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What is a prenup? How they work & how to decide if you need one

Young couple having coffee
Luis Alvarez/Getty Images

Amid conversations about flower arrangements and honeymoon destinations, talk of a prenup may feel uncomfortable, inappropriate or out of place. But there's another way to look at it.

A couple's commitment to one another includes looking out for each other's future—no matter what unforeseen circumstances may arise. A prenup can simply be a tool you use to protect existing assets and help ensure you both have opportunities to pursue lifelong financial goals.

What is a prenup?

A prenuptial agreement—commonly called a prenup—is a contract between you and your future spouse. Its chief purpose is to proactively protect both of you (and, potentially, other loved ones) if your marriage someday ends, either by divorce, or in some cases, upon one of your deaths. Should either scenario occur, the contract states who would own certain assets and who would be responsible for certain financial liabilities.

You finalize and sign a prenup before the wedding, but the agreement doesn't go into effect until you're legally married.

How does a prenup work?

You and your future spouse participate in creating your prenup. For starters, you document details about each of your present financial situations with an inventory. Items might include:

  • Current income
  • Bank account balances
  • Current debts
  • Owned property
  • Retirement accounts
  • Other investments
  • Life insurance policies
  • Business ownership or interests
  • Expected inheritances

Your prenup lays out which assets will become shared by both partners in marriage and which will remain solely the property—or responsibility—of the original owner. You can also specify if you want to pass any of your assets to family members or children from a previous relationship after your death.

Alimony or spousal support is another key piece of many prenups. The contract can stipulate whether one of you will provide financial support to the other if you become separated or divorced. A prenup can also establish some shared commitments you want to make while married. For example, you might address:

  • Maintaining separate or joint bank accounts.
  • Paying off debts.
  • Responsibilities for household expenses.

Generally, prenup provisions should relate to finances. If you consider including lifestyle clauses that set guidelines for other aspects of your relationship, such as child support or custody plans, know that they might not be enforceable in your state. A prenup also can't include provisions that violate the law. Before diving into these discussions, you may want to consider your overall financial goals, including saving for your wedding.

Who should consider a prenup?

Although many people associate prenups with the rich and the famous, these agreements are increasingly popular among couples of varying financial means. A 2022 Harris Poll survey found that 15% of engaged or married Americans—and 39% of those ages 18 to 34—have signed prenups.

A prenup can be especially prudent for:

  • Wealthy individuals or members of wealthy families (including people who've received or expect to receive large inheritances).
  • Couples with one person who has far more financial assets (or debts) than the other.
  • People who've been married before.
  • People who have children from previous relationships.
  • People who own businesses.
  • Couples who expect one or both members to attend college or graduate school during their marriage.

Regardless of financial circumstances, creating a prenup together can help a couple become comfortable talking about money and perhaps avoid some financial stress later in life, which is important for effective financial planning for newlyweds. If you and your future spouse choose to do a prenup, try to get started at least six months before your wedding date. That will allow you time to approach the task thoughtfully and obtain any assistance you may need.

Who can help you write your prenup?

When compiling assets and liabilities for your prenup, it's important to be thorough and accurate. You might find it helpful to seek assistance from a financial professional during this process—especially if either (or both) of you work with someone already.

Although it's not required in most states, many couples hire family law attorneys to help create their prenups. Legal counsel can help you fully understand your contract's ramifications and ensure it's enforceable in court. If you go that route, you and your future spouse must work with separate lawyers so that someone is advocating independently for each person's interest.

Moving forward with prenup plans

A prenup is a contract between two engaged people that takes effect when the couple marries. It establishes how they'll treat their assets and liabilities and spells out measures to protect both people from financial instability if their marriage ends in divorce, or in some cases, upon death of either partner.

If you and your future spouse feel a prenup would benefit you, consider consulting with individual attorneys. And don't forget to confer with a Thrivent financial advisor, who can help you align the agreement with your overall financial plans and values.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.