It’s that time of year again! Yes, that’s right–PRENUP MONTH! Every May is officially prenup month, where we get to talk about all things prenups for 31 days straight (exciting, right?!). So if you’re wondering if a prenup “may or may not” be a good idea, this breakdown is for you.
To keep the good vibes rolling, we’re going to also let you in on some prenup secrets. Did you know you can actually protect your PETS through a prenup? And you can also protect your social media image!? And, of course, there’s protecting assets (a.k.a., your hard-earned money) and making sure those who earn less are also protected in the event of a divorce. Okay, without further ado, let’s dive into the top ten benefits of getting a prenup.
Top Ten Benefits of a Prenup
Benefit #1: Prenups protect assets/income
The bread and butter of any good prenup are protecting your assets. Assets are anything with economic value, so that could be real estate, bank accounts, cars, boats, crypto, retirement accounts, you name it. That apartment you bought when you were 25 and proudly paid off by age 36? You can make sure that it stays in your name. What about that investment account you’ve been growing since you were 18? Yes, that can also be protected.
Don’t forget about those FUTURE assets and income. You can make sure that anything you accumulate in the future is also protected! Say you start making a killing at your job with an income of $500,000 per year. That can definitely be kept separate with a valid and enforceable prenup. That house you plan to buy in a few years but don’t have the money just quite yet? Yes, you can protect that, too.
Benefit #2: Prenups protect the lesser-earning spouse
Now, if you don’t have any assets and don’t really have an income and don’t plan on having an income (say you’re a stay-at-home parent), don’t stress-prenups are also super beneficial for you, too! The lesser-earning spouse can make sure they are protected with different prenup clauses, as well.
For example, a lump sum clause (also known as an equalization payment) is a payment from the higher-earning spouse to the lower-earning spouse upon divorce. This payment is separate from property division and alimony and, instead, sets out to “equalize” the wealth between the parties. You can stipulate that the lump sum clause only comes into effect after a certain number of years (After ten years of marriage or more, Spouse A will pay Spouse B a $100,000 lump sum).
Another prenup mechanism beneficial to a lesser-earning spouse is a primary residence clause. This allows the lower-earning spouse (who may also happen to be the stay-at-home parent) to live in the marital home for a number of years after the divorce. It does not necessarily transfer ownership of the house to that person but simply allows them to live there for a period of time to get on their feet after the divorce.
Benefit #3: Prenups protect against your spouse’s debt
Does your spouse have a staggering amount of debt? Are they avid online shoppers? Maybe they are an entrepreneur who has (or plans to have) lots of business debt. Whatever kind of debt your spouse has, you can make sure you are not responsible for it. And, yes, without a prenup, you could very well take on a portion of your spouse’s debt, even if your name isn’t on it.
With a prenup, you can include debt that already exists (premarital debt) and debt that will be taken out in the future (marital debt). You can make sure this stays separate to avoid becoming responsible for your partner’s liabilities. This also allows you to plan for unforeseen circumstances and protect yourself in the “what if” scenarios.
Benefit #4: Prenups protect your inheritances
Did you know that your inheritance is NOT necessarily “safe” in a divorce? That’s right; many people mistakenly believe that inheritances are automatically separate. I mean, it’s given just to one person; why would your spouse have access to it in a divorce, right?! Wrong! Inheritances are not safe, and they can be split up in a divorce. That means that your future ex-spouse could get a cut of MeeMaw’s hard-earned money she’s passing down to you. With a prenup, you can ensure that any future inheritances are kept separate in a divorce.
Benefit #5: Prenups protect your gifts
Same goes for gifts. If you receive any gifts during your marriage, say, from your parents as a wedding gift or some other big gift, many states will say that it is marital property and will divide it up in a divorce with your spouse. That starter house your parents generously gifted to you for your wedding day? Yeah, that’s potentially up for grabs without a prenup.
With a prenup, you can make sure gifts from third parties or even gifts between spouses are kept separate (the person who receives the gift keeps it in a divorce).
Benefit #6: Prenups protect your children
If you have children from another marriage, you can ensure that their future inheritance from you stays intact. When you get married to another person (that isn’t your children’s parent), you could stand to lose a portion of your assets without a prenup. You could lose out on a large portion of your assets; for example, 40%, 50%, 60%, 70%, or even more of your assets could go to your spouse, depending on the situation and the state laws. Those same assets that you just lost out on could’ve been used for gifts for your children or a future inheritance one day.
Benefit #7: Prenups protect your reputation
With a social media image clause and a confidentiality clause, you can protect your reputation. A confidentiality clause basically prohibits your partner from sharing private information during the marriage and if the marriage ends. You can list out what confidentiality information means to you, but it usually includes things like financial and personal info.
A social media image clause prohibits your partner from posting harmful or disrespectful content about you online. If they do? They pay you. That’s right; you can stipulate a set amount of money that your spouse will have to pay you if they post something disparaging about you.
Benefit #8: Prenups protect your pets
A lesser-known benefit of prenups is the protection of pets! You can make sure your pets STAY in your custody in the event of a divorce. Without a prenup, most states treat pets as if they were a piece of personal property, like a couch or a car, and don’t really take into consideration the well-being of the animal. With a prenup, you can make sure your pet stays with you, even in a divorce.
Benefit #9: Prenups make getting a divorce cheaper and faster
Having a prenup is like having a fast-track ticket at an amusement park (although we know divorce is no walk in the park). With a prenup, you have already predetermined many different issues of divorce (property division, alimony, pets, etc.). What does this mean? Well, it means when it’s time for a divorce, there’s less “arguing” over these topics. It’s already decided. This saves you time and money in legal fees.
Benefit #10: Prenups can strengthen your relationship
Yes, you read that right. No, we’re not kidding! Prenups get a bad rep sometimes, and people feel like they’re more of a sign of distrust, but that couldn’t be farther from the truth! The reality is the process of getting a prenup requires a level of in-depth communication about life goals, finances, death, children, and many other hard-hitting topics. It requires a level alignment on all of these things so you two can be on the same page when walking into your marriage. You both have to agree on all of the terms of the prenup, which, in turn, results in total alignment. What could be more romantic than that?
Do I Need A Prenup Quiz
Want to see if a prenup is right for you? Complete the free “Do I Need a Prenup Quiz” to get an accurate read based on your relationship.
Final Thoughts
The bottom line is that prenups are beneficial for so many reasons. From protecting your assets to strengthening your relationships, what CAN’T a prenup do?! Happy PRENUP MONTH to you and your boo. Let’s get your prenup started before you say, “I do.” Click here to get your prenup started right now.
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]
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