Fifteen years ago, just 3% of Americans who were married or engaged had signed a prenup.
By 2022, this number had grown to 15% [1].
And that figure will keep climbing, according to investor and entrepreneur Kevin O’Leary, who believes signing a financial agreement before marriage should be as natural for engaged couples as choosing flower arrangements.
However, prenups still carry a stigma, and other experts like financial guru Dave Ramsey strongly advise against signing one, warning that it can doom the relationship.
Ramsey has said it is like planning the divorce in advance. “It cheapens the whole affair and puts a dollar figure to it,” he has said on The Ramsey Show, his syndicated radio show. [2]
In a recent conversation with Moneywise, O’Leary didn’t mince words when it came to his thoughts on this way of thinking, calling it “moronic.”
Here’s why he thinks it’s the “stupidest idea I’ve ever heard.”
According to O’Leary, one of the main reasons a prenup is important is because it allows women to protect themselves.
“A woman should never, ever give up her financial independence,” he said.
A few years ago, the Shark Tank judge invested in HelloPrenup, an online platform created by two women that democratizes access to prenups. The founders made their pitch on Shark Tank.
“What HelloPrenup has done so well and why it’s growing so fast, and I’m really happy I’m an investor in it, is it really makes women understand that they need to maintain their own financial identity their entire life. Never merge it in with their husband’s,” O’Leary said.
Marriage is about being a team, but a prenup is designed to protect each individual spouse — and their respective assets — in the event of a divorce. In order for a prenup to hold up in court, couples need to avoid commingling their assets.
Commingling is when separate property becomes marital property. This can happen in various ways, such as depositing your earnings in a joint account. A judge can overrule a prenup in such a situation.
That’s why couples with prenups need to keep finances separate. And this is a good thing, says O’Leary.
“It’s OK to share a credit card and each put 2,500 bucks into it a month, but your entire savings, your credit rating, your own credit card, your own investments, your own savings account, whatever it is, it has to stay in your name,” O’Leary told Moneywise.
“And even if you change your name, that’s fine, but it has to be your identity, your Social Security card, to protect you in the unfortunate event of separating from your significant other.”
Read more: Here are 5 simple ways to grow rich with real estate — whether you have $10 or $100,000 to invest
O’Leary’s argument that women need to protect themselves financially is an important one. Studies have shown that divorces tend to have a bigger negative impact on women’s finances. [3] Financial abuse is also said to occur in 99% of domestic violence cases. [4]
However, Laurie Israel, an attorney who represented clients in prenups for around two decades, thinks prenups set up a “very unequal power dynamic” that damages the relationship and the marriage from the beginning.
“Usually the process begins with the wealthier spouse’s lawyer showing up with an entire prenup with all the terms they want, which can be very coercive,” she told The Cut. “It’s harmful to the goodwill that’s necessary for a healthy marriage. I believe that marriage is about sharing, and the more you share, the more likely your marriage is to thrive.” [5]
Israel thinks there are some good reasons to have prenups, like if one spouse is in a family business or when it’s a second marriage with kids, but when it comes to things like debt carried by one spouse, she believes it’s better for couples to tackle it together.
Ramsey is against most couples signing one unless there are extreme differences in wealth.
His primary criticism of financial experts who push prenups is that they focus only on protecting wealth and not on the marriage.
“Our approach is that the prenup actually could end up stunting your growth because you’re not all in on working together,” he said.
This idea has some scientific support, as studies suggest merging finances leads to more trust and marital happiness. [6]
The HelloPrenup website calls Ramsey’s advice “misguided” and says he’s wrong for a few reasons: prenups are like insurance and not a sign of impending doom, they foster financial clarity and establish healthy boundaries that create a sense of financial responsibility, and life circumstances can change and one member can outearn the other by a lot later.
Watch the whole video interview with Kevin O’Leary here.
O’Leary, who has been married for several decades and says he had signed a prenup himself, admitted that the agreement becomes “kind of irrelevant” when a couple has children. He has two.
“You take on a dual responsibility to support a family unit,” he explained. “There’s two forms of marriage. There’s the euphoric phase where you go in because you love each other and that’s a wonderful time, but then reality strikes about 24 months later and you start contemplating family. And when that happens, you better have money at the table. … You have to have a plan to be able to support a family, support yourselves, provide for those children as they come.”
Legally speaking, a prenup cannot determine the terms of child custody, visitation or support. Those matters are decided by a judge whose priority is the best interests of the child. It’s also not always possible to enforce a waiver of spousal support or alimony. The judge may consider it unfair to one spouse.
If you’re considering signing a prenup, it’s smart to do your research and talk to experts to decide whether it will fit your needs and relationship.
And when should you talk about money with your partner?
As soon as the third date, says O’Leary. He also recommends sharing a bottle of a nice Chardonnay.
“When you talk about money, actually, it makes it even more romantic. It means that you’re really interested in that person and you’re thinking about a future with them,” he said. “Talking about money is l’amore.”
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[1]. The Harris Poll. “More couples are signing prenups before saying ‘I do’”
[2]. The Ramsey Show Highlights. “Should I get a prenup”
[3]. Demography. “Gender Differences in the Consequences of Divorce: A Study of Multiple Outcomes”
[4]. National Network to End Domestic Violence. “About financial abuse”
[5]. The Cut. “Why you (probably) shouldn’t get a prenup”
[6]. Journal of Consumer Research. “Common cents: Bank account structure and couples’ relationship dynamics”
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
