Prenup vs. Postnup: Understanding the Differences and Their Relevance to You

What is a prenup (or postnup) agreement?

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Both prenuptial agreements (i.e., a prenup) and postnuptial agreements (i.e., a postnup) outline the rights of each spouse concerning property, finances, and other assets in the event of divorce or death. It can cover both premarital and marital assets. If the marriage has ended, these documents will be used to determine how the couple’s assets and debts are to be distributed.

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What’s the difference between the two?

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Both agreements serve the same purpose, but timing is the key difference between the two. A prenuptial agreement is made before marriage, whereas a postnuptial agreement is established after marriage. Essentially, a postnup is a prenup created after marriage.

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Common reasons couples have one

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Everyone’s personal situation and relationship is unique. You may hear a friend or family member say they do or do not have a pre/postnup, but that should not be a reason as to whether you should consider one. Personal finance is personal and that includes prenups and postnups. 

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Factors that might make a prenup or postnup worth considering include:

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• There is a child (or children) from a prior relationship or previous marriage
• At least one person has significant assets (e.g., investment accounts, real estate)
• At least one person may receive a large inheritance (e.g., family business)
• At least one person plans to take on debt after marriage (e.g., taking out student loans for school after getting married)

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Some couples may not have known about prenuptial agreements before marriage or may not have had the time to get a prenup before the wedding. That’s where a postnuptial agreement could come into play. A couple may want to consider a postnup for similar reasons if they never had a prenup.

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Additionally, a postnup can also modify a prenup to better fit the current relationship.

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Do you need one?

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You may be thinking, “Why do I need a prenup or postnup? I wouldn’t get married to someone I plan on divorcing.” This is probably one of the most common reasons why people say they don’t need a pre/postnup. It is right next to the reason people don’t want one, which is: “I’m about to marry this person. It would be unromantic to get a prenup.”

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These perceptions of planning for divorce or being unromantic are legitimate. I empathize and even agree with them to some extent. However, I think the key is in changing how you approach and think about the topic. Considering a pre/postnup for the right reasons can make all the difference.

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Let’s look at a few reasons (in addition to the ones mentioned in the previous section) to at least consider a pre/postnup for you and your significant other. You both may decide you don’t need one and that is a great decision assuming it is made together and intentionally (rather than passively – see reason #1).

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Reason #1: You already have a prenup

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Everyone married already has a prenup. Yes, you read that right. Everyone married already has a prenup. It is probably not the prenup the couple would have written on their own and it is probably not a prenup either person will like. This is because your state of residence has default separation laws and standards.

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If a couple does not have a customized prenup tailored to their relationship then, upon the end of the marriage, the assets will be distributed in accordance with their state laws. This is the “default” prenup and everyone has it once they get married.

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Every couple therefore has a choice. The choice comes down to either (i) deciding together as a couple what should be done with the finances according to both your wishes and to put those decisions into a legally binding prenuptial agreement, or (ii) give that decision to the courts and have the state laws dictate what is done with your finances.

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The plan is to never need or enforce the prenup. We can all agree on that. In the unfortunate situation that there is a need to do so, you can have it executed according to your wishes rather than have family court dictate what will be done.

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Reason #2: It is akin to insurance

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Let’s consider two very common types of insurance: home insurance and auto insurance. If someone buys a home or car, it is nearly a foregone conclusion that they will go on to insure that purchase. We don’t plan or expect to experience an accident, fire, leak, or a severe weather event. We all hope that our house will always be in tip-top shape, everyone will drive safely and responsibly, and that we will dodge the next storm. Hopefully, we will never need to make an insurance claim because everything goes according to plan.

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Unfortunately, these things happen and very often it is completely out of our control. Carrying appropriate and sufficient insurance helps to navigate what could be an extremely stressful situation. Insurance helps prepare for unforeseen events by ensuring a clear, organized process during stressful times.

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Similarly, a pre/postnup should be viewed as an in-case-of-emergency document. We hope to never use it. Ideally, it’s written up, signed and filed away never to be seen again. However, if the need arises then it will be there to ensure a clear, organized process during one of the most stressful times in the relationship.

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Reason #3: You love your partner and you want to protect them

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Divorce is stressful and emotionally taxing. We have all heard about “messy” divorces. Sometimes, in these messy divorces, couples have been fighting in court for months. The added stress of dealing with the court can further exacerbate the issues that caused the marriage to end. It is no surprise that all this stress may lead to people saying things to their former partner that would have been unimaginable to them at the onset of their marriage.

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You clearly love this person and that is why you are considering marriage or are already married to them. There’s no way in the world that you would ever do anything to hurt them.

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A pre/postnup can protect the love you have for each other today by giving a written blueprint on how to divide assets and liabilities in the event of the dissolution of the marriage. This written agreement can significantly reduce emotional stress by keeping things out of court and limiting the arguments on who gets what. Most importantly though, this agreement can guard against one party saying or doing things that can’t be unsaid or taken back, minimize emotional strain, and promote amicable separations.

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Next Steps

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If you are considering a prenuptial agreement or postnuptial agreement, initiate an open discussion with your partner. Though initial reactions might be mixed, ranging from understanding to anger, framing the discussion around love, mutual respect, and shared goals can foster understanding.

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Additionally, strong relationships are built on tough conversations. You may consider if it’s right for your relationship and both conclude that it is not necessary. If that’s the case, then your relationship can come out stronger for having the tough conversation. Both of you will also be going into your marriage on the same page regarding each other’s finances.

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Ultimately, a well-constructed agreement, guided by legal professionals experienced in family law, can provide peace of mind and safeguard both parties' interests.

How MyBudgetCoach Can Help

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Hopefully this has helped highlight the importance of at least considering if a prenuptial and postnuptial agreement is right for your relationship. Consulting with an attorney or drafting a pre/postnup could be expensive. Budgeting with MyBudgetCoach can help you save responsibly for that expense.

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Holistically, investing in budgeting software or consulting with a budget coach can provide the tools and guidance you need to take control of your finances. These resources can help you achieve transparency, reduce stress, and ensure both partners are on the same page financially. Take control of your financial future!

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Disclaimer: This content does not constitute legal advice. For personalized guidance, consult with a licensed attorney or law firm familiar with prenuptial and postnuptial agreements.