Any benefit to a prenup for us?

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ryuns
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Any benefit to a prenup for us?

Post by ryuns »

Hi All,

I'm getting married at the end of this month. Yay! I should preface this whole question by noting the obvious: that a prenuptial agreement would not, to us, be any sign of "setting ourselves up for failure". We have always been extremely practical and unemotional about all things money. All of this is from a state of practicality. This is actually on the task list my fiance gave to *me* to do before the wedding!

Here's the thing: I just can't figure out if there's any potential benefit at all to prenup in our situation. When I look at California community property laws, they seem to be exactly in the line with what a prenup would state anyway, so I can't figure out what could potentially be improved by an agreement ahead of time. But then again, people get prenups for a reason, obviously. I just can't figure out what that reason would be in a community property state. Anyone been through this before? Is there any reason a prenup would help? Thanks in advance!

Here are some details about our finances that may or may not be relevant.
M/F, both 30 years old.
Assets:
*Him: ~$300k in retirement accounts, investing, checking and savings accounts. (I can't take credit for all of this--part of it is a small inheritance and some money I was given but didn't spend in college, due to scholarships and working, etc)
*Her: ~$120k in same
*Joint: ~$45k in joint checking and savings
*Jointly-purchased house: ~$150k in equity; $250k mortgage. Technically, I contributed about 80% of the down payment, but we're listed both on the deed. We signed a contract spelling out the calculation of the split in equity if our relationship ended prior to marriage. However, I'm comfortable with 50-50 going forward, since all expenses and improvements since the purchase have been jointly made.

Income:
*Him: ~$80k per year. Very stable. Good pension.
*Her: ~$65k per year. Quite stable. Small pension; great 401k match.

No kids. Kids likely within 3-5 years; probably both stay working post-kid(s).

Any advice? Thanks again!
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
TFinator
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Re: Any benefit to a prenup for us?

Post by TFinator »

I am bumping this because you seem to be the future me, posting in BH forums 5 years later.
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Re: Any benefit to a prenup for us?

Post by placeholder »

You're probably too late for a prenup for a wedding in a few weeks because either could contest it citing undue pressure from the deadline.
Twins Fan
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Re: Any benefit to a prenup for us?

Post by Twins Fan »

I'm not sure on the timing thing, but I also think it might be too late to get a prenup done. You probably should have looked into this prior to May for a May wedding. :D

About the only thing I can see to put in the prenup anyway is the individual accounts you have going. You could say you had $300k before marriage, and she had $120k in those accounts. Otherwise you have joint accounts, both own the house, and if you're not worried about the 80% of the down payment and okay with 50/50 on the house going forward... I doubt the extra 30% you paid over 50/50 down payment is worth haggling over anyway. You both have pensions someday. That could be something for a prenup also... that if a divorce happens neither can have part of the others pension.

So, you have $180k more in individual accounts... what's $90k worth to you? :D

You can't prenup out of child support, and that will be the real hit to your paycheck if a divorce happens after kids arrive... trust me. :D
forestbrook
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Re: Any benefit to a prenup for us?

Post by forestbrook »

Just like to say this sounds exactly like me/us except wedding is 4 months away, we have 1/4 the savings due to doing PhDs, and we'll be moving out of state for sure within 1-2 years, so does the current state even matter?

Maybe a similar question for you -- if you move from CA to another non-community-property state, perhaps the prenup would be important then?
awval999
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Re: Any benefit to a prenup for us?

Post by awval999 »

The prenup can say anything. Doesn't mean it's going to be enforced if the time comes.

Mine says, in a nutshell, my 403b and all future contributions and her pension and all future contributions will not be divided by divorce. That neither party can claim alimony. I had mine signed a month before the wedding; however, I started the process months and months before.

You probably are too late to even get one drafted and notarized at this time.
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Re: Any benefit to a prenup for us?

