How a Prenup Can Protect Your Home in the Event of a Divorce

It’s not romantic. It’s not fun. And in some generations, it’s almost taboo. But if you want to protect your wealth—and possibly your reputation—creating a prenup may just be something you’ll want to consider.

50% of all marriages end in divorce. That’s a pretty staggering statistic, so it makes sense to want to protect yourself against such an event. You buy health insurance, car insurance, homeowner’s insurance, etc. Well, a prenup is like insurance for divorce.

And if you’re not getting married, you may still need protection because it’s not just marriage that has some Silicon Valley techs talking pre-nup: it’s cohabitation too. Any scenario in which two people snuggle up together long term can open the doors to later betrayal, humiliation, and loss of wealth, unless some ground rules are laid up front. Some insurance, if you will.

The types of “insurance” you can protect yourself with include:

• Cohabitation agreements – these define mutual support, asset ownership, debt management, and can protect the couple from suing each other if the cohabitation arrangement breaks down.
• Non-disclosure agreements (NDAs) – these protect the couple from making embarrassing or disparaging public statements about each other, such as on social media, after the relationship ends.
• Prenuptial/premarital agreements – these define distribution of assets, debt management, protect inheritances and trusts, and define spousal support.
• Postnuptial agreements – the same thing as a prenup, but this agreement is made after the marriage begins.

Things these agreements can’t do:

• Make non-financial demands, like requiring a spouse to maintain a certain weight or appearance.
• Dictate the terms of the relationship, like defining a minimum frequency of bedroom activities.
• Require a spouse to participate in illegal acts or “look the other way.”
• Include clauses that promote divorce by dictating terms that would make a divorce more financially beneficial than remaining married.
• Dictate child custody or child support arrangements.

So how can one of these agreements protect your real estate assets?

Well, for one, if you owned property before entering into the relationship, it’s considered separate property, and you can exclude that asset from division if you split up. As long as you don’t pay for any property-related expenses with a joint bank account or allow your beloved to make a mortgage payment with his or her funds (or your joint funds)—or help with any maintenance or upgrades—your asset will most likely remain separate and be protected.

As soon as your spouse participates in improvements that cause the value of your real estate asset to rise, they may become entitled to a portion of that appreciation. And as soon as any joint assets “comingle” with your separate asset—such as in using joint funds to pay for anything related to your separate property—that property can become joint property.

So, is it worth it to enter into a prenuptial agreement, or something similar? Only you can say. Here, in Silicon Valley, many couples are managing assets worth millions—and, in some cases, billions. That seems to me like something you’d want to protect.

For more detailed information on how to manage separate property—and keep it separate—while you’re in a relationship, visit https://family.findlaw.com/marriage/managing-marital-property-do-s-and-don-ts.html.

If you own property, and think you’re headed for divorce, ask your attorney to partner with a Certified Divorce Real Estate Expert who can help you protect the most valuable physical asset you own: your house.

650-550-8646

Shannon Rose
CDRE, SRES, CDPE, CLHMS, GPS
DRE# 01422955
Los Gatos, CA
1-650-550-8646
DivorceRealtor@RoseGroupRE.com