Prenup Is Necessary For Low-Income Situations
Do I need a prenup if I don’t have much money coming into the marriage?
So this question brings up one of the biggest misconceptions about prenups — that the primary purpose of a prenup is to protect assets that you have coming into the marriage. And while that is certainly a very good reason to get a prenup, the focus on premarital wealth misses the bigger picture. A much bigger, more encompassing reason to get a prenup is to prevent a messy divorce altogether. If you know someone who has been through a messy divorce you don’t convincing, but if not take it from a lawyer who has worked on several hundred divorces — you don’t want a messy one. And a good prenup can prevent that in two main ways: 1- by setting some financial ground rules for your marriage itself, that will help reduce arguments and improve your chances of staying married, and 2- by laying out how you’d divide your estate in the unfortunate event your marriage doesn’t last forever. We’re going to talk about number 2 in this video.
You don’t want to be in a position where you spend tens of thousands of dollars or more on a divorce case. Yes, a dispute over the wealth you bring into your marriage could cause an expensive fight during a divorce. But it’s far more common to have an expensive fight over the assets you and your spouse accumulated during the marriage itself. In fact, some of the most expensive divorces I’ve ever worked on are ones where the couple didn’t have much coming in, but one or both spouses had very successful careers, and the dispute is over who deserves to get the majority of the assets that the couple accumulated during their relationship.
That brings up the question: What makes dividing marital assets so difficult?
41 out of 50 states in the United States are considered equitable division states. The court has the authority to divide your assets and debts “equitably” which doesn’t necessarily mean “equally”. A court can split your assets 50/50 or it can split your assets 60/40 or 80/20, depending on what they think about your case.
The judge who decides your case decides what share you get from the marital estate. For the most part, you don’t get to choose your judge. And these judges are human like anyone else — you can get lucky and get a judge who completely relates to you and your story. You can get a judge whose beliefs don’t match yours, or a judge whose ex-spouse looks just like you, and that stranger may decide how much of your assets you get to keep. It’s a huge risk to put the division of every dollar you own in the hands of a complete stranger who gets randomly assigned to your case.
Also, in most jurisdictions, the court can consider each spouse’s behavior during the entire marriage. This means that both spouses in a divorce have a huge incentive to bring up all of the bad behavior of the other spouse and testify about it in a public courtroom.
Most people would not choose this process to determine how their assets get divided. Most of us would not say If our marriage doesn’t work out, I want us to sling as much mud at each other as possible in a public courtroom, and let a complete stranger divvy up everything we’ve worked for over the past 20 years. But that’s exactly the system we opt into when we get married without a prenup.
Luckily, there’s a far better system you can choose that avoids the nightmare of the default system. You and your spouse can decide the rules you’ll use to divide your assets and debts if your marriage comes to an end, and you can agree upon those rules going into the marriage when you and your spouse are making these decisions from a place of love and mutual respect. As someone who has done lots of prenups and lots of divorces, I can tell you that it’s a lot easier to negotiate the money issues at the beginning of the marriage than it is at the end.
The truth is this: Everyone’s got a prenup — if you don’t sign your own, you’re accepting the default rules of your state as your prenup — a public courtroom and a randomly assigned judge. If you choose your own rules, they can be whatever you and your spouse agree for them to be.
Some couples agree that all of their assets will be split 50/50 no matter what happens between them. Some couples agree that their assets will remain totally separate, with each spouse keeping the assets they have in their own names. Some couples choose to have three buckets of assets and debts, where each spouse keeps everything in their own bucket and they split whatever is in the joint bucket 50/50. And there are all types of arrangements in between — but the great thing is that you and your spouse have agreed to them — you decided the rules of your marital money rather than lawyers and judges.
The decision to get a prenup isn’t just about how much money you have going into your marriage, it’s about how much you earn during the marriage itself.
