We Like to Call it Marriage Insurance

Nov 8, 2022 | Divorce, Finances, Prenuptial Agreements, Protecting Assets

You’ve probably heard of a prenuptial agreement, but what if we told you we had a better name for them: marriage insurance? That’s right, prenups could be considered another type of insurance policy (they aren’t actual insurance, but you know what we mean). You buy insurance to protect your house, your car, and your life, so why not your marriage? In this blog post, we’ll explain why prenups are so important and how they can protect your finances in the event of death or divorce, just like an insurance policy.

What is a prenup?

Let’s back it up a bit. A prenup is a private contract that dictates your marital affairs in the event of divorce or, in some cases, death. It can be a communication tool, as well, to help set financial and life goals and expectations in the marriage. A prenup can include how to separate your property, such as houses, bank accounts, retirement funds, inheritance, and your debt, such as credit cards and student loans. It can also determine if alimony or spousal support will be warranted in the future.

Prenup = Marriage Insurance

Most people have car and health insurance to protect their cars and health. Many people have homeowners’ or renters’ insurance to protect their homes. Few people have even gone as far as insuring their body parts from harm, like J.Lo and Julia Roberts! So, what’s stopping us from creating a document that acts as a tool for clarity in our marriages?

Just like car insurance protects you from monetary harm when someone crashes into your car, prenuptial agreements protect you from economic harm if you and your spouse divorce. A prenup can protect you against liabilities while simultaneously protecting your assets. Whether that means not absorbing a portion of your spouse’s gambling debt or protecting your interest in a business, a prenup may ensure a fair outcome for you.

Prenups protect you in the event of divorce and, sometimes, death 

Just like homeowner insurance kicks in when “something bad happens” to your house, the same thing goes for prenups. When “something bad happens” to your marriage, i.e., there is a divorce, your prenup “kicks in” (and you can enforce it privately or ask the courts to enforce it if that is necessary). And yes, even in the event of death, your prenup may protect you, for example, from your assets being divided in a way that conflicts with the prenup.

Prenups protect you from lengthy and expensive litigation

Similar to how car insurance streamlines the process of getting reimbursed for your damages, prenups streamline the process of divorce. With a prenup, you can avoid the part of the divorce proceedings that requires you to go back and forth fighting about alimony, property, and debt because it should already be decided in your prenup! Luckily, a prenup should have already squared that away for you and was probably decided when you both were in a much better headspace. 

Not only does a prenup save you on attorneys fees and court fees due to a lengthy divorce proceeding, but it also saves you time and your sanity! Who wants to go through a trial that takes months or even years? Saving you from that is enough of a reason in and of itself to get a prenup! 

Prenups protect you from losing your assets or gaining unwanted debt 

As you’ve probably guessed by now, a prenup can protect your “stuff.” Houses, cars, bank accounts, retirement funds, businesses, valuables (like artwork or expensive jewelry), and more are all considered assets and can be protected via prenup. You can specifically outline that your premarital assets should be kept separate, and anything accrued during the marriage should also be separate. (Remember, if it’s not outlined as separate property, it may get split in a divorce). 

The same goes for liabilities. A prenup can protect you from soaking up your spouse’s debt. Credit cards, student loans, car loans, mortgages, and more are all considered types of debt, and you can protect yourself by stating what is separate debt.

Don’t forget about those future inheritances! Yes, your spouse may be entitled to some of your parents’ fortune if you get a divorce without a prenup. It is a common misconception that inheritance is always considered separate property. Many states will consider it joint marital property if it is received during the marriage. Other states that would typically exclude inheritance will also consider it joint if it is commingled during the marriage. 

Prenups protect you from paying alimony (or protect you from not receiving alimony)

Alimony (a.k.a. spousal support in some states) is money paid to one spouse after the marriage ends to support them financially. Depending on your situation, you may be deathly afraid of being required to pay alimony every month or terrified that you will be left with no means to support yourself after the marriage. Enter: marriage insurance. (Ahem, a prenup!) 

In your prenup, you may designate what you two will do about alimony in the event of a divorce. Will you waive it altogether? Will you allow for X amount for X amount of years? That’s up to the two of you. Remember that there are varying state rules about alimony; for example, if you waive spousal support in your California prenup, you will need an attorney to represent you when signing the prenup.

