What happens if you don’t sign a prenup?

Dec 3, 2022 | Divorce, Prenuptial Agreements

Let’s face the facts: nearly 50% of all marriages end in divorce. That’s a scary number! Whether you are thinking about getting engaged or already planning the wedding, the thought of divorce can be daunting. It doesn’t have to be, though! Getting a prenup can help put your mind at ease. We like to call it “marriage insurance” for that exact reason! 

With a prenup, you can save eons of time, money, and sanity if you do end up separating. Not only that, but without a prenup, your state law will apply, and you probably won’t like that outcome. Plus, prenups are actually an effective tool for communication. So along with protecting your assets, you get the added benefit of aligning future life and financial expectations with your fiancé. 

What is a prenup?  

A prenuptial agreement (a.k.a. prenup) is a legally binding contract that outlines how matters should be handled in the event of a divorce. A prenup provides specific instructions on how all assets and debts should be divided if the couple separates. You can also use a prenup to determine the ownership of inheritances and gifts. Not only does a prenup cover financial topics, but you may even include personal topics, such as confidentiality clauses and sometimes even infidelity clauses (depending on your state). 

Moreover, a prenup is a vehicle for open communication with your future spouse. Within the prenup process, you are forced to put everything on the table, warts and all. This means no hiding that hefty credit card bill and future inheritance you may receive. The two of you have to put your heads together to plan out your life, including your financial goals and expectations.

What does a prenup do?

What specifically goes into a prenup depends on your specific circumstances; there is no cookie-cutter prenup template that makes sense for every single couple. No two couples have the exact same financial and personal scenarios, so it only makes sense that no two couples should have the exact same prenup. 

Prenups are most commonly used to: 

  • Protect assets, such as bank accounts, real estate, investments, and retirement funds, 
  • Safeguard you from your partner’s debt,
  • Protect businesses, and
  • Protect inheritances and gifts. 

On the other hand, a prenup generally cannot provide instructions for child custody or child support. You cannot use a prenup to determine your child’s rights. Children have their own needs and desires, so you cannot contract their rights away.

Who should get a prenup? 

Everyone should get a prenup. Unless you have a crystal ball that can tell the future, you truly never know what can happen. Do you think Mackenzie Scott (Jeff Bezos’ ex-wife) expected them to become one of the richest couples on earth when they got together? Doubtful! Her payout was a cool $38 billion (with a “B”), and they allegedly did not have a prenup. 

Moral of the story–even if you don’t have much now, you might in the future. Although your net worth may never get quite as high as the Bezos, anyone would hate to say goodbye to their hard-earned money. 

If you do have some assets now, then you definitely want to get a prenup. A prenup can protect your assets by outlining ownership in the event of a divorce. Expecting a hefty inheritance one day? You need a prenup. It is a common misconception that inheritances are protected. They’re not and may be split up in a divorce. A prenup can protect that inheritance and declare it as yours and yours only.

What happens if you don’t have a prenup?

The short answer: a “default prenup” will apply. That’s right, did you know that you actually already have a “prenup?” Your state’s divorce law already has a method of distributing your assets and debt. We like to call this the “default prenup,” but all it really means is the state laws that will apply to your case. That debt that your spouse took out during the marriage? That could be yours with the default prenup. Ouch! If you were to sign a prenup, your prenup would override this “default prenup.”

There are two theories that states utilize in distributing assets and debt. These two theories are known as community property and equitable distribution. Most states (41 of them, to be exact) are equitable distribution properties. Only nine states are community property states, and they are mostly in the western part of the U.S. Those states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

In an equitable distribution state, assets and debt are divided by a judge and they will use a list of state factors to make their decision. The outcome of the division may not be 50/50. It could be a 30/70 split or 40/60 split, or any other combination, depending on the judge’s decision. The factors a judge may use to make this decision differs from state to state. Some factors may include the length of the marriage, the age and health of each spouse, each spouse’s contributions to the marriage, how and when the assets were acquired, and many more. Look at your state divorce law to see a full list of property division factors. 

In a community property state, things are slightly more cut and dry. There are two types of property in a community property state: community and separate. Community property is generally property acquired during the marriage. At the time of divorce, community property will typically be divided 50/50, except for property received by gift or inheritance. Separate property is generally considered gifts, inheritances, or any other property acquired prior to marriage. Each community property state has its own set of nuances, so it’s always important to check with your local divorce law to see what your state will categorize as separate and community property. 

On the bright side, a prenup can change all of that! A valid prenup will actually override the state law, whether it’s equitable distribution or community property, and the court will abide by your property division rules. Divorce cases can be very subjective, and a divorce court has the discretion to make decisions about your finances. If that doesn’t sound ideal, then a prenup is for you! 

