Cost of a Prenup: All the Terms Explained

What Is a Prenuptial Agreement?

A prenuptial agreement is a contract two parties enter prior to their marriage, identifying what assets belong to which party before the marriage, and what assets they each will keep after the marriage. If during the marriage one party acquires an asset defined in the prenuptial agreement, that asset will belong to the party defined therein even after the marriage. For example, if John owns a house prior to the marriage, and he identifies in the prenuptial agreement that he will keep the house even after the marriage, his spouse Joan will have no claim to the house after the marriage is over even if he has made changes to it.
While their primary focus is to protect assets individually, these agreements also determine which party will be responsible for any marital debt. A good prenuptial agreement will include items like which investment accounts belong to which party, which bank accounts belong to which party, which personal property belongs to which party—and how the parties will pay off debt like a credit card.
These contracts also have a very important limitation in that they cannot pass on child support obligations to the other party, though they can provide for spousal support after the parties’ divorce. However, if the prenuptial agreement says that neither party will owe the other spousal support after the marriage is over , a court will presume this provision is in the child’s best interests. Most judges will not honor such a provision in a prenuptial agreement, because spousal support and child support exist to allow the children of the parties to maintain the same lifestyle they enjoyed while the parties were married.
One of the biggest misconceptions about prenuptial agreement is that their creation means the parties expect to divorce. This isn’t true. The truth is that any contract two parties make has the potential to end their relationship, but it also has the potential to help the relationship last longer because the parties have already acknowledged their financial status from the start. Another misconception is that prenuptial agreements are just for celebrities or the ultra-wealthy. That is entirely untrue. Many Americans come to prenuptial agreements for all different kinds of reasons and have all different amounts of wealth. If either party is entering the marriage with substantial debt, a prenup is a good way to separate that debt and protect each party’s credit from the other’s bad marks. It’s ideal for families with children who have previously accumulated wealth, because the wealth has to go somewhere and a prenuptial agreement can be an ideal way to settle that question.

What Factors Influence the Cost of a Prenup?

The cost associated with preparing a prenup can be influenced by a number of factors. The most obvious is the size and extent of the party’s asset base and other financial information that is required. Most lawyers do not bill on a flat fee basis for preparing a prenup (or postnup). Instead, the work is generally billed at the attorney’s hourly rate for each person getting the agreement.
The complexity of a couple’s assets and their needs and goals can – and will — affect the effort and time required by each attorney in preparing a prenuptial agreement. For example, if a couple has very few assets and no children, the time and effort might be minimal. Conversely, if the couple has many different, complicated assets and even a business interest, more time and effort will be expended, which translates to higher legal fees. A different way of looking at it is if one person has many assets and the other person has none, one or more of the issues may be complicated and the negotiation of the contract more involved. If the assets are very diverse, more time will be spent formulating the appropriate agreement.
A couple’s needs, and whether additional attorneys are needed, also affects the cost of preparing an agreement. If there are children of prior marriages, other attorneys may need to get involved – for example, if a couple wants to have estate planning changes prepared as part of a prenup. This often occurs if there are children of a prior marriage, and one or both parents want those children to receive specific assets when they die.
Some people begin to explore the idea of a prenup, but never end up completing one. In fact, many couples who contact us and start the process of preparing an agreement later decide against it. This could be because the couple thinks they have a good understanding of how they intend to divide assets, so an agreement may not be necessary. Or, they may encounter problems along the way that indicate the relationship is heading to divorce anyway.

What is the Average Cost of a Prenup?

The cost of a prenuptial agreement varies widely. According to Angie’s List, the overall range is from $2,500 to $5,000. We have found that as long as the clients keep their financial information organized and there are no other complicating factors, such as prior marriages or children, the average price is $2,500. Another guiding factor to the total cost is where you live. In New Jersey, we would expect a prenuptial agreement to be more expensive, as our typical fee is closer to $3,000.
A good rule of thumb is that one agreement can be compared to an average legal documents. A divorce retainer, for example, tends to be $2,500. While wills are usually less expensive, they fall within the same range as well. In any case, it is much more affordable than a divorce.

