What is a Prenuptial Agreement?
Prenuptial agreements are written contracts between a couple that have been in existence for centuries. They are also referred to as premarital agreements, antenuptial agreements and marriage settlement agreements. Most people have heard of them and know a little about them. Historically they were used by the wealthy to protect their assets from a future spouse. Times have changed and that is not the case today. Most people can benefit from a prenuptial agreement. The reality is that there are many people who are engaging in a second marriage, have children , receive an inheritance or want to protect what they have worked hard for. There are many myths surrounding prenuptial agreements. A big myth is that only the wealthy and famous use them. Another myth is that a prenuptial agreement is only used when both parties have money. The facts are quite different. The benefit of a prenuptial agreement is for both parties to "preplan" for the unexpected. Like insurance coverage, no one plans for a house or car fire, but it is a great comfort to know that you have insurance to protect you. The same is true with a relationship. It is a form of protection before entering into the unknown. Regardless of whether an individual has significant or minimal assets, it is a very worthwhile venture to explore the idea of a prenuptial agreement. They can be more informal in nature if there are limited assets and be more comprehensive if there are substantial assets involved.
Factors in Pricing of a Prenuptial Agreement
The first element that directly impacts the cost to amending, revising or drafting a prenuptial agreement is the complexity of your circumstances. The more complex your circumstance is, the more money will be involved.
A single 32-year-old with a salary of $75,000, an 8 year old car, a modest savings account and no debt is a simple client for an attorney. Even though there are no children, as a client preparing a prenuptial agreement, you or your future spouse will need a standard and simple agreement.
However, some clients come to their attorneys needing more than just a simple document drafted. They may have children from a previous marriage, intricate business dealings or they could have assets nearing seven or eight figures. For instance, if you were a successful venture capitalist with billions in the bank, the method in which you calculate alimony will be different from a regular hard working professional.
The next aspect that influences price is the individual situations of each person involved. Consider a couple that has been together and engaged for two years. They both have children from a previous marriage and a significant amount of income from various sources. In essence, they would require a more complex prenuptial document than a say, one where one of them is only making $60,000 per year and the other is not currently working and also does not have any children. The circumstance of your situation will determine the types of legal fees you must incur.
Cost of a Prenuptial Agreement
The cost of a prenuptial agreement can vary widely depending on several factors including the complexity of the agreement and the geographic location. Typically, you can expect to pay anywhere from $1,200 to $5,000 on the lower end of the scale, and prices can rise into the tens of thousands of dollars for documents that address complex issues about substantial assets, business valuations, or involve representation for a spouse in a high income bracket.
Using an attorney to draft your prenup will definitely cost more than doing it yourself with a generic template. Attorneys are keenly aware of the specifics that must be addressed in a prenuptial agreement, and they may charge an initial consultation fee so that they have an opportunity to review your circumstances and determine which issues the agreement should address.
Another factor that influences the cost is whether or not you choose to negotiate the terms of the prenuptial agreement with your partner. At the very least, you may have to amend several issues or add additional language to the document, which means another round of fees to have the skilled attorney make changes to the document and review the revisions with you. As with many things in life, few things are worth doing if they are not done well. A prenuptial agreement is unfortunately one of those things that must be done well to be effective in the long run, so it makes sense to spend reasonable money to ensure that the document protects you.
How to Save on your Prenup
Prenuptial agreements can be complex legal documents. As a result, they can often be expensive to create. However, there are a few steps individuals can take to reduce the cost of creating a prenuptial agreement.
First, it’s important to be as organized as possible prior to meeting with your attorney for the first time. This includes compiling all documentation of your assets and debts as well as crafting a list of questions and requests you may have for the attorney. This makes it easier for your attorney to draft a prenuptial agreement and also minimizes the time that an attorney will have to charge for consultation, which can save you money upfront.
Secondly, make sure that you conduct as much research as possible on the type of prenuptial agreement you want, what is reasonable and what the law says about prenuptial agreements in general. You can find useful information online as well as helpful tips on getting started on creating a prenuptial agreement. This preparation can similarly minimize the time an attorney will have to bill you for consultation, which can add up quickly.
Finally, it’s vital that you choose your attorney carefully and that you ask the right questions in order to find the best fit not only financially but also professionally. Not all attorneys are created equal. You should take care to avoid attorneys who have a history of taking on cases that are beyond their level of expertise, have a poor reputation for maintaining a good working relationship with their client and with the courts or are known to leave certain ambiguity and other issues unresolved in their drafts.
Prenuptials – DIY or Lawyer-Drawn – How to Choose?
When deciding between a DIY or lawyer drafted prenup, there are a few cost-related factors to consider. Let’s start with the D-I-Y option since it has entered into the prenup world with little notice and much ballyhoo, and arguably, the lowest CPA (cost per hour). In other words, it’s how much you can save by doing it yourself.
D-I-Y Prenups: Pros
If you’re fairly certain you and your betrothed will not have a complex financial situation going forward (think long-term care insurance, distribution of interest in businesses, multiple retirement accounts), then a DIY prenup can save you a lot of attorney’s fees. It can be made at your leisure, and as much fun as you find it, you may be able to do it yourself .
And now for the cons: D-I-Y Prenups: Cons
Lawyer Drafted Prenups: Pros
Prenups created by a lawyer, or jointly by both attorneys, provide a few advantages. These include:
Lawyer Drafted Prenups: Cons
The primary con when weighing a lawyer-drafted prenup is cost. Lawyers charge substantially more than you will likely spend creating your own. Creating a successful prenup is more art than science; speaking to an experienced attorney with insight into the more common pitfalls of prenups has the potential to save you from some major pitfalls of a prenup, and some of those pitfalls can result in financial loss that may be greater than any savings achieved by a DIY document.
Other Costs to think about with Prenups
Should you and your prospective spouse hire outside experts to provide valuations of your assets or your future income potential, you can expect to pay at least a few hundred dollars for the services provided. If you and your spouse-to-be are seeking powers of attorney, an advance healthcare directive or a will as part of your prenup package, expect to pay anywhere from $500 to $2,000 per document. These items may not be necessary, but if you have reason to believe that these documents may someday be needed, it may be cost effective to include them in the process of negotiating your prenup.
If you live in a foreign country or are relocating, then you may wish to have your agreement translated into another language. Expect to pay up to $100 per page for this service. Ironically, some states require that premarital agreements be notarized, so you and your spouse-to-be may wish to schedule an appointment with a notary public. The cost can range from a few dozen to a hundred dollars or so. Finally, if you anticipate additional legal consults or court appearances in the process, this is likely to add up to $500 or more to your overall tab.
Conclusion – Is a prenup worth the cost?
When it comes to the cost of a prenup, you need to evaluate the expense in light of the long-term benefits of securing a legally binding agreement. The extent of this needs to be weighed based on your particular circumstances. Obtaining a prenuptial agreement may be a relatively minor expense as compared with ensuring marital assets are legally protected. Additionally , a prenup is rarely as expensive as pursuing divorce litigation without it. This is particularly true if your agreement provides for what happens to your assets in the event of separation or divorce.