Why You Should Consider a Prenup Even If You're Not Rich
One of the most dangerous misconceptions about prenups is that they’re basically just for protecting premarital wealth, and that they’re only useful for rich people. It’s not true for a few reasons.
Preventing Messy Divorces
The most important reason to have a prenuptial agreement is to take the possibility of a messy and expensive divorce off the table. And it’s not just what you had coming into the marriage that makes divorces messy, it’s fights over what you accumulate during the marriage. So it’s much more important to have a prenup if there’s the possibility of you accumulating significant assets during your marriage.
Protecting the Middle Class
It’s actually middle class people who get hurt the most without a prenup – you’ve got enough in assets – retirement accounts, home equity, maybe an investment account – that you need to protect, but you’re not so rich that you can afford to spend a year and a half paying the equivalent of another mortgage in attorneys fees in a divorce. If you’re super rich, you can afford the attorneys no matter how much they cost.
Defining Financial Boundaries
A prenup helps define the boundaries of your financial relationship with your spouse. Some people think – oh we have no boundaries, we’re 50/50 on everything – but when you dig a little deeper, that falls apart: Well maybe we’re 50/50 on a lot of things, but this is my phone this is my wife’s phone. I have my car, my wife has her car. I have my Play Money account, and my wife has her Play Money account. We each have our electronics, wardrobe, and office furniture, and we each brought our retirement accounts from previous employers, we each may receive our inheritance in the future, maybe we have side businesses, right? And perhaps it’s debts too – you may have your student loans, or credit card debts that you consider your own.
Acknowledging Three Financial Buckets
Most married people don’t live a life where everything is “ours”. Most of us if we’re honest have three buckets – mine, yours, and ours. When you don’t have a prenup, there’s no room for nuance and distinction in where the boundaries are – it defaults to everything being “ours,” and when couples get divorced, they realize that they do have these informal boundaries that are not going to be respected by a one-size-fits-all court system.
Ensuring 50/50 Splits
And even if you truly are 50/50 on everything, that’s worth making clear in an agreement – in 41 out of 50 states, courts don’t have to split everything down the center, and you might be surprised what judges take into account when deciding whether to do 50/50 or 60/40 or 70/30. Getting a prenup just means that you get to decide where the boundaries are of mine, yours, and ours, rather than leaving it up to a court system – who’s better to decide how to categorize your life savings – you, or a judge?