Think postnuptial agreements are only for the mega-rich? Think again! That’s a common misconception we hear all the time. While postnups are often associated with protecting the ultra-wealthy, postnups offer valuable benefits to couples of all financial backgrounds. A postnuptial agreement, a legal contract entered into during marriage, isn’t just about protecting millionaires; it’s about smart financial planning and protecting assets, regardless of their worth. So, how can a postnup be beneficial even if you don’t consider yourself wealthy? Let’s explore.
Situations where postnups benefit “non-wealthy” couples
Postnups aren’t just for the wealthy. Postnups are for anyone. Here are some situations where a postnup can benefit a “non-wealthy” couple:
- Protecting inheritances: Even if you’re not ultra-wealthy, you may still receive an inheritance (regardless of how big), and you may want to protect it in the event of a divorce. Again, this inheritance can be $5,000 or $5M—it doesn’t matter the size, a postnup can protect it.
- Small business owners: Whether you own a billion-dollar business or just a small Mom’n’Pop shop, a postnup can ensure your business interests stay separate property.
- Unequal income levels: Even if you and your spouse’s earnings aren’t “wealthy” levels, if there is an income disparity or one spouse forgoes their career to stay home with the kids, a postnup can help balance out this disparity.
- Managing debt: Debt surely isn’t exclusive to the wealthy! Debt can be addressed in the postnup, ensuring the spouse who is not responsible for the debt isn’t on the hook for payments in the event of a divorce.
- Real estate: Even if you’re not a real estate mogul with hundreds of millions of dollars worth of property, you can still ensure your pre-marital real estate or real estate purchased during the marriage stays your separate property.
- Financial planning: The core principle behind a postnup (proactive financial planning) is a valuable tool for couples at all income levels.
- Clarifying responsibilities: Postnups can help clarify financial expectations and responsibilities, such as who is responsible for what debt. Couples with minimal or moderate assets and debt can obviously benefit from this, too!
- Fostering communication: The act of getting a postnup can help provide transparency in individual goals and finances and help the couple create a shared vision for their future. This can be beneficial for couples of all wealth statuses.
As you can see, there are many ways a postnup can help a couple—regardless of net worth. From clarifying financial responsibilities to protecting small businesses, there is something for everyone.
Why postnups are common among the wealthy
It’s true—postnups are prevalent among couples with high-net-worths. This is likely because the ultra-wealthy want to protect their many assets and have the money to hire as many lawyers as it takes to get it done. (Spoiler alert: It only takes one lawyer per person). Postnups can make sure each wealthy person retains their assets in a way the couple deems fair instead of leaving it up to a court and state law in the event of a divorce. In other words, it helps rich people stay rich.
Let’s use Beyonce and Jay-Z as an example. They are both ultra-wealthy, with their own assets that they want to protect (from real estate to their music). Getting a postnup to ratify (i.e., confirm) their terms in their prenup may be something they want to consider to add an extra layer of protection to their assets.
Debunking the “Postnups are only for the rich” myth
We’ve said it once, and we’ll say it again (and again…and again): Postnups aren’t only for the wealthy. It’s a myth. Let’s debunk this myth. For starters, the “meat and potatoes” of a postnup is protecting assets. There’s no dollar amount required for postnups to be valid. You can protect an asset worth $1 or $1 million. If it has value, it can be protected in a postnup.
Next, let’s use an example of how a “non-wealthy” couple can benefit from a postnup. Mark and Jane are married. Jane is a teacher with a modest salary, and Mark is a car salesman, also with a modest salary. They are both financially independent and have no children. Jane has a modest 401k, and Mark expects a modest inheritance from his parents in a few years. They sign a postnup that protects each person’s assets (inheritance and 401k) and waives spousal support. Since they are both financially independent, they agree to waive spousal support in the event of divorce. It makes things much simpler in a potential divorce and gives both people peace of mind.
So, there you have it! While the couple has modest assets, the postnup is worth the peace of mind that each person’s assets are protected, and spousal support won’t tie either person down in the event of a divorce.
The bottom line
Postnups, while common among the wealthy, are not *exclusively* for the wealthy. Postnups can benefit anyone who wants to protect assets (regardless of value), align with their spouse, do some financial planning, and more. Think beyond the stereotype of “postnups are only for the wealthy” and consider if a postnup would make sense for you and your spouse, even if you don’t consider yourselves “rich.” We always recommend speaking with a postnup attorney to explore your options. Happy planning!
Nicole Sheehey is the Head of Legal Content at HelloPrenup, and an Illinois licensed attorney. She has a wealth of knowledge and experience when it comes to prenuptial agreements. Nicole has Juris Doctor from John Marshall Law School. She has a deep understanding of the legal and financial implications of prenuptial agreements, and enjoys writing and collaborating with other attorneys on the nuances of the law. Nicole is passionate about helping couples locate the information they need when it comes to prenuptial agreements. You can reach Nicole here: Nicole@Helloprenup.com
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