How Prenups Work and Why You Might Want One

Bill Nelson is a Planning Excellence Lead Consultant at Northwestern Mutual.

Couples planning a wedding have no shortage of decisions to make, from choosing a venue and finalizing the guest list to deciding where to live and how to combine finances. But amid all the excitement and anticipation, you might be wondering: Do I need a prenup? Here’s how prenups work—and why you might want to consider adding one to your wedding to-do list.

What is a prenup?

A prenuptial agreement, commonly known as a “prenup,” is a legally binding contract created before marriage and negotiated, reviewed, and signed by both partners. It typically outlines how their assets, debts, and financial responsibilities will be handled if the marriage ends, either in divorce, or death of a partner. It can also define which assets each spouse brings into the marriage and keep them separate, preventing them from being treated as marital property.

While prenups are often associated with high-net-worth individuals, they can benefit people at many income levels by allowing them to set their own financial terms. For example, a prenup can specify financial support for a partner who quits their job to raise children or protect assets such as stock options or an inheritance brought into a marriage.

Without a prenup, division of marital property is generally determined by state law. Most states follow “equitable distribution,” where the court divide assets based on fairness; a smaller group of states use “community property,” which generally treats marital assets as jointly owned and often splits them equally.

A prenup can give couples more control over those decisions and may help to reduce disputes later and allow them to avoid costly legal fees. These agreements are not one-size-fits-all documents so the agreement can be tailored to a couple’s specific financial situation and priorities. Because prenups are legal contracts, it’s advised that each party has their own attorney. Costs can vary widely based on complexity, location, and negotiation time but, according to legalclarity.org, prenups involving an attorney commonly cost about $1,500 to $10,000 or more per couple. Cheaper prenup services (some with attorney support) can also be found online.

What can a prenup protect?

A prenup can address a range of financial and personal issues, including:

• Financial and physical assets: Clarifies that savings, investments, retirement accounts, real estate, and personal property brought into the marriage remain separate.
• Business interests: Spells out ownership, profits, and future growth to help avoid disputes or business disruption.
• Future income and debt: Explains how inheritances, investment gains, future earnings, alimony, and student loan debt will be handled.
• Financial reputation and privacy: Sets terms for social media, public image, and non-disparagement to help limit negative posts or disclosures.

What doesn’t a prenup cover?

• Child custody and visitation: Individuals cannot predetermine custody arrangements; courts will always decide this based on the "best interests of the child" at the time of the divorce.
• Child support: You cannot waive, limit, or dictate child support, as this is a legal right belonging to the child.
• Personal lifestyle clauses: You cannot enforce rules about daily chores, vacation habits, or personal behaviors.
• Illegal acts: Any stipulations that require a party to break the law or violate public policy will be voided.
• Unconscionable terms: Agreements that are heavily one-sided, leave one spouse completely destitute, or require someone to go on public assistance are typically unenforceable.

Should I have a prenup?

Once you know what a prenup can cover, the next question is whether it makes sense for your relationship. Prenups can be useful for many couples, especially if one or both partners are bringing significant assets, debt, or future earning potential into the marriage.

For some couples, the main goal is protecting property they already own, such as financial accounts, real estate, vehicles, family heirlooms, other personal assets—and even pets. A prenup can clarify what stays separate and what becomes marital property.

Business owners may also want a prenup. Without one, a divorce can create questions about ownership, valuation, continuity, and future control. A prenup can help reduce disruption and create clarity for both spouses and business partners.

Couples expecting their finances to grow may also want to decide early how that growth will be handled. That could include raises, investment gains, stock options, inheritances, or business growth. A prenup lets couples make those decisions themselves instead of leaving them to state law.

Debt protection is another common reason couples get prenups. One partner may want protection from debt the other brought into the marriage. Couples may also want to set expectations around shared debt, such as student loans or major purchases.

Some couples also see a prenup as part of a broader estate plan. It doesn’t replace a will or trust, but it can reinforce financial intentions and help reduce disputes over inheritances or family assets later.

Benefits of having a prenup

If a prenup seems like a good fit, the benefits often go beyond asset protection. One of the biggest is transparency before marriage. The process usually requires both partners to fully disclose assets and debts, which can lead to better conversations about financial expectations, spending, and cash flow before they combine their lives.

Prenups can also simplify the divorce process if a marriage ends. Because many financial questions have already been addressed, couples may spend less time negotiating property division and less money on legal counsel and fees.

Another potential benefit is certainty. State laws provide default rules for dividing property, but those rules may not align with a couple’s personal wishes or financial goals. A prenup gives couples the opportunity to create agreements that reflect their specific priorities and circumstances.

When a “postnup” may make sense

Of course, not every couple makes these decisions before the wedding. A postnuptial agreement, or postnup, is similar to a prenup, but it’s created after a couple is already married. Similar to a prenup, it outlines how assets, debts, and other financial matters would be handled if the marriage ends in divorce.

Couples may choose a postnup after a major financial or life change, such as starting a business, receiving an inheritance, changing careers, or taking on significant debt. Some also use one to revisit financial expectations or add clarity around shared and separate assets after years of marriage.

Postnups are generally subject to the same legal standards as prenups, including full financial disclosure and independent legal review for each spouse. State laws vary, so working with an attorney is important to ensure the agreement is enforceable.

How a financial advisor can help with the prenup conversation

A trusted financial advisor from Northwestern Mutual can help you approach the prenup conversation with more clarity and confidence—especially if you’re worried a prenup could signal distrust. Your advisor can help you frame a prenup successfully by shifting the conversation from a contingency plan for divorce to a shared financial roadmap for your marriage.

Your advisor can also help you start early, organize your financial information, and prepare to review any agreement with your own attorney. They can guide you through key planning topics like cash flow, debt, family assets, business planning, insurance, estate planning, and investing.

While your attorney handles the legal agreement, your advisor can help you organize the financial side and spot questions you may not have considered. With the right support, you can approach the start of your life together with more clarity, confidence, and a strong foundation for your future together.

Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.