(upbeat music) - Let's talk about the conversation around money and your partner. We've already covered the emotional side of it in my conversation with Ramit, but I haven't had any conversation on this show ever about pre-nups and post-nups and that whole can of worms. And I know you have and have lots of opinions.

So for anyone who's either in that situation, will be in it, regrets not having been in it, what advice do you have for people to think about? - Man, we need to stop making the pre-nup a big deal. That is my first and foremost soapbox on this topic is that pre-nups are one of the biggest remaining taboos, I feel, when it comes to money conversations.

Because to just say the word, like people are like, cursed, how dare you get a pre-nup? Your marriage is gonna fail. You do not trust and love your spouse if you want a pre-nup. - All right, here's my multi-prong attack on people who are currently listening to this and feeling that way.

First and foremost, as my pre-nup attorney said to me, because yes, I do indeed have a pre-nup, is that everyone has a pre-nup, it's just the default laws of your state. What a great reframe. So technically, there is a pre-nup in place for you if you didn't get one yourself, and it's just based on how your state would divide assets in the case of a divorce.

All right, fair enough. You should look at those state laws prior to getting married to see if that feels fair to you and the ecosystem of your relationship. And if it doesn't, you should get a pre-nup, because that'll account for what actually feels fair to you within reason. You can't just do like anything you want in a pre-nup.

There are rules and stipulations. But within reason, you can take back some level of control. The other thing is, I really just think of it as marital insurance. And I think of it that way because again, a lot of times people will say like, oh, if you get a pre-nup, it means that you don't love or trust your partner.

Well, I don't have renter's insurance because I think that I'm gonna get burglarized. I don't have car insurance because I think I'm gonna get into an accident. I have those things just in case the bad thing does happen, then I'm protected. So again, I kind of think of pre-nups in a very similar way, that it is an insurance policy on my marriage.

I didn't get married thinking, well, this could go sideways and we could get divorced. I got married thinking this is my person forever, but life is long. And if something happens and we're no longer happy being married, then I have an insurance policy that will make it much easier to get divorced.

And we will have made decisions about what feels fair and equitable at a point where we're very much in love and we'll have been kind to each other. And it will save so much money on the cost of a divorce. Divorce can be so expensive. And also no one talks about that part.

And then finally, for those of you listening who are thinking, well, I just never leave my spouse. Listen, people think that for myriad reasons. It could be religiously, societal pressure, cultural pressure, personal feelings. You just would never leave this person no matter what happened. Well, you can't control what they will do.

They could leave you. And that's always really hard to hear. But again, to have a document in place that stipulates what feels fair to you is important. Because finally, everyone listening here would not sign a contract for a business agreement or anything in the business realm. You would never join a partnership with a friend without having a contract about what feels fair and deciding what would also happen if things were to go south.

Why are we all signing this very legally binding agreement that has huge financial implications without reading the fine print? And that is one thing too that I think about a marriage license is that's one of the biggest financial decisions you might ever make in your life. Why are we not knowing the terms and conditions prior to signing?

- One thing that never crossed my mind with what you just said was that, I have at least a few friends now that have gone through the process of divorce. And even when amicable, it is very expensive. And I've always just put prenups in the light of this is a thing to make sure that you protect money in a situation where one person has more or might have more or something.

That's the idea. But is there a world where someone could say, "Look, I believe that if we ever get divorced, "we should split everything 50/50, "but we should still have a prenup "so that if it happens, it just is a simple process." In the way that an estate plan might avoid the messy process of probate, but it might not change, you could decide how things get affected.

Could a prenup just be something that adheres to the same process as what you'd thought what the state would do, but just does it more efficiently and saves you on attorney fees? - I would talk to an attorney about that before. I'm gonna be like, "Yeah, absolutely." 'Cause again, so much varies by state.

If you live in a community property state, your divorce might actually be easier if you're not gonna contest anything 'cause they're usually just like, "50/50, down the middle, let's go. "It doesn't matter why." So again, knowing the laws of the land could impact whether or not you need one in the first place, if it feels super fair, and you also can see a world where you can get through a divorce quick and easy with minimal amount of pain and suffering financially.

'Cause if that stuff drags out, it is so expensive. But the other part, I sometimes feel like it's a bit of a misconception that a prenup is just to protect the one person who brings in all of the assets. Yes, obviously, if you come from wealth or you've already created wealth, those are two key reasons that you would want a prenup.

A third being if you have a child from a preexisting relationship, that's another good reason to have a prenup, to protect the financial interests of your child. But it also can be about what would happen to, let's say, retirement accounts. Those are often forgotten about in these conversations. So even if you haven't accumulated a bunch of assets going in, if you have one that you know has the potential to get pretty significant over, let's say, 10, 15, 20 years of a marriage, those are often some of the first assets to get completely gouged in a divorce.

So even just having a prenup that might be as simple as we're protecting our retirement accounts, we each just have the right to our own retirement account, we don't have rights to each other, that might be something that saves you a ton of money in the future. Now, a prenup isn't cheap.

I look at it as an upfront lump sum on an insurance policy. So again, that amount of money might not feel good to you for doing something just like exclusively protecting a retirement plan. But if we wanna talk post-nups, this also might be an opportunity to bring that up with a spouse and post-nups are a really hard sell if you have not previously had the prenup conversation.

I actually know a couple of people who wanted to have a prenup, just kind of ran the clock down on getting it done and then got married and had a post-nup instead. That's an easier pitch. You know, if you're 10, 15 years into your marriage and all of a sudden you're like, "Oh, post-nup sounds like a great plan," and you pitch that to your spouse, it might sound like you're preparing to divorce them.