How to Save on a Prenup

In some cases, a prenuptial agreement may be less costly than you think. There is a lot you can do to save money on a prenup, whether your budget is tight or you simply want to ensure that the cost stays reasonable for both spouses. For example, if you require your spouse to share certain financial information prior to getting engaged, you can dramatically reduce the amount of work that is required to gather that information during the negotiation of your prenuptial agreement. If you have this information beforehand, you can easily provide copies to the attorney who will draft your prenup, and you’ll have all your financial records in one place. This process can take a lot of time, so there is a good chance that you can save several hours of attorney’s fees just by being particularly organized prior to the drafting process. Negotiating the prenup fee upfront can also save you time…and therefore, money. Businesses often advertise a flat rate for legal services, but it’s important to clarify exactly what those services will include. For example, some services may involve drafting a basic prenup template, but the attorney will then charge their hourly rate to modify it for your specific needs. In these cases, you can end up paying more than you anticipated. Make sure you and your attorney thoroughly discuss fees, and even ask them to provide you with a written estimate based on their understanding of your case. You can also ask for a sample bill to see how your attorney tracks their time. If you find yourself extremely pressed for time and need a prenup quickly, some online legal services are offered at very low rates. They allow you to get a prenup at your convenience, in as little as a few days. However, most online services do not allow you to consult with an attorney unless you pay additional fees, and they usually charge you for the serving of the documents. It’s definitely worth making a few calls to local attorneys because sometimes you can negotiate to have the prenup drafted relatively quickly, without paying additional fees for an e-signature service.

Other Legal Costs and Hidden Fees

Cost is a major consideration when deciding on a prenuptial agreement. However, there are questions as to whether all legal considerations (and hidden costs) have been factored in. Potentially hidden costs of a prenup include revisions and notarization. Legal considerations that affect a prenup include the choice of legal representation, and the negotiation process. In any case, it is always prudent to budget out for "hidden costs" that may arise.
One of the easiest ways to inadvertently add on costs to a prenup is to make revisions to the agreement. For example, if you and your fiancé sit down with your California divorce lawyer and agree that the work on the prenup has been completed, unfortunately, it might not be over yet. As logical and as easy-to-understand as the agreement may be , it might come across certain issues under the law that must be addressed before the agreement can be validated.
It is important to examine the final draft of your legal prenup closely. Make sure that all changes have been made. This could be anything from minor errors like a typo to large substantive changes. Even if the drafting lawyer assures you that everything has been addressed, double-check that it is the case because correcting mistakes later could be more costly.
If the agreement happens to be notarized, this could raise costs. The signed and notarized prenup may need to be attached to a preliminary injunction. It’s understandable that things may get confusing, but again, double-check that everything has been notarized.

When a Prenup is Worth Investing In

There are many situations where the cost of creating a prenup will be greatly offset by the financial security it will provide. For baby boomers, higher earning millennials, and couples marrying for a second time, the use of prenups in the past few decades has increased dramatically. For these couples (and some first timers), the exchange of assets, compatibility of estate plans, and division of contributions during marriage are of particular concern. For example, a couple has recently been married for five years. One spouse founded a successful tech business before they met which has generated significant financial growth. The other spouse has been a stay-at-home parent during the marriage and has not had any significant career of their own after age 25. They are now facing a divorce and the owner spouse wishes to protect his business from distribution to the other spouse. A carefully crafted prenup could have assisted the couple in engaging in forward thinking rather than living through a post-divorce risk averse negotiation. Another example is the perfectly normal situation where two people with long-term careers enter into marriage. Each is responsible for their own retirement savings and strategy and each has been saving a significant amount for many years. This premarital savings, which can be a large asset in its own right, would be significantly impacted by an equal distribution in the case of divorce absent a prenup.

Expert Tips on How to Negotiate a Prenup’s Cost

When it comes to negotiating the cost of a prenuptial agreement, many legal experts offer the following tips to ensure that the agreement is both comprehensive and enforceable:

• Discuss Budget and Expectations: Before beginning the drafting process, couples should discuss their budget for the prenup and their expectations for what they hope to include in the document. This will help their attorney understand the priorities for the prenup, and potentially offer alternatives that will help them save money.
• Address the Cost of Specific Provisions: Certain provisions in a prenup could be more costly than others, depending on the couple’s individual financial situation. The couple can work with their attorney to address areas of concern and trim the cost from those that are least important to them.
• Look at Alternative Payment Plans: Couples should be open to discussing alternative forms of payment with their attorney. Generally, attorneys will not bill for future time on the case until the work has been completed . However, if an attorney has a larger retainer paid at the outset, they may agree to allow a client to pay a fixed amount for their work each month, even if they do not bill for that much in a given month. Additionally, billing a client per hour on a monthly basis may be another option.
• Consider Mediation: Couples struggling with prenuptial agreement costs may want to consider mediation or collaborative law to draft the agreement. Though these can still be time-consuming, a mediation process could save costs on the draft. With collaborative law, the couple will both retain attorneys who will provide information directly to the couple without interference.
• Educate Yourself: Couples who are educated on what goes into a prenuptial agreement and why will be less likely to make changes to the agreement as it is drafted, which can extend the process and rack up bills extremely quickly. By educating yourself on the general contents of a prenup, you can limit needed alterations that will add costs.

When negotiating costs in a prenuptial agreement, you have options that can create a fair, equitable and comprehensive agreement while offering the most savings.