Prenups Are for Everyone, Not Just the Rich & Famous
While prenuptial agreements (prenups) are often associated with celebrity marriages and vast fortunes, their value extends far beyond the world of the rich and famous. In reality, prenups can be a beneficial tool for couples at any income level entering into marriage, offering clarity, security, and a foundation for open communication.
Prenups Can Benefit Everyone in Some Way
Traditionally, prenups have been viewed with suspicion, seen as a sign of distrust or a lack of commitment. However, this perspective overlooks the agreement's core purpose: to establish clear expectations regarding finances and assets in the event of a divorce. This can be especially helpful for couples with:
- Pre-existing assets. If one partner owns a business, inherited property, or has significant savings, a prenup can safeguard these assets and ensure their rightful distribution in case of divorce.
- Debt. When one partner enters the marriage with debt, a prenup can shield the other partner from future financial burdens.
- Blended families. For couples with children from previous relationships, a prenup can ensure each child's inheritance rights are protected.
- Differing financial goals. Openly discussing financial expectations and outlining how income and assets will be managed during the marriage can foster a sense of fairness and prevent future conflict.
Beyond safeguarding assets, prenups encourage crucial conversations about finances. The process of creating a prenup compels couples to discuss often-avoided topics like money management, debt, and inheritance. This open communication can strengthen the foundation of a marriage by fostering understanding and establishing clear financial boundaries.
It is important to remember that prenups are not static documents. They can be reviewed and updated throughout the marriage to reflect changing circumstances, such as the birth of children or a significant inheritance.
What Happens If You Do Not Have a Prenup?
In the absence of a prenuptial agreement (prenup), your assets will be subject to equitable distribution, and other aspects of your divorce (i.e., custody, alimony, etc.) will also need to be negotiated or decided by the court. Unlike community property states where marital assets are automatically split 50/50, equitable distribution grants judges discretion in dividing marital property. This means the court considers various factors to determine a "fair" distribution, which may not always be equal.
Let’s look at an example of what can happen when a couple doesn’t have a prenup: John and Sarah met in college and married young, both with modest incomes. John, an entrepreneur with a promising idea, poured his energy into his startup while Sarah, a teacher, provided financial stability. For ten years, they lived comfortably on Sarah's salary, with John's business venture showing little return.
Finally, John's hard work paid off. His company boomed, making him a millionaire. Delighted by their newfound wealth, they enjoyed a luxurious lifestyle, traveling and renovating their home. However, after fifteen years of marriage, John and Sarah, sadly, grew apart and decided to divorce. A lack of a prenup can impact their divorce in the following ways:
- The company’s value. While the company belonged solely to John before the marriage, the significant growth it experienced during their marriage is considered marital property. The court will determine a fair share of the company's current value for Sarah, potentially millions of dollars.
- The home. The couple's home, initially a modest starter house, was significantly renovated during the marriage using John's newfound wealth. This appreciation in value is likely considered marital property, meaning Sarah could be entitled to a substantial portion of its current worth.
- Lifestyle considerations. The court might consider the lifestyle they enjoyed during the marriage, which was funded primarily by John's company. Sarah may argue that she became accustomed to this standard of living and received spousal support to maintain it.
Get Help Filing an Uncontested, No-Fault Divorce
Cairns Law Offices can help you file an uncontested, no-fault divorce for $299. We are committed to making sure divorce is simple and affordable, and whether or not you have a prenup, you can utilize our Divorce Wizard to streamline your divorce process.
Call (888) 863-9115 to schedule a consultation today.
