Money Rehab with Nicole Lapin - You Need a Prenup. Here's Why.

Episode Date: February 16, 2023

Why talk about prenups so close to Valentine's Day? Because prenups aren't the un-romantic, love-squashing contract you think they are. Prenups can actually make your relationship stronger, *if* you have the right kind of conversation. Today, Nicole shows you how.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. it's time for some money rehab. Now that the best chocolates have been eaten and the champagne hangover has hopefully passed, it's time to think about your relationship in the cold post-Valentine's light of day. Here at Money Rehab, you know we're all about the money and the difficult money conversations. So let's talk about one of the last relationship taboos, the prenup. Now, if I was making this episode even six months ago, I would be opening with that line from Kanye, old Kanye's song,

Gold Digger. You know, the one where he says a prenup is something that you need to have because when she leaves you, she's going to leave with half. As a Jewish woman, a proud Jewish woman, I am done with Ye. But not only is that song the perfect lead into our episode about prenups, his whole public meltdown with Kim Kardashian West is a great example of why a prenup protects both parties. Obviously, Kim is not a gold digger. She has plenty of her own money. But by the time they were divorcing, it was clear that Ye was seriously troubled and that the man she had married was long gone. Say what you will about Kim, I think it's unlikely that she would have married him and then had four kids with him if she really understood exactly how disturbed he would become. But what she did have on her side was a prenup.

For Valentine's Day? I know, so romantic. Let's talk about all the ways that a prenup can protect you when things go wrong, and the surprising ways a prenup can protect you even when things go right and you stay together all the way till death do you part. Let's start off by talking about who needs a prenup, because even people with less money than a Kardashian need to have them. The first reason to consider a prenup is family. You can use a prenup to override inheritance laws. For example, in many states, you can't disinherit a spouse. Why would you want to disinherit a spouse? Well, let's say you have a family farm and you want to

keep the farm in the family. A prenup would allow you to direct the family farm to go to, say, your brother's kids when you die so it stays in the family, even if it represents the bulk of your estate, which you otherwise would have to leave to your spouse, even if they didn't want the farm. Using a prenup to shelter assets can also be a huge benefit for that other family reason to sign a prenup. Kids. If you or your partner have kids from a prior relationship, a prenup can help safeguard those kids' assets. Let's say you're a widow with two kids and you're about to get married. A prenup can protect anything, payouts from life insurance policies, heirlooms, or college funds, that you may have inherited from your kid's dad that you want to leave them.

A prenup can also help shelter your kids' assets in case of a divorce, but it can also help protect their assets after your death. While this is true for minor children, it's even more true if you're getting married as older adults with adult kids. That's a situation where estate planning can be a lot more complex and a prenup can help ensure that everyone's children and grandchildren are taken care of exactly the way you want. So family property, heirlooms, and kids can all be protected by prenups. If you're a business owner, a prenup can also help you keep your business even if you divorce. Your business, even if you created it before you met your partner,

could be considered a marital asset. If your partner worked in or for your business, it's possible that you would have to buy them out as part of a divorce settlement. A prenup protects you, but it can also protect them. Prenups aren't just about assets, they also cover debt. So in a prenup, you can agree to be responsible for any debts that your business may incur during your marriage for which your partner could still be held partly responsible for if you divorce. While celebs use prenups to protect their privacy and may include rules about what their partner can write or say about them in case of a divorce, a more down-to-earth

way to use a prenup is to protect a stay-at-home parent. If you're a stay-at-home dad, let's say, while your wife pays all the bills as a dermatologist, I totally support that. But you're also missing out on peak earning and saving for retirement years. This could leave you very vulnerable in case of a divorce. It is also one of the great ways that prenups give you a chance to discuss and negotiate how you want your married financial life to look. The prenup can spell out that if you stay home, your partner must contribute to a Roth IRA in your name in a set amount each year that you stay home. That's a great thing to do and a

conversation that should be had before having a kiddo. Unfortunately, it's not a conversation that people usually have. We look at prenups as being about divorce, and they can be, but they can also be about so much more. They can be an important part of estate planning and financial planning for life. Bringing up a prenup can be awkward. I speak from personal experience. But marriage is full of hard and awkward conversations. We talk about marriage as being about love and emotional fulfillment. And it is. But in many ways, it's an open-ended contract to make a series of investment decisions, like buying a house, saving for retirement, and caring for children and aging parents. A prenup can be used to help you navigate those decisions whether your marriage is till death do you part or not.

For today's tip, you can take straight to the bank. If you do decide to stay home, try to do some part time volunteering. This can be used in place of work history and the people you volunteer with can act as references if you decide to go back to work. It can be hard to reenter the workforce after a long break, and volunteer work can act as a bridge between your before-kids and after-kids life. Money Rehab is a production of Money News Network. I'm your host, Nicole Lappin. Money Rehab's executive producer is Morgan Levoy. Our researcher is Emily Holmes. Do you need

some money rehab? And let's be honest, we all do. So email us your money questions, moneyrehabatmoneynewsnetwork.com to potentially have your questions answered on the show or even have a one-on-one intervention with me. And follow us on Instagram at Money News and TikTok at Money News Network for exclusive video content. And lastly, thank you. No, seriously, thank you. Thank you for listening and for investing in yourself, which is the most important investment you can make.