Generally, people hearing prenups or prenuptial agreements take it negatively. Some say it's unromantic while others say it's unnecessary. They say that prenup only makes relationships unhealthy, or it deceives the other party.
However, there are many reasons to sign a prenuptial agreement, especially for the rich. Here are some ideas about why rich people have a prenuptial agreement:
1. Override State Divorce Laws
As for divorce, states have different laws to address such issues. As unfortunate as it may be, some couples end up getting divorced for various reasons. It's best to think about the future rather than stay on the thought that you're both in love and will never break apart.
Especially when one of you has more valuable assets, a prenuptial agreement can help protect these assets against state divorce laws. Generally, state laws dictate what happens when a couple gets divorced. From finances to child support, the state will have a say, and you've got nothing to do but follow it.
With a prenup, you can decide on what to do with your finances when divorce comes in the way. Moreover, you can draft your laws to govern your marriage with a prenuptial agreement.
What's even better is you won't have to pay for the litigation costs of the divorce since the prenup contains rules regarding it.
2. Protect Future Investments
One of the things you can protect with a prenup is your future investment – whether it’s a business or other type of investment. Especially when you're an entrepreneur seeking for investors or expanding your business, you need to have a prenuptial agreement so you can protect the shares of the business.
When you’re divorced and already established business, state laws will divide it in half. That means your spouse will get a share on it even if they didn't contribute anything to the business.
Unless you've signed a prenup agreement, this won't happen. On the other hand, you can even use the prenup to designate a share on your future investment to your spouse. Whatever the reason is, you can put this in your prenup or choose not to.
Especially that rich people grow their finances by investing ahead, they use a prenup to keep their future investments protected.
3. You Have More Value Than The Other
Rich people get a prenup when the other spouse has more wealth or assets than the other. That means that whatever you own before getting married is still yours even after the marriage ends.
Unlike with regular marriage with no prenup agreement, whatever you own before marriage becomes marital property. With this, your spouse will have a share on whatever you own after a divorce.
If your income is lesser than your spouse and you have a prenup agreement, you can state how you want your future financial security. This includes the alimony, its type, and duration. That way, you won't be left without any penny.
Aside from money or assets, the other spouse's value extends to credit card debt, student loan debt, or loans. If you didn't sign a prenup agreement, you might end up paying your spouse's debt or loans. Whatever types of debts or investments, you, as a spouse, are expected to help fund such things.
4. Use It As Insurance
Instead of thinking negatively about it, rich people use prenuptial agreement as a form of insurance. Not being pessimistic, but most rich people consider every possible scenario in the future, especially when it comes to finances.
Since you can talk and set rules or specific laws on the prenup, both parties can draft one on how they'll face worst-case scenarios. For instance, a prenup can have a way to join, remain, or separate one's income or debts during the marriage. Whatever type of finances one acquires, a prenup will state whether it'll stay as an individual asset or become a joint asset.
Because heightened emotions may lead the other party to make an irrational decision during a divorce or marriage, the prenup ensures that the properties or assets will go to whoever is stated in the prenup.
To sum it up, rich people positively obtain a prenup agreement, unlike what other people think about it. Because rich people have a lot of assets to protect, they use a prenup to protect it from divorce or other state laws. That way, they can do whatever they think is fit instead of letting the state decide over their finances.
Even with future investments, a prenuptial agreement helps protect such investment from being divided. Or, if the other spouse has more assets or value, they use a prenup to protect themselves from acquiring debts of their spouse. Lastly, a prenup also acts as insurance for the rich because it'll adequately join or separate the parties' assets or income during the marriage.
This means that a prenup is a wise way that most rich people use to protect their properties and themselves in case of unwise future decisions.