Post by ryuns »

Heh, yeah, well, I had considered it earlier and assumed it was nothing to worry about, since the community property rules seem reasonable for our situation. But the more I thought about it, the more it seemed I might be missing something and realized that I could tap into the wealth of collective knowledge here at BH.org. I figured that if it was pretty basic, we could probably get one done pretty quickly. I guess there's the possibility of her saying it was under duress, but that might be a possibility anyway, if she morphed into someone vindictive. The sources I read said things like "recommended at least a month before the wedding". So...cutting it close, but not outside the realm of possibility I guess.
Twins Fan wrote:I'm not sure on the timing thing, but I also think it might be too late to get a prenup done. You probably should have looked into this prior to May for a May wedding. :D

About the only thing I can see to put in the prenup anyway is the individual accounts you have going. You could say you had $300k before marriage, and she had $120k in those accounts. Otherwise you have joint accounts, both own the house, and if you're not worried about the 80% of the down payment and okay with 50/50 on the house going forward... I doubt the extra 30% you paid over 50/50 down payment is worth haggling over anyway. You both have pensions someday. That could be something for a prenup also... that if a divorce happens neither can have part of the others pension.

So, you have $180k more in individual accounts... what's $90k worth to you? :D
Good question. My assumption was that our individual accounts values would be sort of frozen at the date of the marriage (assuming one can track down that information), and that all investment gains and contributions would be split 50-50.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

Post by ryuns »

awval999 wrote:The prenup can say anything. Doesn't mean it's going to be enforced if the time comes.

Mine says, in a nutshell, my 403b and all future contributions and her pension and all future contributions will not be divided by divorce. That neither party can claim alimony. I had mine signed a month before the wedding; however, I started the process months and months before.

You probably are too late to even get one drafted and notarized at this time.
Ok, thanks, those are helpful examples. I do see how that is significantly different from community property, though probably not something I'd want to pursue. Though we'll continue to contribute individually, we treat our investments together, generally, and there's always the chance someone stops working temporarily or permanently, so that type of language might be limiting.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
HIinvestor
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Re: Any benefit to a prenup for us?

Post by HIinvestor »

Most folks I've heard of who get prenups have kids of prior marriages. Can see the point for those. For most other folks, unless wealth is VERY different, I think marriage is a time to be, "for richer, for poorer....." Hopefully mostly the former. :)

If there are kids, hope those kids will get the lion's share in case of a divorce, but sadly that rarely is the case. If my assets at the time of my marriage were like yours and your Fiancé, I'd just move forward, expecting and working for the best. No one amongst me and my parents and sibs have had prenups--still all happily married for 5-60+ years now.
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Re: Any benefit to a prenup for us?

Post by ryuns »

forestbrook wrote:Just like to say this sounds exactly like me/us except wedding is 4 months away, we have 1/4 the savings due to doing PhDs, and we'll be moving out of state for sure within 1-2 years, so does the current state even matter?

Maybe a similar question for you -- if you move from CA to another non-community-property state, perhaps the prenup would be important then?
Maybe planning time for getting a pre-nup is proportionate to the amount of time you've spent in college? :)

That's a good question. The idea of an "equitable distribution" according to the person in the black robe does make me a little nervous. I guess, in our situation, and perhaps yours, it's hard to imagine even an arguably "unfair" judge and lawyer interpreting "equitable" too harshly, since we're both employed and saving, but I'm guessing my imagination is too limited on that.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

Post by ryuns »

HIinvestor wrote:Most folks I've heard of who get prenups have kids of prior marriages. Can see the point for those. For most other folks, unless wealth is VERY different, I think marriage is a time to be, "for richer, for poorer....." Hopefully mostly the former. :)

If there are kids, hope those kids will get the lion's share in case of a divorce, but sadly that rarely is the case. If my assets at the time of my marriage were like yours and your Fiancé, I'd just move forward, expecting and working for the best. No one amongst me and my parents and sibs have had prenups--still all happily married for 5-60+ years now.
Thanks for the note HIinvestor. I also don't know anyone who had a prenup, so it's all, obviously, a bit new.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

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Re: Any benefit to a prenup for us?

Post by pezblanco »

Anybody that's never been through a bad divorce has no idea of how bad things can get. Anyone that gets married without a prenup is stark raving mad in my humble opinion. Remember, in many states, at divorce time, depending on length of marriage there will be an effort made to equalize income, especially if you're the male and you make more money than her. No political statement there at all. That is what happened to me. After a marriage of 10 or 12 or whatever is deemed a "long term" marriage, you can be on the hook to this person (that you now love and can not imagine anything going wrong with) for the rest of your life. Your marriage may terminate in one of those states even if California is currently not one of them.

Get the pre-nup done as quickly as possible. Remember marriage is ABOVE ALL a legal contract. If it was about all about love, flowers, and living together, why get married at all? It is, again in my opinion, an insanely unfair legal contract. I'm serious, if you can't get this done, you should postpone the marriage. (Of course no one at your age, has the courage or common sense to do this). If you allow yourself due to time pressure do without the prenup .... remember the old adage (aimed at a different context): Marry in haste, repent at leisure.
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Re: Any benefit to a prenup for us?

