Time to bust this myth once and for all: prenups are not just for wealthy celebs. They’re for everyone! While, yes, celebs may have a couple extra million to lose in a divorce, that doesn’t mean that a prenup isn’t just as beneficial for us normal folk. Maybe you don’t have millions sitting in the bank, but you do have the childhood home that you inherited from your parents or the small business that you built with your own blood, sweat, and tears. Without a prenup, you could end up splitting those assets with your ex – ouch! If you have property or assets, no matter how big or small, that you can’t fathom losing or splitting in a divorce, you need a prenup! We could go on and on, singing the praises of prenups, and in fact… that’s just what we plan to do. Read on to find out why you need a prenup – even if you’re not Kim K.
Debunking other prenup myths
While we’re busting myths, let’s hit a few more. Prenups are commonly regarded as romance killers, but we’re here to tell you that’s just not true. What could be more romantic than being on the same page and seeing eye-to-eye with your partner? Take finances, for example. You may have heard that money is one of the biggest reasons couples get divorced. A lot of this has to do with a lack of communication around finances. By openly and honestly discussing money, and other important topics, prior to marriage, you’re really setting your marriage up for success. Maybe you foresee splitting everything when you tie the knot, but your partner prefers to keep things separate. Discussing this issue now can help you and your partner to get on the same page and create a plan that works for you both. The communication skills you build in the process will help in so many other aspects of your relationship.
Next myth: discussing divorce before marriage is bad luck.
It’s a fact that about half of marriages end in divorce these days. Avoiding that statistic does not save you from it. Think of prenups as insurance policies. With insurance, you hope you never have to use it, but you sure are happy to have it when something unexpected pops up! Same with prenups. Nobody hopes to use their prenup when they create it, but you may regret not having one if things fall apart down the road. As we mentioned above, prenups are useful both during and after marriage. You may be surprised to find that creating a prenup actually brings you and your partner closer together.
Who should consider a prenup?
Everyone! Prenups are beneficial regardless of your financial status, but there are a few situations where prenups may be even more crucial. In case you need a few more reasons, consider these scenarios as pretty solid arguments for why to get a prenup:
When you have both personal and business assets (and/or debt), the waters get a little murkier. Many people may not know that your business could end up getting split between you and your ex during a divorce, or the interest either of you has in that business could be valued at the time of a divorce. If you create your business during the marriage, there is a good chance that the business will be considered a marital or community asset. That means that if you divorce, your partner would be entitled to a portion or even half of your business. Even if you created your business before marriage, depending on numerous factors such as your partner’s involvement or contributions to the business or commingling marital/community funds into the business, a court could determine that your spouse is entitled to a portion of your business (check out more about prenups for businesses here). Small missteps can cost you big time.
If that sounds like a nightmare, don’t worry; there is a simple solution. A prenup, of course! With a prenup, you can declare your business off-limits to your partner. Specifically, you can designate it as separate or non-marital/non-community property.
If you are marrying a business owner, there are also some important considerations. Just as a business can be marital property that is subject to division upon divorce, so too can business debt. Even if you aren’t involved at all in your partner’s business, business debt accrued during the marriage could end up being at least partially your responsibility. So, if that’s not to your liking, it’s important to designate how to treat business debt in your prenup.
If you and your spouse own property prior to marriage – or perhaps you each plan to acquire property post-marriage – you may want to consider a prenup to specifically designate rights to that property. This is important. If the property is owned prior to marriage, or one spouse purchases the property in their name alone, the other spouse may still be entitled to that property upon divorce. Property owned prior to marriage can be considered marital property in some instances – for example, if the non-owning spouse contributes significantly to a remodel project. If the property is purchased during the marriage without a prenup, it will likely be considered the property of both spouses. If you know you want to keep property separate, you should explicitly declare that in your prenup.
If you are expecting to receive an inheritance, you may want to address that in your prenup. While in most states, inheritance is considered the separate property of the spouse that receives it, it can quickly become commingled with marital assets or considered marital (again, depending on which state you live in). In the case that inheritance becomes commingled, it will likely be considered marital property by the court and subject to division with your spouse upon divorce. For example, perhaps you receive a large inheritance and use it for a down payment on a home that you jointly own with your spouse, or worse, deposit all of it into a joint bank account. In that case, your inheritance may lose its “separate designation” and be up for grabs. With a prenup, you can specify that any inheritance you receive is your separate property alone. Read more on separate property here!
Divorces are stressful. But, with a prenup, you can majorly streamline the process, should it ever occur. Your prenup allows you to make decisions about property distribution and alimony in advance. This eliminates a lot of the fighting (and attorney fees!) during the divorce.
How HelloPrenup can help
Through a collaborative questionnaire, HelloPrenup allows you and your partner to get on the same page prior to marriage in a convenient and affordable way! Ready to get started?
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