We may be biased, but we think everyone should get a prenup. You truly never know what your life may entail, and even if you are taking in a modest income now, you might hit the jackpot down the road. Okay, maybe not the jackpot, but maybe you will start a successful business or run into a large inheritance. And if you do have assets, then you should consider getting a prenup. Keep reading to find out a bunch of other reasons why you should get a prenup.
Many marriages end in divorce (around 40%!)
The age-old statistic that everyone has heard before (“50% of marriages end in divorce!”) may be on the decline, but the percentage of divorce still hovers around the 40% mark. If you had a 40% chance of losing your house in a hurricane, would you get hurricane insurance on that house? We sure would. Well, the logic applies to prenups as well. Hence, why we like to call it “marriage insurance” (although it’s not ACTUALLY insurance). It’s plain and simple: a prenup can protect you in the event of a divorce. You never hope you have to use a prenup, and many people never need to use it! However, you’ll be glad you got one if you fall on the wrong side of statistics. This is why everyone who is about to get married should consider getting a prenup.
You are expecting a future inheritance
You should consider a prenup if you are expecting an inheritance. It is commonly misconceived that inheritances are automatically protected in a divorce. That’s just not true–there is a chance that your future ex-spouse can take a portion of that inheritance in a divorce. Whether or not your ex will be entitled to some of your inheritance depends on your specific situation and the state laws, but why risk it? Especially since Millennials are about to be on the receiving end of the largest wealth transfer in history. Baby boomers are expected to pass down a whopping $68 trillion to their children and grandchildren. Luckily, a prenup can help protect that money!
You have a business
Do you have a business? Then you should definitely consider getting a prenup. Here’s why. Let’s say you started your business ten years before meeting the love of your life. It’s been up and running successfully for all ten years without the help of your spouse, so certainly, a court would never award a spouse money from that business…right? Wrong. Generally, growth and revenue the business generates during the marriage can become marital/community property and subject to division in a divorce. Yikes!
Maybe you don’t have a business yet, but you plan to start one with your honey. What will happen to that business if you get a divorce? For example, let’s say your marriage comes to an end, but your business is doing better than ever. Spouse A wants to sell, and Spouse B does not. What happens, then? Prenups are an excellent way to hammer out hard-hitting questions like these and protect your business!
Your partner makes significantly more than you
Most people think prenups are for the person with more money. And while this is true a prenup can benefit the wealthier party; it’s also simultaneously true that prenups can greatly benefit the partner with less, as well. How? Well, for starters, prenups should feel like a win-win. It shouldn’t be excessively one-sided. In fact, a prenup can be completely thrown out by a court if it’s egregiously unfair in the court’s eyes. In other words, one spouse shouldn’t be sailing off their yacht after a divorce while the other spouse signs up for the homeless shelter.
Also, prenups can even the playing field between one wealthier partner and a not-so-wealthy partner. This is done by providing the less-financially-endowed person more assets in a divorce than they entered the marriage with to make them feel financially secure if the marriage should come to an end. By evening the financial playing field, this can also affect the relationship dynamic by giving the less wealthy person more agency and independence. When the person with less money feels trapped or completely financially dependent on the other, they may have less of a voice in the relationship. Getting a prenup can give both parties peace of mind and even improve their relationship dynamics! See? A prenup really does have its wide range of benefits!
You want to align goals, expectations, and roles for your marriage
A lesser-known fact about prenups is that they facilitate communication and help partners better understand each other. When going through the process of getting a prenup, you both will be faced with questions about your life and finances that you have to answer. For example, “what should happen if either of you dies?” “What about divorce? What should happen to our stuff?” “How should you maintain finances during the marriage?” “Will you or your souse be a stay-at-home parent?” These questions (and many more) will arise during the process and will help you two align your goals, expectations, and roles for the marriage.
You have assets you want to protect
This is a very typical reason people get prenups: to protect assets! What are assets, you ask? They are basically anything with economic value, like houses, cars, bank accounts, retirement funds, cryptocurrency, artwork, and more. A prenup can help keep those assets separate property and not subject to division in a divorce.