Post by travellight »

I would also do the prenup if only to stipulate no alimony.
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Re: Any benefit to a prenup for us?

Post by The Wizard »

awval999 wrote:The prenup can say anything. Doesn't mean it's going to be enforced if the time comes.

Mine says, in a nutshell, my 403b and all future contributions and her pension and all future contributions will not be divided by divorce. That neither party can claim alimony. I had mine signed a month before the wedding; however, I started the process months and months before...
Wow, nice!
Did you run this by a lawyer or anything?
I'd be really surprised if a 20-year Stay At Home Parent would be denied alimony by a judge due to a silly prenup signed a quarter century or more ago...
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Re: Any benefit to a prenup for us?

Post by Nuvoletta »

There is something along the lines of an agreement of marital assets that was suggested to me post marriage in order to separate and identify assets in my will. In my case, there is a blended family with older and younger kids, so that's my impetus. It seems to me that this might be a tool y'all could use given your time constraint, even after the marriage.

There are things you learn about each other after many years together…just having things all defined when you left the gate seems like a good idea.

She sounds like a keeper if this was on her list of to dos and you have more assets. :)
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Re: Any benefit to a prenup for us?

Post by awval999 »

The Wizard wrote:
awval999 wrote:The prenup can say anything. Doesn't mean it's going to be enforced if the time comes.

Mine says, in a nutshell, my 403b and all future contributions and her pension and all future contributions will not be divided by divorce. That neither party can claim alimony. I had mine signed a month before the wedding; however, I started the process months and months before...
Wow, nice!
Did you run this by a lawyer or anything?
I'd be really surprised if a 20-year Stay At Home Parent would be denied alimony by a judge due to a silly prenup signed a quarter century or more ago...
As I said, there is no guarantee it will be enforced. But yes, it was written by a lawyer.

I suppose in your scenario I would use the prenup as leverage to settle out of court, without lawyers, and offer a lump sum one time alimony. Mostly I wanted to protect my 403b.
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Re: Any benefit to a prenup for us?

Post by Calm Man »

OP, ask anybody who has gotten divorced without a prenup if it just went nice and smoothly like you initially wrote. It doesn't. If she applies for the divorce, they will request, X, Y and Z. And believe me, it will be more than you want to give. And you will counterpropose A, B and C and she won't want that. Then you can spend a whole bunch on lawyers like those of us who got divorced without prenups experienced. if you have a prenup the only contention is that the "angrier" spouse gets a shyster to challenge the prenup. A good one usually holds, as mine did. You have anticipated 1% of the issues that can come up. You each must pay the lawyers separately and get it done and the lawyers will know the language to use indicating there is no coercion, time pressure, etc. As somebody has said, should divorce occur, the prime easy challenge will be that it was too close to the wedding. So the lawyers can write very strong language about that. I have a feeling you aren't going to do it. I pray if you don't you do not get divorced and wish you the best of luck.
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Re: Any benefit to a prenup for us?

Post by adam1712 »

It may or may not be too late for a formal prenup but that isn't an excuse to not make sure you and your spouse are on the same page.
Do you both have an understanding of how community property rules work?
Have you documented what property both of you are bringing to the marriage?
Do you have a plan for keeping these assets in separate accounts or mixing things together?
Are there gifts/inheritances or other family interests that need to be accounted for or are expected?
Do you have wills/estate plans?
Do you know each others' end of life wishes should either of you become incapacitated?

Just because you may be happy with the default divorce laws as written doesn't mean there aren't important legal issues to address.
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Re: Any benefit to a prenup for us?

Post by rec7 »

Dave Ramsey says not to get them I think under 2 million. So is there enough money here for a prenup?
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Re: Any benefit to a prenup for us?

Post by LeeMKE »

I married for the second time and we used the Nolo Press (DIY law publishers) book on Pre-nuptual agreements.

http://www.nolo.com/products/prenuptial ... -pnup.html

Here's why I recommend it to anyone getting married, no matter what the financial circumstances. In order to write the agreement, you must consider many issues, and select the way you want to handle each. The exercise is an excellent way to think about your own wishes and assumptions, and learn the same of your intended. It was both illuminating and allowed us to consider issues we hadn't considered, but should discuss before marriage and combining assets.

