With singer Joe Jonas and actor Sophie Turner announcing an “amicable” divorce Wednesday, an apparent prenuptial agreement will ensure that they won’t have to fight over how to split their wealth.
While prenups are often mentioned in celebrity news stories — think Kevin Costner or Tom Brady and Gisele Bündchen — they can also be a smart move for regular people who want to avoid drawn-out divorce settlements or burdensome legal costs.
“I would absolutely advise having an attorney draw up an ironclad prenuptial agreement,” says Crystal Cox, a certified financial planner in Wisconsin. “I always say you have a prenuptial agreement one way or another, the only difference is whether you decide the terms or if you let the state decide.”
How prenups work
A prenuptial agreement is a legally binding contract made between two people before they get married. The contract outlines how assets, debts and property will be divided in the event of divorce, separation or death.
To ensure that a prenup holds up in court, the agreement should be drafted by a lawyer and signed by both parties well in advance of the wedding, says Jacqueline Newman, a New York-based divorce lawyer.
Financial disclosures should also be accurate, with a clear breakdown of how assets and debt will be split, she says. Child custody and support are separate matters from prenups and are generally handled by family courts.
There are all sorts of reasons to sign a prenuptial agreement even if you aren’t rich, says Scott Bishop, a CFP in Houston. Here are a few to consider:
If you have children from a previous marriage, you can ensure their inheritance is protectedIf you have a lot of debt, you can mitigate the risk to your partner by separating that debt from joint debts within the marriageIf you have complicated business dealings, you can keep them separate from your marriage for the sake of simplicity and convenience
It’s also commonly recommended that both spouses have their own lawyer to review the prenup on their behalf, says Sara Stolberg Berkowicz, a CFP in Illinois.
However, it’s worth noting that any prenuptial agreement can be challenged if the financial disclosure is misrepresented or there are unfair terms as part of the settlement. Unfair terms can include penalties for infidelity or stipulations about child custody or support, says Newman.
Why you should discuss finances with your partner before marriage
Even if a couple decides against a prenup, it’s important for them to have “difficult conversations” about money before getting married, says Newman.
Doing so will help establish a healthy and transparent partnership that will last, while also uncovering financial problems that could ruin a marriage later on.
“Money is going to be a source of discussion throughout their entire lives,” she says. “If you don’t know what money means to the person you’re marrying, you don’t want to find that out later when you’re sitting in my office, looking for a divorce.”
“Thinking about a possible breakup isn’t romantic, but much of marriage is about handling the day-to-day details of life,” says Larry Luxenberg, a CFP in New York. Discussing money shouldn’t detract from the romance of a marriage, especially “if the relationship is strong,” he says.
Representatives for Joe Jonas and Sophie Turner did not respond to requests for comment.
DON’T MISS: Want to be smarter and more successful with your money, work & life? Sign up for our new newsletter!
Get CNBC’s free Warren Buffett Guide to Investing, which distills the billionaire’s No. 1 best piece of advice for regular investors, do’s and don’ts, and three key investing principles into a clear and simple guidebook.