Taxable investments account money in a prenup

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Topic Author
ploldo
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Joined: Sun Oct 30, 2011 1:23 pm

Taxable investments account money in a prenup

Post by ploldo »

Can I identify taxable account investments as an asset in a prenup?

I understand this is more difficult to track than money in an IRA/401k. This is further complicated by how the investment/asset is tracked as it grows over time. For example if I have $100k as an asset now I wouldn't want this asset to still be $100k in 20 years if it has grown to $250k. I would think this should still be possible as long as I stop using this account once married.


I have searched the internet extensively and can only find an answer pertaining to money in retirement accounts or more static assets. Thanks!
Last edited by ploldo on Fri May 31, 2013 12:17 pm, edited 1 time in total.
Quickfoot
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Re: Taxable account money in a prenup

Post by Quickfoot »

Assuming your fiancee is onboard with a prenup I'd talk to your attorney, I would not take Internet forum advice for legal matters.
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Watty
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Re: Taxable account money in a prenup

Post by Watty »

Quickfoot wrote:Assuming your fiancee is onboard with a prenup I'd talk to your attorney, I would not take Internet forum advice for legal matters.
+1
This likely also varies by your state law so that even if you get an good answer, it might not be right for your state.

This is actually a complicated question once you start talking about the future growth since over the time you are married you will have dividends and capital gains that might be reinvested or taxed while you are married.
Topic Author
ploldo
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Re: Taxable account money in a prenup

Post by ploldo »

Yes I will definately be getting legal advice as well.

I just want to know where I'm at going into those discussions. I am hoping this is a common enough occurrence to be fairly straightforward but it's not looking that way.
gerrym51
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Re: Taxable investments account money in a prenup

Post by gerrym51 »

I think you should just give it to her now :mrgreen:
FinanceRookie
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Re: Taxable investments account money in a prenup

Post by FinanceRookie »

Are you going to maintain title to this taxable account once married? If so, and without a prenup, it is my understanding that any gain above the original asset amount will be considered marital property. I'm pretty sure this rule also pertains to retirement plans.
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BolderBoy
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Re: Taxable investments account money in a prenup

Post by BolderBoy »

This issue isn't too complicated at the base level.

You figure (or itemize) your net worth as of the day BEFORE you get married. Put that info / itemization away in a safe place. Any gain going forward from the day of the marriage is a marital gain and in general applies to everything either of you brings to the marriage.

Beyond the basics there may be state specifics.
awval999
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Re: Taxable investments account money in a prenup

Post by awval999 »

You can have a prenup say whatever you want.

You can say that all contributions and all growth in the IRA is individual property and not marital property.
You can say that all contributions and all growth in your 401k is individual property and not martial property.

In Ohio--- for example--- as long as the prenup isn't "unconscionable" it will be enforced.

Easiest way to deal with a taxable account is to not contribute to it once you are married. Have the prenup state: "On date of marriage account #564846438 has $x,xxx,xxx USD. This account is to remain individual property. Dividends will be reinvested. No new contibutions will be added.
Maybe open up a new account with a new number/name/broker post-marriage?
BW1985
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Re: Taxable investments account money in a prenup

Post by BW1985 »

If two people are on completely different levels financially speaking, it really makes you reconsider marriage. Sounds like even with a prenup specifying pre-marriage net worth, all the growth from those accounts is shared. So in the unfortunate event of divorce, half the gains on every investmest would go to the other person.
Chase the good life my whole life long, look back on my life and my life gone...where did I go wrong?
awval999
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Re: Taxable investments account money in a prenup

Post by awval999 »

BW1985 wrote:If two people are on completely different levels financially speaking, it really makes you reconsider marriage. Sounds like even with a prenup specifying pre-marriage net worth, all the growth from those accounts is shared. So in the unfortunate event of divorce, half the gains on every investmest would go to the other person.
This isn't true.
Greatness
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Re: Taxable investments account money in a prenup

Post by Greatness »

Here's what my uncle did when he married. His net worth was north of 5 million. She, had an small inheritance of a few hundred thousand. Since he did not go the pre-nup route (you have to disclose all assets. You forget one, the whole thing can be tossed out due to misrepresentation or fraud), he transferred all assets six months before the actual marriage certificate to a irrevocable trust. He has two family members as the trustees, he's the sole guarantor. Therefore, the money is 100% protected; as long has he doesn't commingle the money. He requests from one of his family members a monthly check, they approve. That money, however, would then become marital property. So, you only take the money out as needed. Also, don't get married in a community property state. Just make things harder. Going the pre-nup route also seems like you do not trust the other spouse. While that may be true financially, I do agree, should one spouse know that the other spouse has loads of money, this could lead to resentment and money issues. The trust would be the way to go. Therefore, you are now legally starting on the same foot. Not hiding anything. Legally the assets and money were transferred to a irrevocable trust. They are not yours anymore. A pre-nup shows you do not trust (no pun intended) the other person. I guess, they are both the same, just the trust route doesn't throw it in their face.

