Prenups are becoming more prevalent every day. Here’s a quiz to help you decide if you should get a prenup.
A prenuptial agreement also called a “prenup” is a written premarital agreement between a couple. A prenup details what happens to finances and assets during marriage and in the event of divorce. Though prenuptial agreements are important for holding significant assets or debts before marriage, some other factors may justify seeking one. If you answer ‘yes’ to any of these questions, you may want to seek legal counsel.
Related: Should I Sign a Prenuptial Agreement? Read This
1. Do you have significant assets?
If you possess significant assets before marriage, a prenup is highly recommended. A prenuptial agreement can keep your property classified as separate property free from claims by your spouse in the event of a divorce.
Related: What to Include in a California Prenuptial Agreement
2. Do you have a job or plan to quit?
Prenups are particularly important for women who spend the majority of their time outside of the workforce performing tasks such as caregiving. Couples do not likely enter a marriage expecting divorce. However, people still buy car insurance in the event of a car crash.
3. Are you expecting a significant inheritance?
During divorce proceedings, the property is categorized as “marital” or “separate” property. Marital property is subject to division during divorce, while separate property is not. In most states, inheritance is seen as a separate property entity belonging to the spouse who received it.
However, each state’s divorce laws independently govern how property is redistributed in divorce. Even if your state initially views inheritance as separate property, actions during a marriage can change a court to view your inheritance as a “transmutation of property.” An increase in the value of inheritance due to improvements may be a considerable part of the marital estate. A prenup is recommended if you suspect a large inheritance.
4. Does your spouse have significant debts?
If your spouse poorly manages assets, getting a prenup may help protect you in divorce. A prenup may allow you to avoid responsibility for your spouse’s debts. Getting a prenup is highly recommended if your spouse has prior significant debts, so you know what financial situation you are getting into.
5. Do you own a business?
Getting a prenuptial agreement can be wise for business owners. Businesses are considered an asset and may be taken into consideration when dividing finances among spouses in a divorce. Merely getting married does not entitle one party to an even 50/50 split of business ownership. However, many factors can be at stake. Keeping a business separate from marriage is the best way to protect it in the event of a messy divorce.
6. Do you have children from a previous marriage?
Subsequent marriages can sometimes have special issues differing from a first marriage. If both spouses have kids and assets haven’t been outlined, whichever parent dies first will have their assets distributed to their surviving spouse, rather than the deceased’s children. If spouses want specific assets or property allocated to their children, drafting a prenup or will is recommended.
7. Do you possess any intellectual property?
During a divorce, all assets and debts including patents, trademarks, copyrights, and other intellectual property must be disclosed. Intellectual property can be divided during divorce like any other asset, regardless of who created it. A prenup may be necessary to protect intellectual property.
What can happen if you don’t make a prenup?
If you answered ‘yes’ to any of these questions, seeking a prenup is recommended. Talking with a legal advisor about whether your state is a “community property state” or an “equitable distribution state” is essential to understanding your property rights for divorce proceedings. If you don’t create a prenup, your state’s laws determine the rights of the property you acquire during the marriage. State laws can also determine the property rights of assets acquired prior to marriage.
Protecting your financials and assets is an important factor to consider when getting married. If you still remain unsure, contact one of our attorneys today!
Related: What a California Prenuptial Agreement Can and Can Not Do
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If you or a loved one would like to know more about if you should get a prenup, get your free consultation with one of our divorce attorneys today!