A pre-nup also forces each person to come clean about their finances. How many people end up surprised by debts or assets that turn out to be different than described casually before marriage? Much easier to accept if you know about it before hand.

The process took us months, as we covered just a few sections at a time, and some of the sections were complicated by previous marriages, and children. In some cases, it was surprising how long it took to dig up financial details that are important and should be documented someplace so each partner knows about them and how to find them.

Highly recommend the exercise. IMHO if divorce comes, it is much smoother when you start off on a basis of mutual trust and understanding. Most Pre-nups become useless within a decade of the marriage, and easily broken in court. But the core of the document, is always good evidence in court of forthright intentions going into the marriage, and IMHO judges tend to follow that course when the parties seem to be on a level playing field.

Pre-nups are MORE necessary if your assets are insufficient to split in half and still raise children and cover retirement IMHO.
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Re: Any benefit to a prenup for us?

Post by pezblanco »

Calm Man wrote:OP, ask anybody who has gotten divorced without a prenup if it just went nice and smoothly like you initially wrote. It doesn't. If she applies for the divorce, they will request, X, Y and Z. And believe me, it will be more than you want to give. And you will counterpropose A, B and C and she won't want that. Then you can spend a whole bunch on lawyers like those of us who got divorced without prenups experienced. if you have a prenup the only contention is that the "angrier" spouse gets a shyster to challenge the prenup. A good one usually holds, as mine did. You have anticipated 1% of the issues that can come up. You each must pay the lawyers separately and get it done and the lawyers will know the language to use indicating there is no coercion, time pressure, etc. As somebody has said, should divorce occur, the prime easy challenge will be that it was too close to the wedding. So the lawyers can write very strong language about that. I have a feeling you aren't going to do it. I pray if you don't you do not get divorced and wish you the best of luck.
OP, you will never hear better advice than the above. Contrary to what some have implied, prenups are not at all that easy to get thrown out. The vast majority of divorces are about dealing with negotiations between the lawyers and are never argued in front of a judge. The lawyers typically do NOT want to go to do so. They make their money by dragging out interminable negotiations. The prenup is a huge bargaining chip to keep the demands on track and reasonable.

Another thing to remember. Do not comingle your inheritance money with joint household expenses. Keep that money in a separate account and strictly separated from all comingled funds. In most (all?) states inheritance will not be subject to being divided at the divorce. Again, this is something that should be specified and laid out in the prenup .... OP, think about it: FIFTY PERCENT OF AMERICAN MARRIAGES END IN DIVORCE. This isn't even Russian Roulette. There you've got a 5 out of 6 chance. :)
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Re: Any benefit to a prenup for us?

Post by cowboysFan »

ryuns wrote: That's a good question. The idea of an "equitable distribution" according to the person in the black robe does make me a little nervous. I guess, in our situation, and perhaps yours, it's hard to imagine even an arguably "unfair" judge and lawyer interpreting "equitable" too harshly, since we're both employed and saving, but I'm guessing my imagination is too limited on that.
To me, your question seems odd. You could write a prenup that screws your wife, but I don't know why she would agree to it. Alternatively, you could have a prenup that screws you over and helps your wife, but then I don't know why you would agree to it. Divorce really is zero sum.
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Re: Any benefit to a prenup for us?

Post by Professor Emeritus »

awval999 wrote:But yes, it was written by a lawyer.

I suppose in your scenario I would use the prenup as leverage to settle out of court, without lawyers, and offer a lump sum one time alimony. Mostly I wanted to protect my 403b.

May I suggest, based on 38 years as a member of the bar, that any agreement written a "A" lawyer, rather than negotiated between lawyers for the parties will be found unenforceable as a matter of law?
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Re: Any benefit to a prenup for us?

Post by HomerJ »

HIinvestor wrote:Most folks I've heard of who get prenups have kids of prior marriages. Can see the point for those. For most other folks, unless wealth is VERY different, I think marriage is a time to be, "for richer, for poorer....." Hopefully mostly the former. :)
Yeah, the net worth isn't different enough to warrant a prenup.

My wife asked me for a prenup because she had two kids, $200k, and some house equity while I had -50k in student loan debt. :shock:

I, of course, happily signed...

16 years later, we're still going strong... No idea how that prenup would work nowadays... If we ever do get divorced, I'll end up giving her 75% anyway, and I'll just work until I'm 65 and retire to my parents farm instead of retiring at 55 with a lake house.
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Re: Any benefit to a prenup for us?