A prenup may save you time

According to a study cited by Forbes, the average divorce takes one year to complete. Another survey from Nolo also said the same. With just one contested issue, a divorce, on average, will take one year. And if you live in California, the average duration is 15 months! The even scarier news? About 22% of people said their divorce lasted for over a year, and 13% of people said their divorce lasted over two years! Ouch! 

Sure, some divorces can take as little as six months, but that’s typically only if you have no disputes over any issues. The more contested issues, the longer the divorce will take. What is a contested issue, you ask? This could be anything you and your spouse don’t agree on, such as division of property or spousal support. 

When you don’t sign a prenup, you are instead signing yourself up for more time in the courtroom and in your attorney’s office. Sounds fun to you? We think not! The good news? Prenuptial agreements cut down on court time and attorney work. The survey above says that it takes an average of twelve months to resolve one contested issue in a divorce. If that contested issue was property division or even spousal support, you could have easily cut that time down by having a prenup. 

Remember, when you create a prenup, you are typically outlining the ownership of different properties in the event of a divorce. In other words, “who gets the house” may already be an issue that you decided in your prenup with your honey long before you got a divorce. As you can see, there will be no fighting over the house if you have a prenup, thus, saving you time. A prenup is money well spent, if you ask us!

A prenup may save you money

Along the same lines as losing time, you will also likely lose money. According to another Nolo survey, the average cost of a divorce in California was $12,500 – $15,300. On the other hand, Forbes found that the average divorce cost is much higher–between $15,000 and $20,000. This cost is derived from attorneys’ fees, and, as you may know, attorneys bill their hours at a very high rate. The average family law attorney cost is somewhere between $100 and $400 per hour, but these rates can go as high as $1,000 per hour depending on things like the attorney’s experience and location. 

Think about it: when do attorneys bill hours? When they are doing anything for your case. (You see where we’re going with this). The more disputes you may have, such as property division, the more billable hours your attorney will have. On the flip side, the fewer disputes you have, the less time your attorney will spend on your case. And what’s the best way to have fewer disputes? Having a prenup! Remember, a prenup covers what happens to certain assets and may also cover spousal support. If these issues are already decided for you, then there is no need to “fight” over them in a divorce proceeding. Less “fighting” means fewer attorneys fees, which in turn means less money you have to spend. 

A prenup may save your sanity

Nicole kidman walking out of attorney's office after divorcing Tom CruiseLosing your sanity is a much less tangible outcome than the others, but it exists, nonetheless! Divorce is the second most stressful event (next to the death of a spouse) that a person can experience in modern society, according to this Life Change Index Scale. The longer the divorce drags on, the more you will have to endure this stress. A prenup can help with that! 

When you have a prenup, it not only makes the whole divorce process cheaper and faster, but it also helps keep your sanity in check (as much as humanly possible). The less money and time you spend, the more sanity you will keep. It’s simple math! 

Do you remember this iconic pop culture moment when Nicole Kidman had just finalized her divorce from Tom Cruise and was caught by the paparazzi walking out of her attorney’s office? As you can see in the picture, it really speaks to the relief one can get from a divorce finally being over with! 

Final Thoughts 

Who doesn’t want to create their own rules for their property while also saving time, money, and sanity? A prenup can help you accomplish all of those things. And it’s really very simple, especially with HelloPrenup. You can get a prenup from the comfort of your own home with a few clicks of a button. Get started on your prenup today.

 

All content provided on this blog is for informational purposes only. HelloPrenup, Inc. (“HelloPrenup”) makes no representations as to the accuracy or completeness of any information on this site. HelloPrenup will not be liable for any errors or omissions in this information nor for the availability of this information. These terms and conditions of use are subject to change at any time and without notice. HelloPrenup provides a platform for contract related self-help. The information provided by HelloPrenup along with the content on our website related to legal matters (“Information”) is provided for your private use and does not constitute legal advice. We do not review any information you provide us for legal accuracy or sufficiency, draw legal conclusions, provide opinions about your selection of forms, or apply the law to the facts of your situation. If you need legal advice for a specific problem, you should consult with a licensed attorney. Neither HelloPrenup nor any information provided by Hello Prenup is a substitute for legal advice from a qualified attorney licensed to practice in an appropriate jurisdiction.

 

Nicole SheeheyNicole Sheehey is HelloPrenup’s Head of Content. She is an Illinois-licensed attorney. You can read more about us here. Questions? Reach out to Nicole directly at [email protected]

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