Do Millennials Need a Prenup?

Beth Lynch in Wealth Management 13 November, 2018

wedding rings on piggy bankBefore tying the knot, it’s important to talk about money and goals with your significant other — it’s something we’ve discussed before on Ramparts. Getting each person on the same page is essential for a harmonious financial future together. Increasingly, part of that discussion for millennials includes prenuptial agreements (prenup).

What’s causing the trend?

We’re finding that two major items are at play leading to this rise in prenups. One, people are waiting longer to get married thus accumulating more assets and want to protect them. The second has to do with the amount of debt that each person is bringing into the marriage, such as large student loans. Millennials don’t want to go into a marriage responsible for the counterpart’s debt should things ultimately not work out. No one wants to start their marriage thinking that it won’t work out, but the unfortunate truth is that roughly half of marriages end in divorce. A prenup is just one avenue that can protect each person.

How do you broach this uncomfortable topic?

Many parents are concerned for their kids and come to us when their adult child is getting married to help start the conversation about saving money, investing, planning for the future and protecting their child’s assets. Sometimes these conversations go better coming from a third party, it can be less emotional to discuss the practicality of a prenup. Starting with that big-picture discussion about goals, your future together and how money plays a role in those goals and decisions can be a positive way to frame the conversation. It’s important to talk about the assets and liabilities each person is bringing into the marriage, as well as retirement savings they have and both parties spending habits. This can help to lay the foundation for an agreement.

What else should be considered?

The titling of assets can help with protecting each person’s estate, especially when it comes to inherited assets and/or trusts. It’s important to discuss how commingling assets can affect the prenup; once you commingle assets, it’s difficult to change. Particularly in Pennsylvania, once something is titled as a joint asset, it’s considered marital property, so be sure to check with state laws and talk with an attorney to ensure accounts are titled properly.

It’s important for couples to discuss the pros and cons of having a prenuptial agreement. When starting a life together you want to be all-in, but if things don’t work out, you want to make sure you have put in place the proper documentation to protect your assets.

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