Let’s illustrate this with an example. Molly and Josh are about to get married next year. Molly and Josh are both 38 years old, and it’s their first marriage. As you might have guessed, they’ve had some time to accumulate assets being the elder millennials they are. Molly owns her 2-bedroom apartment in downtown Chicago, and Josh has a lake house up in Lake Geneva. They both want to keep their real estate separate if things ever went south. So, they get a prenuptial agreement with HelloPrenup that allows Molly’s apartment to be her separate property and Josh’s lake house to be his separate property (among other things). Bam! Just like that, a layer of protection for their assets was created!
Your partner has debt
The truth is that many people nowadays are riddled with student loan debt. Or maybe it’s a credit card or business debt. Either way, you could be on the hook for your honey’s debt. Yes, that’s right, even if you did not take out the loans, you might be apportioned a piece of your future ex-spouse’s debt in the event of a divorce. Painful, right? Right. So, what can you do about it? P-R-E-N-U-P. Yes, a prenup can help protect you against your partner’s debt. You can make sure all pre-marital debt (debt taken out before the marriage) and marital debt (debt taken out during the marriage) are each party’s debt and their debt alone. Phew!
You have pets
You should consider getting a prenup if you guys have pets. Picture this: your fiancé surprises you with a puppy the same day they propose. You name her Bella. She is the light of both of your lives. You truly follow the millennial way and treat her like a human child. You get married a year later. Things are great… until they’re not. After a few years of marriage, you guys call it quits. Bella is only five years old at this time. Who gets to keep her? Well, if you had a prenup with a pet clause, you could have predetermined this beforehand. However, without a prenup, most states treat pets like property and will follow general personal property principles in determining ownership. Yikes!
Okay, back to the present day. You still have time to get that prenup with a pet clause! You can determine who will keep your puppy (or maybe you want to share “custody”) if the marriage should end. Either way, this can be worked out beforehand and prevent you from a lot of stress. Thank goodness!
You have children from a prior relationship
Prenups can help protect your children from a prior relationship by protecting your assets. If you are getting married to a person that is not your children’s parent, then you are putting the financial support of your children at risk. Even if you have adult children, you probably want to save your assets for them instead of a future ex-spouse. In other words, prenups protect your assets from going to an ex-spouse, which in turn, allows your children to retain more of your assets (in one way or another).
One thing a prenup usually cannot do is dictate child support or child custody. Some states allow narrow exceptions for this, but most do not allow it. This is because children have individual needs and desires, and their life should not be predetermined by two people (possibly) years before something even happens.
You often receive significant gifts from family or friends
If you’re a lucky person who has a doting family that loves to give you luxurious gifts, then a prenup may be for you. Let’s say your grandparents love sending you $10,000 for your birthday every year, and your parents are planning on gifting you a house for your wedding anniversary. How should those gifts be treated? Better yet, are you okay with those things potentially being split up with your future ex-spouse in a divorce? If the answer is “no,” then you should consider getting a prenup.
This isn’t your first rodeo
Maybe this is your second, third, or even fourth marriage, and that’s okay, but you’ve been down this road before. You probably understand the harsh reality of marriage, that it’s not all fairies and butterflies. You’ve done the divorce thing, you’ve spent hours with your attorney, and you understand the stress it can bring on. Between the time it takes, the money it costs, and the sanity it steals, you don’t want to do it again. A prenup can be a great solution for you if this sounds like you. A prenup can save time in the courtroom, money on attorneys fees, and even your sanity.
Alternatives to prenups
If your mind’s made up, and after reading to this point, you still don’t feel like a prenup is for you, that’s okay. Or maybe you’ve run out of time, and you’re passed the point that you can even get a prenup. Not to worry– there are some options still. Remember, you can only get a prenup before the marriage begins. You can’t get a prenup after the wedding day. However, if you get married and feel a pang of regret for not getting a prenup, then all hope is not lost! There is something known as a postnuptial agreement, and it is a marital agreement that you can get during the marriage. Just know that a postnup is generally not as solid and enforceable as prenups are, but they are still a great option.
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: [email protected]