Money & Kids: The 2 Things Women Must Factor into a Prenup

You can’t have a realistic conversation about your financial future, without considering family planning.

As a woman, the two key issues you should factor into your prenup are your financial position and earning money while raising children.

As with all prenups, the most critical part of drafting your document is having an active dialogue with your partner around financial goals. Once you understand each other’s financial position and future plans, you’ll have a clearer path towards marital success. A productive conversation should also consider how your career trajectory, financial position, and roles and responsibilities may be impacted by having children.

Let’s dive deeper into how you can draft a powerful prenup as a woman.

Your Financial Position

Whether you’re going into your marriage with equal financial footing or an income imbalance, money will play a pivotal role in your prenup.

What If You and Your Partner Have Equal Financial Footing?

So you and your spouse-to-be have similar incomes or assets. In community property states like California, the key consideration is determining your separate property vs community property.

Separate property is anything you own prior to your marriage, whereas community property are assets acquired during marriage. In addition, the community may gain an interest in your separate property assets during marriage by way of your time, effort, and skill unless you specify in your prenup that you want to keep certain assets separate.

Why does this matter? Because if you end up divorcing, the court and your state’s default laws will ultimately decide who gets what property. Basically, if you owned assets prior to your marriage like a condo, car, or business, you need to clearly define them as separate property in your prenup.

Establish your separate property, and how community property will be created during marriage from the outset so you can maintain autonomy while contributing to the overall betterment of your marriage.

If One Partner Makes More Money Than the Other

What if your spouse makes more money than you, or vice-versa?

In this case, it’s imperative to develop a plan to build community property together, if you choose to do so.

One of the advantages of a prenup is that it’s highly customizable. It’s an opportunity to include specific stipulations that grant each of you equal ownership to assets even if one of you invested more in those assets.

For example, to ensure you have 50/50 ownership of a home (even if your spouse pays for the whole thing), you need to specify this ownership clause in your prenup.

BEFORE getting married, what conversations about MONEY should you have with your partner?

Use this guide to discuss budgets, assets, debts, goals, joints bank accounts and more.

Get the guide

This is also a great opportunity to determine how much money each person contributes towards a joint bank account. Discussing this together ensures that you’re building your community property in a way that feels fair.

Setting financial guidelines in your prenup helps you in two key ways. First, you’ll be protected from potential financial hardship in the event of a divorce. More importantly, collectively agreeing to a financial plan builds trust and camaraderie in your relationship and dispels any mystery around your finances.

The Family Planning Effect

Gender norms are slowly, but surely, taking a back seat in parenting. Still, women may take on an unfair share of the responsibilities, especially with young children. This can impact your ability to maintain a steady income and contribute toward both your separate and community property.

If having kids is in the cards for you and your spouse, ask yourself a few key questions:

1. Who will be responsible for staying home with the kids, and will this be temporary or permanent? Consider how this may evolve as they become eligible for daycare or preschool.
2. If you do end up leaving your job, how will you continue to create a communal or separate property nest egg?
3. If one of you will be taking considerable time off of work for caretaking, will the other assume responsibility for all of the finances and growing the community pot?
4. If one of you will be taking time off of work or quitting your job for caretaking, how will that affect spousal support that may be necessary in the future in the event of divorce?
5. What do you need to budget for childcare?

These are just a few questions to get a dialogue going around financial and caretaking expectations. How you answer these will determine what to include in your prenup, especially in regards to spousal support provisions, and whether or not you will decide to include any limitations or waivers to spousal support.

Your spousal support provision can be contingent upon whether you have children and include items such as establishing a weekly allowance or annual gift for the unemployed spouse in order to provide the security of knowing that you can leave your job to take care of children without the financial sacrifices you may have to make. You can be as creative as you want in the details as long as they don’t go against public policy.

Support Each Other While Supporting Yourselves

The ultimate value of your prenup lies within the conversations it sparks between you and your spouse. Take this opportunity to consider what you want to include that will leave you both feeling like you are financially supported and not left to fend for yourself, especially when it comes to family planning.

Interested in learning more about how a prenup can ensure your financial autonomy? Schedule a consultation with me today – I am passionate about helping my clients create mutually beneficial agreements that strengthen their relationship.