse brought into the marriage.
What is a Postnup?
A postnup, or postnuptial agreement, is almost identical to a prenup — except that it’s drafted after a marriage has been established.
They may not be as well known as prenups, but postnups have grown increasingly common in recent years, with nearly all 50 U.S. states now allowing them.
A postup may be created soon after the wedding, if the couple meant to do so but simply didn’t get around to it before the big day, or well afterwards, especially if some significant financial change has taken place in the family.
Either way, a postnup, much like a prenup, does the job of outlining exactly how assets will be allocated if the partnership comes to an end.
Who Needs a Postnup?
Along with being drafted whole cloth, a postnup can be used to amend an existing prenuptial agreement if there have been big changes that mean the initial contract is now outdated.
And although it’s not fun to think about, if a couple feels they’ll soon be facing divorce, a postnup can help simplify one important part of the process before the rest of the legal proceedings take place.
A postnup, like a prenup, can help separate out assets that would otherwise be considered shared, “marital property,” which can be important if one partner obtains an inheritance, trust, piece of real estate, or other possession they want to maintain full ownership over.
Postnups can also be part of a renewed effort for a couple to commit to a marriage that may be facing some obstacles and challenges.
Prenup vs. Postnup: Which is Right for Your Relationship?
While it may be a difficult conversation to face with your fiance or spouse, creating a prenup or postnup can be an important step to help you avoid both headache and heartache later on.
If you don’t make a pre- or post-nup, your state’s laws determine who owns the assets that you acquire in your marriage, as well as what happens to that property in the event of divorce or death. State law may also determine what happens to some of the assets you owned before marriage.
While almost any couple can benefit from a frank discussion of who gets what in the worst-case scenario, here are the situations in which you might specifically want to consider a prenup vs. postnup.
When to Consider a Prenup:
• If one or both partners have existing children from a previous partnership, to whom they want to lay out specific inheritances in case of death.
• If one partner has a larger estate or net worth (i.e., if one spouse is significantly wealthier than the other).
• If one or both partners want to protect earnings made and possessions acquired during the marriage from “shared ownership.”
What to Consider a Postnup:
• If you intended to create a prenup but ran out of time or otherwise didn’t do so before the wedding.
• If significant financial changes have made it necessary to change an existing prenup or draft a new postnup.
• If divorce is looking likely or inevitable, and the couple wishes to streamline the process of dividing marital assets before undergoing the rest of the process.
In all cases, prenuptial and postnuptial agreements can help simplify the division of assets in the case of either death or divorce—and in either of those extremely emotionally charged scenarios, every little bit of simplification can help.
However, prenups are sometimes considered more straightforward, since they’re made before assets are combined to become marital property.
Prenups may be more likely to be enforceable than postnups should one partner attempt to dispute it after a divorce.
How to Get a Prenup or Postnup
For a prenup or postnup agreement to be considered valid by judge, it must be clear, legally sound and fair.
Couples looking to save money may be able to use a template to create a prenup or postnup themselves.
It may still be a good idea, however, for each partner to at least have separate attorneys review the document before either one signs.
If your estate is more complex, you may want to consider hiring an attorney to draft the agreement.
Either way, having an attorney review the document will help protect your interests and also help ensure that a judge will deem the agreement is valid.
Reducing the Odds You’ll Ever Need to Use that Prenup or Postnup
While creating a prenup or postnup can be a smart move for even the most hopeful and romantic of couples, the ideal scenario is a happily-ever-after that leaves those contracts to gather dust.
Fighting about money is one of the top causes of strife among couples, and one of the main reasons married couples land in divorce court.
For some couples, one way to improve their odds might be waiting until they’ve achieved some measure of financial stability before tying the knot.
Walking into a marriage with a solid personal foundation, such as a well-stocked emergency fund and a well-established retirement account, can help partners feel empowered and able to focus on other important relationship goals.
Financial transparency, starting before and/or early in marriage, can also help mitigate marital tension over money.
To achieve more transparency, some couples may want to consider opening up a joint bank account, either after they tie the knot or before if they are living together and sharing household expenses.
While there are pros and cons to having a shared account, merging at least some of your money can help make it easier to track spending and stick to a household budget, while also fostering openness and teamwork.
For couples who’d rather not share every penny (or explain every purchase), having two separate accounts along with one joint account can be a good solution that helps keep money from becoming a source of tension in a marriage.
The Takeaway
Prenuptial and postnuptial agreements are both legal documents that address what will happen to marital assets if a married couple divorces or one of them dies.
A prenup is drafted before marriage, while a postnup can be drafted soon after or many years into marriage.
Both agreements can make divorce or the death of a partner significantly less traumatic.
These agreements can be particularly useful if one spouse has children from a previous marriage, has significant assets, and/or expects to receive a large inheritance or distribution from a family trust during the marriage.
It can be helpful to use an attorney to draw up or look over one of these agreements to make sure it’s legally sound.
For couples who are ready to integrate their finances, opening a checking and savings account with SoFi makes it easy to create a joint account that gives couples shared access to their money.
Prefer to keep some (or all) of your finances separate? The SoFi Checking and Savings app makes splitting bills and expenses easy by allowing you to send money directly from the app. If your partner is also a member of SoFi Checking and Savings, he or she will get the money instantly.
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