People frequently come to us saying, “Do I really need a prenup if [insert reason here]?” So, we’ve decided to consolidate all of your questions into one article and talk about the ways prenups can still help you despite X, Y, and Z things. And, of course, you might be perfectly fine without a prenup, too, because no one has a crystal ball to tell the future. However, prenups simply provide an extra layer of financial protection for your future self. Let’s dig into how a prenup can help you below.
Do I really need a prenup if my default state law already deems my assets purchased before marriage separate?
You may have read online or heard through the grapevine that your state deems all assets purchased/owned prior to marriage are “automatically” declared your separate property in the event of a divorce. Therefore, you don’t need a prenup…right? Well, this rule isn’t usually very straightforward because of the possible exceptions that exist.
Let’s back up for a minute. Yes, it is possible for a court to declare assets that you owned prior to marriage as your separate property, even without a prenup. However, it is also possible for a court to declare those same assets joint property or that the community has earned an interest in those assets during the marriage, making them divisible in a divorce.
So, let’s talk about the exceptions. There are exceptions that can make your property owned prior to marriage (that would normally be considered separate property under default law) now considered joint property divisible in divorce. Every state will have its own exceptions, but here are some common ones:
- Spousal contributions
- Equitable distribution state factors
Commingling is when spouses mix funds to the point of no return, and a court cannot distinguish what is what. For example, if you owned a bank account before the marriage and you thought it was your separate property, but you allowed your spouse to dip into it and deposit into it, as well, it could become joint property through commingling.
Spousal contributions can sometimes change the character of a property from separate to joint, too. This could be in the form of time, effort, industry skill, or physical labor (i.e., a spouse physically contributes to the upkeep of your separate property house) or paying for loans/renovations/upkeep/expenses on the separate property.
In many equitable distribution states, there could be a myriad of ways a court decides separate property should become joint property, from looking at the length of the marriage to the health of the spouses. So, if you live in a community property state now but move and end up divorcing in an equitable distribution state, you could be in big trouble without a prenup because there are different laws applied.
Do I really need a prenup if my default state law already deems my future inheritance separate?
It is a common misconception that inheritances are automatically protected in most states. Many states do say that inheritances should be considered separate property by default, but there are exceptions to this rule where the inheritance becomes joint property.
Again, these exceptions may vary from state to state, but they generally include commingling and equitable distribution factors.
So, let’s look at how commingling could derail your inheritance from remaining separate (without a prenup). If you receive a $100,000 lump sum of money from your Mom after she passes and deposit it directly into your joint bank account that you share with your spouse, it could become so interspersed that it’s impossible to fish out. Thus, a court would declare it joint property.
In some community property states, if you purchase a certain appreciating asset with your separate property inheritance, and if the court deems the appreciation in value is based on your labor, time, effort, and skill during marriage, the community could gain an interest in your inherited asset.
If you live in or move to an equitable distribution state, you could lose your future inheritance based on a list of state factors, such as the age of the spouses, the length of the marriage, each spouse’s contributions, and more.
Do I really need a prenup if my partner and I have similar financial situations?
There are several reasons why someone may want a prenup even though they are in a similar “financial boat” as their partner.
Firstly, a prenup can protect against the unknowns of life. While you and your partner may be on even ground now, no one has a crystal ball to say what will happen in the future. For example, the current tech layoffs in the Big Tech world are something that probably wasn’t super predictable 5-10 years ago. These layoffs have led to unemployment and lower salaries for people that were previously making hundreds of thousands of dollars per year. Not only that, but there are other possibilities, such as unexpected disability, unexpected children, or other major life events that may prevent someone from working or having a lower salary.
Secondly, one or both spouses may run into a large amount of money along the way, making one spouse significantly wealthier. This may be through a large inheritance, gift, or promotion that was not previously expected.
Thirdly, a prenup can do more than just protect finances; it can also lay out a framework for a successful marriage, as well as asset division, debt allocation, alimony, and more if things don’t work out. Prenups can actually streamline the process of divorce, making it less expensive and faster (leading to decreased stress levels)!
Do I really need a prenup if neither of us has any money right now?
It’s frequently believed that prenups are only for the wealthy, but that’s just not true! Prenups are for both wealthy folks and people with fewer assets (or none at all).
Prenups can provide a framework for assets and debt accumulated in the future, not just what exists today. So, if you are the next Jeff Bezos and you don’t have a prenup (which, by the way, he allegedly did not have one), you may be kicking yourself down the road for not getting one. Yes, prenups can protect assets you don’t even have yet.
Same goes for debt! If your partner is an avid online shopper, gambler, or entrepreneur with tons of business debt, you can protect yourself with a prenup that makes sure each person’s debt remains separate.
Do I really need a prenup if it will just be thrown out by a court in the future?
So many people mistakenly believe that “most prenups are thrown out by a court,” and that is not necessarily true. Sure, it is possible that a prenup can be deemed unenforceable by a court, but it takes a lot to get there. Not only does one spouse have to challenge the prenup in the first place, but they have to bring it all the way to the court (paying lots of legal and attorney fees along the way). At that point, the court then has to decide, based on the circumstances and the laws at play, if the prenup is enforceable. And there are a limited set of ways, legally speaking, that a prenup can be thrown out, such as:
- Failing to follow state formalities such as putting it in writing, signing it, and notarizing it.
- Either party signed the agreement under coercion or duress.
- The prenup is so egregiously unfair that it is deemed unconscionable, especially with spousal support limitations/waivers.
- The prenup lacked adequate financial disclosure.
- And a few others, depending on your state.
Your attorney or state-compliant platform (like HelloPrenup) should be able to assist you in maximizing your odds of an enforceable agreement.
Do I really need a prenup if I plan on staying married forever?
We totally understand why getting a prenup may feel unnecessary because, let’s face it, who enters a marriage planning on getting a divorce? Probably very few people. However, (you know we’re going to say it) “life happens,” and things change.
We love to use this analogy: would you ever NOT get car insurance based on the fact that you believe you are such a good driver and nothing would ever happen to you? Of course not, because “things happen.” That’s why we like to refer to prenups as marriage insurance (although it is not actually insurance).
Not only can you think of a prenup as marriage insurance, but it can also be a way to protect children from a previous relationship by securing your assets and protecting their future inheritances (or current financial support if they’re really young children).
Do I really need a prenup if my partner and I already verbally agreed on everything?
Virtually all states agree that prenups are not valid unless they are put in writing. We repeat: it is highly unlikely that a court will enforce a verbal promise as a prenuptial agreement. It has to be in writing.
And, sure, maybe your spouse is a really great person and will actually hold up their promise if a divorce ever happens, and if you’re willing to take that risk, then that’s up to you!
The Bottom Line
The decision to get a prenup is ultimately up to you and your partner. We only want to provide you with the most information you can so you can make the best decision for you and your future spouse. And if you still have lingering legal questions and how a prenup may benefit your specific situation, speaking with a lawyer may be a good idea.
Raymond Hekmat’s practice of law has been devoted exclusively to areas of California family law focusing on prenuptial agreements, divorce consulting and mediation, since earning his Juris Doctorate degree from Loyola Law School in 2009. During his tenure at Loyola, Raymond was President of the Evening Bar Association, and was awarded the Alumni Association Governors’ Alumni Award. While earning his degree, Raymond worked as a law clerk, and later an associate, for a Beverly Hills family law firm. Prior to founding HLM, Raymond’s practice involved complex family law litigation involving high-asset property division, complex custody litigation, jurisdictional issues, division of community estates and prenuptial agreements.