Cordially divided: the joy of prenups as planning tools

Prelude

At the center of the opera that gave us one of the most popular pieces of wedding music in the Western world sits something unexpected: a prenuptial agreement.

In the second act of Wagner’s Lohengrin, you’ll hear the familiar strains of the Bridal Chorus – modern wedding guests’ cue to stand. The opera tells the tale of a mythic knight who proposes to serve as champion and husband to heroine Elsa, on the condition that she never ask his name or origin.

By reputation, prenups are fundamentally unromantic. Yet here one is at the heart of a Romantic classic with a musical motif that has ushered hundreds of thousands of brides down aisles.

While mere mortals are more concerned with protecting children, businesses, real estate and significant assets than a celestial secret like Lohengrin (spoiler alert: the knight’s name), his story offers us another way to look at prenups. Instead of sowing discomfort and distrust, they can be a demonstration of deep commitment to building a shared future – a long one.

Processional

“Nobody goes into a marriage expecting it to fail, but many people do get married without having had the more serious conversations,” says attorney Liz Ochoa, vice president of private wealth strategy, who consults with Raymond James advisors and their clients. “This is an opportunity to sit down with the person you care about most and set boundaries and make rules while you still agree on things.”

For many, Liz adds, prenups represent the first steps in a much larger planning process: estate and legacy.

“People have prenups before they have wills or trusts. I think it’s wise to view them as proto-estate planning – especially since all of these documents will ultimately have to play nicely together.”

While the specter of divorce, with rates at 40% for first marriages and 60% for second, has given younger generations a more cynical view of the institution, it has also given way to a kind of sentimental practicality. Many of today’s betrothed are treating marriage like any other long-term investment – and planning accordingly.

According to a 2023 Axios-Harris poll, 41% of Gen Z and 34% of Millennials reported signing prenups, and the space has been digitally democratized with apps boasting AI-tools, easy access to experts and flat fees.

It is worth noting, however, that some of this generational momentum could also be owed to Boomer and Gen X parents.

“We are seeing an uptick in prenuptial agreements as a condition of inheritance,” Liz shared. “Trusts structured so designees forfeit all or some of their benefits unless they have prenups.”

But even in this, the road leads back to long-term planning.

Exchanging of vows

Beyond the “who gets what,” prenups can set the terms for inheritance, designate life insurance and retirement beneficiaries, determine business interests, outline current and future child custody arrangements and more – which demands they be overseen objectively.

Many legal advisors, Liz included, caution against a shared approach to the planning process, encouraging couples to use separate legal counsel both in the creation of the agreement and in its execution, should it come to that. A prenup can include requirements for how, when and which professional advisors would be called into a potential divorce proceeding for things like mediation, financial analysis, even child therapy.

Postnuptial agreements – whether novel or amended versions of a prenup – are also on the rise. The presence of these documents tends to correlate with wealth accumulation, and they are increasingly used as an alternative or precursor to gray divorce (splits between couples over 50), which has more than doubled since the 1990s.

Exchanging of rings

When it comes down to the actual division of assets, there’s a golden rule: everything is on the table and has to be.

“This is what I own. These are my accounts. These are trusts I’m a beneficiary of. You need to disclose everything; otherwise, the prenup may not be enforceable,” Liz says.

In addition to being legally required, this transparency also helps introduce estate planning as a living, ongoing conversation years before it might otherwise have been. Prenuptial planning can be the beginning of clearer distinctions about what’s considered separate property, intentions for heirloom items, and long-term goals for family.

A rise in specialized lifestyle clauses is also shaping things in the nearer term. These stipulations can govern everything from sobriety and social media disparagement to who gets custody of the pets or, much more consequentially, the embryos.

Recessional

Stepping into married life with a prenup doesn’t have to be an assumption that a union will fail. In fact, the act of creating an agreement that will need to align with end-of-life documents can be as a much of a pledge as the vows.

“With a prenup, you’re making a plan that will need to promise all the same things as your estate and legacy plans,” Liz says. And there’s a certain romance to that.

Raymond James does not provide legal advice. Please discuss these matters with your legal professional.