Prenuptial agreements were once thought of as a legal document appropriate only for the wealthy with trust funds and mansions to protect. But, today, many ordinary people are signing these contracts that dictate in advance how property will be divided in divorce and whether alimony will be paid if a marriage ends.
Many millennials, in particular, are making sure to sign prenups before getting married. And there are three very simple reasons why that's the case.
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1. To protect assets
Millennials are marrying later in life than their older counterparts. The average first age of marriage in 2019 was 30 for men and 28 for men. That's three years later than it was in 2003, four years later than in 1987, and seven years later than in 1968.
When you get married later in life, you've likely acquired more assets before forming your union. You may have a good-size 401(k) balance and a reasonable amount of money in your bank account, and may even have a house of your own before you get married. If you don't want to take a chance of losing any of your hard-earned money and property after divorce, a prenup may seem like a good idea. It will allow you to define what will happen to the property if your marriage comes to an end.
This can help you stave off conflict, making divorce less expensive and less acrimonious. For many millennials who saw their parents go through difficult divorces, this may come as a major relief.
2. To avoid debt
While some millennials want to protect what they have, others are concerned about being saddled with additional obligations due to marriage.
An estimated 15 million millennials have student loan debt, which is more than any other generation. And, they may not owe a small amount, either. The average student loan balance among millennials is $33,173 per borrower.
Entering into a marriage with someone who owes a lot of money can be a frightening prospect. This is true even though your partner's student loan debt or credit card debt doesn't automatically become your responsibility in every situation just because you tie the knot.
Still, the fear of taking on someone else's financial burden is not unreasonable. That's why it's common for people in this generation to sign prenups to ensure they don't become legally liable for any of their partner's debts should the marriage end.
3. To protect their businesses
Millennials have embraced a new mindset when it comes to their work life, with many charting their own course and starting businesses or carving out other innovative career opportunities for themselves.
For those who start a company and build it from the ground up, protecting that business and ensuring they don't have to buy out a spouse's interest in the event of a divorce could be an important reason to sign a prenuptial agreement. Making clear in writing that a business is separate, rather than marital property, can solve a lot of problems -- especially in the event a company was started during the marriage and becomes an especially lucrative one.
For all of these reasons, it's not a surprise that young people may be in favor of a prenuptial agreement. Creating this type of premarital contract makes good sense given the lifestyle many millennials lead.