So it's a much harder sell to be like, "Let's have a post-nuptial agreement." - But I guess conceptually you can make these changes at any point in time, it sounds like. It doesn't have to be done before marriage. - You can. And honestly, a lot of prenups should, again, like all the documents we've been talking about already, you should check in on that from time to time just in the sense of, has something big shifted in your marriage?

So if you had outlined something in the prenup that now no longer feels fair based on the current ecosystem of your relationship, it might be time for a post-nup. And that could be something like, hey, if the two of you waived alimony in your prenup, but you're 10 years in, you've had two kids, and one of you has left the workforce for an extended period of time, that doesn't feel so fair anymore that you waived alimony in the prenup.

So it might warrant having a post-nup to compensate for that. Or maybe you had kids and now you feel like the finances are a little bit of a different conversation, or maybe somebody, Bill Perkins style, received a lump sum inheritance early, and you bought property with it, and you wanna have a post-nup that accounts for who has rights to that property in the case of a divorce.

- I know some people whose parents have asked to set up a post-nup as part of pre-inheritance. But a situation that you just alluded to that I thought was something that I'd never really thought about a prenup in this perspective was someone, one of the spouses was going to leave the workforce to take care of kids full time.

And that would, in the future, kind of hinder their ability to earn income, right? They'd be out of the workforce maybe five, 10 years, they would be out of their career track. And so at that point in time, they actually talked about, can we set up something different? Because my ability, were we to get divorced, to go get a job is different going forward than it is now.

So that was a point in time where someone brought that up, where it felt a little more natural than just out of the blue. - I haven't thought or done any of this stuff. Just, you know, we've never crossed our minds. And now, you know, it's something, I don't even know how I'm gonna think about it.

Like you just threw this at me, like you're crazy to have not done something. I respect your opinion and I haven't done it. And I'm still have this like weird undertone of like, why would I do it? That seems crazy. I trust, you know, like, so it's just so funny.

- I get it. - I'm trying to have this rational conversation and those emotions, I still see them. - Oh, listen, I have, I'm gonna say 85% of people react to this soapbox that I have in that way. You know, even if they see from like a very rational side of things that it makes a lot of sense, a lot of people still feel, yeah, it's not romantic.

I get it. There's nothing about that process that is romantic. But even if you're not gonna sign on the dotted line, to have the conversations that are required of you when going through the prenup process, that is some of the best pre-marriage conversations that I could ever recommend somebody having.

And even if you're not going to get married, but if you're in a long-term committed relationship, it is such helpful conversation to be having, 'cause it really digs into not only how each of you react to money, let me tell you, you'll be surprised what triggers you during the prenup process.

You know, you might be like, wow, I did not expect to react that way to something, but you will. And it also gets into how each of you personally feels about money, how you wanna handle money in a marriage, what feels fair to you. And then, yeah, if certain things come up, what feels fair to you at that time?

And again, that's gonna be an evolving conversation. What felt fair six years ago when my husband and I were working on this probably feels a little different than right now at this phase in our relationship and marriage. - Yeah, and I think the last thing I'll say on this is that if you had asked me a month ago, so I just, I binged part of Ramit's show, and I've listened to his podcast, it still amazes me, just given the way that my wife and I manage our finances, that there are couples where you can get married and find out later that one spouse has a lot of debt and the other one doesn't.

It seems crazy that you could sign a contract that would require you to be equally liable for a financial situation in some ways without actually understanding that situation before going in. I know you have a few things to say here, so I'm just gonna leave that as an open door when it comes to if either spouse has student loans or credit card debt or anything like that, does that play into this situation and change anything?

- It should. If your spouse has debt, first of all, again, know the rules of your state. Is there any possibility for you to become legally obligated to that debt as a byproduct of getting married? Oftentimes the answer is no, unless you accumulated it together in the marriage or they accumulated it unbeknownst to you in the marriage, it still could impact you, so that's an important thing to know.

But student loans obviously being a big thing for millennials outside of you co-signing on it, typically you are not legally connected to that debt in the case of a divorce. Now, what happens if you get married and you graciously, aggressively help your spouse pay off the student loans and then your marriage goes down the tubes a year or two later?

I've seen this on Reddit a few times. (laughs) And all of a sudden, you had paid tens of thousands of dollars to help your spouse get out of debt and they're like, "Okay, I'm out." A prenup actually could solve for that problem. You could, there's all sorts of different strategies that you could put in, but you could have kind of like a vesting period for what they would owe you back if you came in and paid off a huge amount of their debt and then the marriage dissolved in a certain period of time.

Again, is that a romantic thing to be talking about when you're planning your wedding? Absolutely not. Does it sometimes sound like you don't trust your partner? It might, but that is an important conversation to be having 'cause again, you just don't know what could happen. And particularly if you have worked very hard to set up a solid financial life for yourself, you don't want something like a divorce to completely undo all of that work.

But it sounds like even if you're four or five years into a marriage and you're like, "Let's use our savings to pay off your student loans," that could be a time where you say, "Well, could we set up a very specific post-up for this situation?" And that, the thing that I never really considered is like, it doesn't necessarily have to change some of the default state rules, right?

You can get a post-up, I assume, that says, "Hey, you're gonna have to pay back the student loans." But we still split all of our assets. You don't have to rewrite everything and kind of do it in a way that's like protecting your money and make sure no one ever gets it.

It doesn't have to have all those stipulations. And it doesn't need to be adversarial truly at any point. That is the one beauty I see of doing it at what hopefully is sort of like a peak time of your love bubble when you're engaged and you're getting excited to be married and start this life together, that you will be kind and fair and generous with each other 'cause there's a reason you're marrying this person.

And also depending on work situations, that person might've helped you get where you are financially. Like I know a lot of my career is owed to my husband handling a lot of things behind the scenes and being supportive and doing a lot for my household too. So yeah, he deserves some of the money.