Russell Brand stands to make an estimated $20 million from Katy Perry’s fortune because under California law, the community property clause splits money and property acquired during the union 50/50 when there isn’t a prenup.

While most of us can only hope to be in that kind of financial situation, a recent survey says that about 20% of those getting married have prenups.

A prenuptual agreement, or prenup, is a contract entered into prior to marriage or civil union, which commonly includes provisions for the division of property in the event of a breakup.

Related: Couples Money – Savers Vs. Spenders


This is a controversial topic and there are many who oppose prenups.  The objections include:

  • It’s not romantic.
  • Religious reasons – ‘Til death do you part.
  • Don’t trust each other.
  • Not really optimistic about the marriage
  • Not willing to commit and work at the marriage if there is an exit strategy in place.

No one goes into a marriage expecting it to fail, but the fact is that 50% of marriages end in divorce, especially second, third (and more) marriages.

Who would benefit from having a prenup drawn up?

  • Someone who is much wealthier than their partner.
  • Someone who earns much more (they can limit the amount of alimony payable).
  • Someone about to remarry.
  • Partner has a high debt load.
  • Someone who owns his or her own business.

Here are some prenup examples.

Prenup Example No. 1

Boris and Natasha met while attending university.  They get married before graduating.  With their financial situation becoming increasingly tight, Natasha postpones her studies and goes to work while Boris finishes his degree.

A couple of children later, Natasha’s education is put on indefinite hold as Boris graduates and becomes established in his career.  Boris meets someone more interesting and dumps Natasha.  He then argues that he made all the money.

Among other details, a prenup could have established provisions should one partner have to delay their studies so that they could be continued at a later date and ensure the financial burden of raising a family is shared fairly by both partners.

Prenup Example No. 2

Desmond and his friend start a new business.  With a lot of time and hard work the business is finally making money and some lucrative contracts are anticipated.  Desmond marries Molly who is established in her own career.

After several years, things don’t work out and Molly files for divorce.  In the divorce agreement she demands half the business.

Without a prenup Molly could end up with a share of the business or become an unwanted partner.

Prenup Example No. 3

Diane has a well paying job.  She is careful with her money and has accumulated a nice nest egg in her investment and retirement accounts and has no debt.   With an inheritance from her grandmother she purchased a nice condo and her car is paid off.

Diane met Jack and fell head over heels.  Jack is divorced.  He has $73,000 in credit card debt and no assets.  He lost the equity in his former house in the divorce settlement and pays $2,800 in child support for his pre-school children.

If Diane sells her condo after the marriage, the money becomes community property.  If this marriage breaks up, Jack will likely be entitled to half of Diane’s assets and may also be on the hook for part of his debts and child support.

Other clauses

Other non-financial clauses, such as the division of household chores and weekly date nights, can be included in the prenup agreement.  However they increase the likelihood of the agreement being invalidated by the courts.  They must be fair and equitable in the eyes of the law.

Here are some crazy (but true) clauses:

  • The right to perform random drug tests with financial penalties if the results are positive.
  • The husband cannot watch more than one football game on Sunday during football season.
  • A claim on all frequent flier miles should the spouse be unfaithful.
  • The husband cannot go on vacation with his mother-in-law.

In Conclusion

Today couples are getting married at a much later age and they can build up substantial assets while still single.

Related: How Young Adults Can Still Thrive Financially

People going in to a second marriage, especially when there are children, need to protect themselves.  A prenuptial agreement protects the assets and income streams that already exist so that they won’t be shared in the event of a separation.

Do you think a prenup is a good idea?

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