Post by Professor Emeritus »

pezblanco wrote: OP, you will never hear better advice than the above. Contrary to what some have implied, prenups are not at all that easy to get thrown out. The vast majority of divorces are about dealing with negotiations between the lawyers and are never argued in front of a judge. The lawyers typically do NOT want to go to do so. They make their money by dragging out interminable negotiations. The prenup is a huge bargaining chip to keep the demands on track and reasonable.

Another thing to remember. Do not comingle your inheritance money with joint household expenses. Keep that money in a separate account and strictly separated from all comingled funds. In most (all?) states inheritance will not be subject to being divided at the divorce. Again, this is something that should be specified and laid out in the prenup .... OP, think about it: FIFTY PERCENT OF AMERICAN MARRIAGES END IN DIVORCE. This isn't even Russian Roulette. There you've got a 5 out of 6 chance. :)
and of course if you expect a spouse to be a "stay at home parent" be prepared to sign a post nup if its not covered in the prenup.
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Re: Any benefit to a prenup for us?

Post by EnjoyIt »

Not having a prenup is by far the worst decision you can make.

You have plenty of time. I was able to get a prenup hashed out in about 1 week.
Day 1) I saw an attorney, that evening he wrote a document from a standard he had written in the past based on what I wanted.

Day 2) Found an attorney for my wife.

Day 3) I reviewed the document with my attorney and then that night with my wife. We requested a few small changes.

Day 4) The changes were made and the PDF was forwarded to her attorney who reviewed the document

Day 5) My wife and her attorney discussed the documented and recommended further changes changes

Day 6) After several calls of going back and forth between attorneys and us. I finally created a 4 way conference call and we hashed out those differences. That night the document was finalized

Day 7) We signed and notarized.

You have plenty of time to get it done. Let me tell you, my wife and I love each other and get along great. Despite that there was still a place for argument and discussion when creating the prenup. I can only imagine how it would have went if we hated each other's guts during a divorce.

The other thought is that this was not cheap. Attorneys charge by the hour and this took many hours to finalize x 2 attorneys.
The couple of thousand spent now is an insurance to preserve some of the wealth you acquire. The $300K account you have now can be worth $1 Million and I think a few thousand now to preserve $500K is money very well spent and MUST be spent. After all, you have a 50% chance of divorce and loosing that $500K
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Re: Any benefit to a prenup for us?

Post by Professor Emeritus »

FWIW our marriage was a full economic partnership from day one. I had nothing. DW always had her own separate money from her family. But every single cent we both made was OUR money. Every single debt was Our debt. That gave us a full incentive to make the other person as productive as possible. Our DB pensions are OURS so are retirement funds houses etc.

When DW became disabled it became MY job to look after both of us, using all of our resources.

For those of you who want to write a limited check for a lifetime partner, what do you expect to happen if one of you becomes disabled? What provision did you make for that? What if you have a disabled child?

My FIL had a very fair and decent pre nup with his second wife. She was taken care of till the day she died (after him)
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Re: Any benefit to a prenup for us?

Post by awval999 »

Professor Emeritus wrote:
awval999 wrote:But yes, it was written by a lawyer.

I suppose in your scenario I would use the prenup as leverage to settle out of court, without lawyers, and offer a lump sum one time alimony. Mostly I wanted to protect my 403b.

May I suggest, based on 38 years as a member of the bar, that any agreement written a "A" lawyer, rather than negotiated between lawyers for the parties will be found unenforceable as a matter of law?
People sign agreements everyday that are legally binding that are written by Company A and not reviewed or negotiated by a personal lawyer.

In addition the Uniform Premarital Act which over 20 states have adopted gives specific instructions on independent counsel including the steps for one or both parties to waive the right to counsel.
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Re: Any benefit to a prenup for us?

Post by YttriumNitrate »

pezblanco wrote:OP, think about it: FIFTY PERCENT OF AMERICAN MARRIAGES END IN DIVORCE. This isn't even Russian Roulette. There you've got a 5 out of 6 chance. :)
To be fair that statistic is quite misleading since it is biased by the number of people who marry early and those who are serial divorcers. More appropriate for Ryuns situation would be the statistic that 84% of college graduates who married past the age of 26 in the 90s were still married 10 years later, or perhaps the statistic that 81% of college graduates who married past the age of 26 in the 80s were still married 20 years later.

http://content.time.com/time/magazine/a ... 24,00.html
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Re: Any benefit to a prenup for us?

