Why Do I Need a Prenup?

When Should You Consider Getting a Prenup?

So first, let’s talk about the obvious – everyone knows that a prenup can protect premarital assets, things that you owned before the marriage. This isn’t the only reason for a prenup; in fact, it’s not even the most important reason for a prenup, in my opinion.

Protecting Premarital Assets

If you own property coming into your marriage, even if it’s just $25,000 in a retirement account, that’s usually enough to warrant having a prenup to protect it. Without a prenup in place, it’s extremely easy for assets you own prior to marriage to get converted into marital assets that you then have to split if the marriage ends. With a retirement account, if you keep contributing to it during the marriage, you’ve commingled it and may very well have to split it later on. That $25,000 you have coming in could turn into $50,000 or $100,000 during your marriage, so even a relatively small account is still worth protecting.

Insurance Against a Messy Divorce

An even more important purpose of getting a prenup is insurance against a messy divorce. In more than 40 out of 50 states, the court doesn’t have to split your marital assets 50/50—the court can consider almost anything in deciding who gets more of the assets.

A prenup lets you decide what happens to your life savings rather than a judge. You and your spouse can identify which categories of your assets are joint and which are separate and simply agree to split your joint assets 50/50 while you each keep your separate assets. This is a very common way to structure a prenup that gives you and your spouse the certainty and peace of mind of knowing exactly what you own together and separately and removes the possibility of an expensive fight later.

Other Reasons for a Prenup

There are many other reasons you might want to have a prenup, and most of them are associated with having different buckets of money. I like to say that even if you don’t have a prenup, you still have a prenup—it’s just your state’s laws that act as your default prenup. And the default prenup pretty much lumps everything each spouse owns together into one bucket of marital property. Any of these situations are a good reason to consider a prenup:

You or your spouse have assets or debts, that shouldn’t be considered joint.
If you have children from a previous relationship, and either pay or receive child support.
You or your spouse wants to leave an inheritance to children from your separate assets.
You or your spouse expect to receive an inheritance.
You or your spouse are part or full owners of a business – that’s a huge reason to have a prenup.
You or your spouse expect to start a business in the future.
Or maybe you’re just like most modern couples, where you have a joint account that you and your spouse contribute to, but you also maintain separate accounts that you have ownership over. That’s a good reason to have a prenup—to clearly separate what’s mine, what’s yours, and what’s ours.