First Comes Love, Then Comes a Millennial Prenup?

April 17, 2018

I now pronounce you husband and wife…with a prenuptial agreement. (Wouldn’t it be great if that was announced at the ceremony?!) Though prenups were once thought to be reserved for the rich and famous, studies show that millennials are increasingly signing on the dotted line. The “four Ds” below point to a few reasons millennials are choosing to protect their assets from a potential divorce…

  • Delay – We’ve all heard the jokes about millennials living in their parent’s basement, right? Millennials are delaying the walk down the aisle to later in life than ever before. Thus, by the time marriage comes, many millennials are already established in their careers and finances and have accumulated significant dollars. This leads to thought about whether commingling assets is the right thing to do. Furthermore, many millennials believe in financial equity and independence. While there are ways to keep assets separate without a prenuptial agreement, the water gets muddy fast, making a prenup the best way to safeguard assets acquired on their own from the mystery of what the future may hold.
  • Divorce – Roughly half of all millennials are children of divorce. They have already experienced firsthand the hardships that come with court proceedings, splitting of assets, and the emotional toll divorce puts a family through. They view a prenuptial agreement as a way to alleviate the stress of these situations.
  • Debt – Since we already know millennials are marrying later in life, this gives them more time to pursue advanced degrees which commonly translates to more debt on their balance sheet. Even if an advanced degree isn’t in the picture, the cost of an undergraduate college education has been on the rise, and credit card debt can be an even bigger concern. Millennials are wary to take on financial responsibility for debt that is not their own.
  • Dynasty – Many times parents play a critical role in encouraging their children to consider a prenuptial agreement. In this case, it becomes more about protecting a family’s business interests or a future inheritance. Though a millennial family member may not yet be active in a family business, prenuptial agreements help ensure that younger generations are able to take on that responsibility without any outside interference when the time comes. The same is true when thinking about a future inheritance.

Of course, there are always outliers when talking about an entire generation. However, whether you’re a millennial, gen X-er, or baby boomer thinking about marriage, we recommend, at the very least, you know your options. If nothing else, keep an open line of communication with your future spouse—every couple has hang-ups about money! Check out our “Keeping I Do, I Do” blog for six steps to help maintain a happy marriage while openly communicating about finances. Our BDF Divorce Practice Group can be a great resource in thinking through the possibilities for you or a loved one with any complex, non-traditional family issues. Please contact your Wealth Management team if you have additional questions.

Kristina Caragiulo, CFP® is an Advisor who joined the BDF team in July of 2015. As an Advisor, some of Kristina’s responsibilities include providing analysis to clients in the different areas of financial planning, maintaining client relationships, and trading and rebalancing client investment accounts. Kristina received a Bachelor of Science degree in Agriculture and Consumer Economics with a concentration in Financial Planning from the University of Illinois at Urbana-Champaign. She is a CERTIFIED FINANCIAL PLANNER™ professional.