Prenups protect you from unexpected financial situations 

Ahh, prenups. The gift that keeps on giving! Another perk of “marriage insurance” is that it aligns you and your soon-to-be spouse on financial and life goals, helping you to avoid unexpected financial situations. A prenup forces you to put all of your cards on the table by providing full financial disclosure and then putting your heads together to plan your life. 

You can discuss the good, the bad, and the ugly. How much money do you both spend? Does one of you have credit card debt? What does retirement look like for you guys? Is one person staying home with the kids? How many kids? What about alimony? That inheritance? All of these answers will lay the framework for your beautiful life together! 

They can also help you to avoid unexpected financial situations, for example, if you learn that your soon-to-be spouse has been expecting to be a stay-at-home parent all these years and you had no idea. It’s an excellent time to figure this stuff out! Not to mention, your relationship will be better off with all of this open communication.

The data on divorce rates

Think you are immune from divorce? Think again. According to the CDC, in the year 2020, there were 1,675,911 marriages and more than 630,505 divorces (this number excludes CA, HI, IN, MN, and NM). Ouch, that’s a big number! 

What’s more, for the last 20 years, the marriage rate has steadily declined, and divorce rates have also declined. However, the percentage of divorce remains between 40-50%. That means the data is still hovering around the same well-known statistic–the 50/50 odds of divorce. It’s even worse if you’re in your second marriage–there’s a 60% chance of divorce. Think about it like this: if there was a 50 to 60% chance of you getting into a car accident, would you buy car insurance? What about life insurance?

No one gets married expecting divorce or death…

Of course, nobody goes into marriage thinking or expecting their marriage to end, or worse, for one of them to die soon. More than half of married people ages 25-50 admit that they have recently thought about divorce. Yikes, that’s a scary thought. No one wants to admit that they may be part of that statistic, but the truth is you have a 50/50 chance. Let’s illustrate: flip a coin right now: heads you are getting divorced, tails you aren’t. I bet you wished you had marriage insurance when that coin flips in the air!

No one plans to get into a car accident, but they still buy car insurance, so they know they won’t have a huge bill if they get into one. A prenup will help you keep what’s yours, protect you from your spouse’s liabilities, and avoid lengthy and costly divorce proceedings. It can even align you and your spouse on financial obligations and life goals, avoiding miscommunication. All the better for your marriage!

Did you know even if you skip a prenup, you actually already have a default “prenup”? 

That’s right, even if you don’t get your own prenup, you still have a default prenup–i.e., the default state laws of your state. The difference? With the default state laws, you don’t get to choose your fate–it’s chosen for you. When you divorce without a prenup, your property and debt will still be split up according to the laws and sometimes a judge’s discretion. Does your spouse turn a blind eye to credit card bills? Do they have gambling debt? Maybe they have school debt? With default state laws, a portion of their debt could become your shiny, new parting gift! If you get a prenup, you override these default state divorce laws (or the default prenup, as we say). You can make sure that debt stays put with the rightful owner!

The bottom line

No one bats an eye when it comes to protecting our cars, houses, health, and life with insurance, so what’s the hesitation with safeguarding your marriage? There should be none! Prenups preserve your marriage, money, and sanity, so what are you waiting for? HelloPrenup can give you back the control with a prenup by making it fast, cheap, and efficient. Click here to get your “marriage insurance” (aka your prenup) today! 

 

All content provided on this blog is for informational purposes only. HelloPrenup, Inc. (“HelloPrenup”) makes no representations as to the accuracy or completeness of any information on this site. HelloPrenup will not be liable for any errors or omissions in this information nor for the availability of this information. These terms and conditions of use are subject to change at any time and without notice. HelloPrenup provides a platform for contract related self-help. The information provided by HelloPrenup along with the content on our website related to legal matters (“Information”) is provided for your private use and does not constitute legal advice. We do not review any information you provide us for legal accuracy or sufficiency, draw legal conclusions, provide opinions about your selection of forms, or apply the law to the facts of your situation. If you need legal advice for a specific problem, you should consult with a licensed attorney. Neither HelloPrenup nor any information provided by Hello Prenup is a substitute for legal advice from a qualified attorney licensed to practice in an appropriate jurisdiction.

Nicole SheeheyNicole Sheehey is HelloPrenup’s Head of Content. She is an Illinois-licensed attorney. You can read more about us here. Questions? Reach out to Nicole directly at [email protected]

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