Post by kaudrey »

Calm Man wrote:OP, ask anybody who has gotten divorced without a prenup if it just went nice and smoothly like you initially wrote. It doesn't.
My first marriage/divorce went smoothly; no pre-nup. I just offered to buy him out of 1/2 the equity in our home and give him 1/2 (in cash) of the amount our retirement accounts grew during the marriage. We both thought that was fair and simple, and allowed us both to just move on with our lives. He didn't try to go "after" anything that was mine before the marriage. There's always an exception to the rule!
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Re: Any benefit to a prenup for us?

Post by mptfan »

ryuns wrote:Here's the thing: I just can't figure out if there's any potential benefit at all to prenup in our situation. When I look at California community property laws, they seem to be exactly in the line with what a prenup would state anyway, so I can't figure out what could potentially be improved by an agreement ahead of time.
Your future spouse could move to another state and file for divorce in that state, and in the absence of a prenup, you would then be subject to the divorce laws in that state.
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Re: Any benefit to a prenup for us?

Post by mptfan »

Professor Emeritus wrote:
awval999 wrote:But yes, it was written by a lawyer.

I suppose in your scenario I would use the prenup as leverage to settle out of court, without lawyers, and offer a lump sum one time alimony. Mostly I wanted to protect my 403b.

May I suggest, based on 38 years as a member of the bar, that any agreement written a "A" lawyer, rather than negotiated between lawyers for the parties will be found unenforceable as a matter of law?
I am a lawyer with 19 years as a member of the bar, and I respectfully disagree.
flyingbison
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Re: Any benefit to a prenup for us?

Post by flyingbison »

ryuns wrote: My assumption was that our individual accounts values would be sort of frozen at the date of the marriage (assuming one can track down that information), and that all investment gains and contributions would be split 50-50.
Your future spouse's attorney may not share that assumption. :wink: Seriously, though, I don't think a pre-nup is needed in your situation, but one could be useful for almost any marriage. It all depends on what you and your fiance want to agree to.
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HomerJ
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Re: Any benefit to a prenup for us?

Post by HomerJ »

Beckmaster wrote:After all, you have a 50% chance of divorce and loosing that $500K
FYI, it's really not that high...

College educated people who marry late have a much smaller chance of divorce (like 20%)

Interesting, it seems age is more important than education...

High-school educated people who marry late have a slightly smaller divorce rate than college-educated people who marry right out of college.

Although high-school educated people who marry early have the largest divorce rate of all.

I guess that just tells us that many people today still aren't mature enough in their early 20s to handle marriage. By your late 20s, early 30s, people seem better able to handle the give and take of marriage.

(My pet theory is that people who get married at 23 always wonder what they missed, not being single in their 20s, while people like me, who married at 29, know exactly what we are not missing, and have no regrets being married) :)
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Meg77
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Re: Any benefit to a prenup for us?

Post by Meg77 »

I also just got married and live in a community property state, and we decided there was no real added benefit to us to have one. I have more assets, and likely some amount of them (the interest/gains) will be considered "comingled" regardless of what I do to keep them separate, but I'm ok with that. So much can and will change - kids, new jobs, income potential - that trying to spell out how to split stuff in a future divorce seemed like an impossible exercise for us. And what we could agree on in advance is spelled out by TX law anyway.

Plus no prenup done weeks before the wedding would be enforceable. So you'd need a post-nup, which you can always get and update as circumstances change.
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mptfan
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Re: Any benefit to a prenup for us?

Post by mptfan »

Meg77 wrote:Plus no prenup done weeks before the wedding would be enforceable.
What is your basis for this conclusion?
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Re: Any benefit to a prenup for us?

Post by Barefootgirl »

Bogleheads run an additional risk when they go for a pre-nup with a partner with considerably less in assets:

"What? you mean all this time, you were worth X and we've been flying coach and using restaurant coupons!??"

BFG :)
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pezblanco
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Re: Any benefit to a prenup for us?

Post by pezblanco »

HomerJ wrote:
Beckmaster wrote:After all, you have a 50% chance of divorce and loosing that $500K
FYI, it's really not that high...

College educated people who marry late have a much smaller chance of divorce (like 20%)

Interesting, it seems age is more important than education...

High-school educated people who marry late have a slightly smaller divorce rate than college-educated people who marry right out of college.