All in all, you really need to seek some help and advance from a good estate/elder law attorney in your state. Money changes a relationship. It is best to keep yours to yourself. These days, you never know how or why it just goes to the other party due to divorce.
ddunca1944
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Re: Taxable investments account money in a prenup

Post by ddunca1944 »

Greatness wrote:Here's what my uncle did when he married. His net worth was north of 5 million. She, had an small inheritance of a few hundred thousand. Since he did not go the pre-nup route (you have to disclose all assets. You forget one, the whole thing can be tossed out due to misrepresentation or fraud), he transferred all assets six months before the actual marriage certificate to a irrevocable trust. He has two family members as the trustees, he's the sole guarantor. Therefore, the money is 100% protected; as long has he doesn't commingle the money. He requests from one of his family members a monthly check, they approve. That money, however, would then become marital property. So, you only take the money out as needed. Also, don't get married in a community property state. Just make things harder. Going the pre-nup route also seems like you do not trust the other spouse. While that may be true financially, I do agree, should one spouse know that the other spouse has loads of money, this could lead to resentment and money issues. The trust would be the way to go. Therefore, you are now legally starting on the same foot. Not hiding anything. Legally the assets and money were transferred to a irrevocable trust. They are not yours anymore. A pre-nup shows you do not trust (no pun intended) the other person. I guess, they are both the same, just the trust route doesn't throw it in their face.

All in all, you really need to seek some help and advance from a good estate/elder law attorney in your state. Money changes a relationship. It is best to keep yours to yourself. These days, you never know how or why it just goes to the other party due to divorce.
Wondering if this would work with a revocable trust as well?
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Sam2
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Re: Taxable investments account money in a prenup

Post by Sam2 »

I would strongly advise to get professional help from a very reputable divorce attorney. In this case do not save on attorney's fees because you may loose much more. My experience taught me that money is a powerful motivator for most people and protection is extremely important, if you don't want to loose it all.

Good luck.
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Boglenaut
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Re: Taxable investments account money in a prenup

Post by Boglenaut »

gerrym51 wrote:I think you should just give it to her or him now
Greatness
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Re: Taxable investments account money in a prenup

Post by Greatness »

ddunca1944 wrote:
Greatness wrote:Here's what my uncle did when he married. His net worth was north of 5 million. She, had an small inheritance of a few hundred thousand. Since he did not go the pre-nup route (you have to disclose all assets. You forget one, the whole thing can be tossed out due to misrepresentation or fraud), he transferred all assets six months before the actual marriage certificate to a irrevocable trust. He has two family members as the trustees, he's the sole guarantor. Therefore, the money is 100% protected; as long has he doesn't commingle the money. He requests from one of his family members a monthly check, they approve. That money, however, would then become marital property. So, you only take the money out as needed. Also, don't get married in a community property state. Just make things harder. Going the pre-nup route also seems like you do not trust the other spouse. While that may be true financially, I do agree, should one spouse know that the other spouse has loads of money, this could lead to resentment and money issues. The trust would be the way to go. Therefore, you are now legally starting on the same foot. Not hiding anything. Legally the assets and money were transferred to a irrevocable trust. They are not yours anymore. A pre-nup shows you do not trust (no pun intended) the other person. I guess, they are both the same, just the trust route doesn't throw it in their face.

All in all, you really need to seek some help and advance from a good estate/elder law attorney in your state. Money changes a relationship. It is best to keep yours to yourself. These days, you never know how or why it just goes to the other party due to divorce.
Wondering if this would work with a revocable trust as well?
No, it will not. Revocable Trusts would just show original ownership of the assets and protect the original amount. However, the growth would be subjected to marital distribution. I second the advice from a professional. If I had any assets like the OP, I would lean towards the irrevocable trust. It removes the awkward talk about the pre-nup, the distrust she will have for you making her consider and/or sign the pre-nup, revealing all assets and cannot be broken unless due to comingling of assets or fraud. There is case law on this. Some Wisenheimer is going to ask for the case law. Fine. Here you go: http://irrevocable-trust.ultratrust.com ... ement.html
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