Although high-school educated people who marry early have the largest divorce rate of all.

I guess that just tells us that many people today still aren't mature enough in their early 20s to handle marriage. By your late 20s, early 30s, people seem better able to handle the give and take of marriage.

(My pet theory is that people who get married at 23 always wonder what they missed, not being single in their 20s, while people like me, who married at 29, know exactly what we are not missing, and have no regrets being married) :)
Come on Homer. This is Bogleheads where people diversify into international stocks since the USA might become the next Japan. The whole philosophy of most people on this board is to not take needless risks. 20 percent chance of divorce is still worse odds than Russian Roulette. :)

I'll also throw out that anyone that does not have personal experience with what a bad divorce is like (whether as a lawyer or as one of the divorced pair), just has no idea. How many Boglehead would be willing to enter into a long time contract for something say like putting up large amount of money to start a business with a partner ... and it is decided, that well look, we don't need any contracts signed. We're good buddies, we like each other. Friends for better or worse, right? Shoot, if things go to hell, we'll just kind of get lawyers and hash it in the courts if we have too. What do you think the Bogleheads advice would be for THAT scenario? :)

This thing of you guys don't have enough money or assets to get a prenup is just spectacularly bad advice in my opinion. In 10-15 years, there should be/probably will be some real money on the table. You'll find that people change when there is a large pot of cash on the table to be divided (or not).
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HomerJ
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Re: Any benefit to a prenup for us?

Post by HomerJ »

pezblanco wrote:The whole philosophy of most people on this board is to not take needless risks. 20 percent chance of divorce is still worse odds than Russian Roulette.
Well, it's not like it's 100% out of your control like Russian Roulette... I would assume people who have a philosophy to not take needless risks would be more careful than the average person when choosing a spouse.
I'll also throw out that anyone that does not have personal experience with what a bad divorce is like (whether as a lawyer or as one of the divorced pair), just has no idea. How many Boglehead would be willing to enter into a long time contract for something say like putting up large amount of money to start a business with a partner ... and it is decided, that well look, we don't need any contracts signed. We're good buddies, we like each other. Friends for better or worse, right? Shoot, if things go to hell, we'll just kind of get lawyers and hash it in the courts if we have too. What do you think the Bogleheads advice would be for THAT scenario? :)
That's a good point.
In 10-15 years, there should be/probably will be some real money on the table.
Yeah, but that money was earned together over that 10-15 years and should be split evenly. The only thing a prenup is going to save the OP is the 180k extra he has at the start of the marriage (he has 300k, she has 120k). He probably won't get to keep the growth of that extra $180k all for himself.
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Re: Any benefit to a prenup for us?

Post by mptfan »

HomerJ wrote:The only thing a prenup is going to save the OP is the 180k extra he has at the start of the marriage (he has 300k, she has 120k). He probably won't get to keep the growth of that extra $180k all for himself.
Not true. The OP will get to keep the growth of the 300k if it is agreed to in the prenup.
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ryuns
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Re: Any benefit to a prenup for us?

Post by ryuns »

Thanks to everyone for all the thoughtful and helpful responses. This is such a great group. Good diversity of responses.
pezblanco wrote: I'll also throw out that anyone that does not have personal experience with what a bad divorce is like (whether as a lawyer or as one of the divorced pair), just has no idea. How many Boglehead would be willing to enter into a long time contract for something say like putting up large amount of money to start a business with a partner ... and it is decided, that well look, we don't need any contracts signed. We're good buddies, we like each other. Friends for better or worse, right? Shoot, if things go to hell, we'll just kind of get lawyers and hash it in the courts if we have too. What do you think the Bogleheads advice would be for THAT scenario? :)

This thing of you guys don't have enough money or assets to get a prenup is just spectacularly bad advice in my opinion. In 10-15 years, there should be/probably will be some real money on the table. You'll find that people change when there is a large pot of cash on the table to be divided (or not).
The analogy speaks to me, because I'm incredibly risk-averse in a lot of ways. However, I'm not entirely sure it holds. We both understand that our marriage, as signed off with the county, is a legal arrangement (my fiance wanted to quote from a court case about the legal importance of marriage in society in our vows, for heaven's sake--that was too dry even for me!). Where it seems to differ from your analogy is that there are already laws in place that dictate the consequences of dissolving that arrangement. You can enter into a contract where your a priori requirements for that dissolution differ from the existing laws, but doing otherwise is just an employment programs for lawyers. I'm not saying it's a bad idea or that you're incorrect in your conclusions, just that it may have missed the thrust of my question.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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ryuns
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Re: Any benefit to a prenup for us?

Post by ryuns »

mptfan wrote:
HomerJ wrote:The only thing a prenup is going to save the OP is the 180k extra he has at the start of the marriage (he has 300k, she has 120k). He probably won't get to keep the growth of that extra $180k all for himself.
Not true. The OP will get to keep the growth of the 300k if it is agreed to in the prenup.
Good point. Question is whether I'd want to do that. Not a leading question--I'm honestly not sure if that meets my idea for what is fair.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

Post by ryuns »

cowboysFan wrote:
ryuns wrote: That's a good question. The idea of an "equitable distribution" according to the person in the black robe does make me a little nervous. I guess, in our situation, and perhaps yours, it's hard to imagine even an arguably "unfair" judge and lawyer interpreting "equitable" too harshly, since we're both employed and saving, but I'm guessing my imagination is too limited on that.
To me, your question seems odd. You could write a prenup that screws your wife, but I don't know why she would agree to it. Alternatively, you could have a prenup that screws you over and helps your wife, but then I don't know why you would agree to it. Divorce really is zero sum.
Maybe you could elaborate on that. My point was that any potential prenup would be designed to prevent any decisions by a judge from swinging too wide in way or another; to support our present notion of what is "fair". My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

Post by mptfan »

ryuns wrote:My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.
I can. Let's say 6 months after you get married, your spouse decides to stop working, against your wishes, and earns no income from that point forward. You are against the decision, but you support your spouse and stick by him or her. 12 years later, your spouse files for divorce, again, against your wishes (perhaps he or she found someone else), and the judge rules that your spouse is entitled to alimony for the rest of his or her life because you supported him or her for the last 12 years in a lifestyle to which he or she has now become accustomed. In the absence of a prenup waiving alimony, that may be the outcome, whether or not you think it's fair.
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Re: Any benefit to a prenup for us?

Post by ryuns »

mptfan wrote:
ryuns wrote:My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.
I can. Let's say 6 months after you get married, your spouse decides to stop working, against your wishes, and earns no income from that point forward. You are against the decision, but you support your spouse and stick by him or her. 12 years later, your spouse files for divorce, again, against your wishes (perhaps he or she found someone else), and the judge rules that your spouse is entitled to alimony for the rest of his or her life because you supported him or her for the last 12 years in a lifestyle to which he or she has now become accustomed. In the absence of a prenup waiving alimony, that may be the outcome, whether or not you think it's fair.
Thanks for the example. That does make sense. But how do you write that in a contract, aside from just waiving alimony? I mean, it seems like there are a lot of situations where alimony is justified, like if she took time off for kids. Or someone went back to school. Or someone tried to work independently and made less money. While I understand this creates a disincentive for the unfortunate situation you outline, it also seems like it would massively limit flexibility.
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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Re: Any benefit to a prenup for us?

Post by Twins Fan »

That's the thing... it is very situational. With you guys having similar employment, net worth, and joint accounts and a home already. There's not much to prenup for you. The only things I see from the info given is your slightly larger retirement account/savings and the pensions. As someone mentioned earlier, if your marriage ended after 10 years (may be different state to state) it's considered long term and whoever has the larger pension could be on the hook for giving part to the former spouse someday.

Also, if a divorce were to happen it comes down to how agreeable both would be. If it was simply agreed to split everything down the middle and hands off each others pensions, the court would be fine with that also. As long as things are fair, the court will sign off on it. Yes, there are plenty of nasty divorces. But, there are plenty that go smoothly also.
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Re: Any benefit to a prenup for us?

Post by pezblanco »

ryuns wrote:Thanks to everyone for all the thoughtful and helpful responses. This is such a great group. Good diversity of responses.
pezblanco wrote: I'll also throw out that anyone that does not have personal experience with what a bad divorce is like (whether as a lawyer or as one of the divorced pair), just has no idea. How many Boglehead would be willing to enter into a long time contract for something say like putting up large amount of money to start a business with a partner ... and it is decided, that well look, we don't need any contracts signed. We're good buddies, we like each other. Friends for better or worse, right? Shoot, if things go to hell, we'll just kind of get lawyers and hash it in the courts if we have too. What do you think the Bogleheads advice would be for THAT scenario? :)

This thing of you guys don't have enough money or assets to get a prenup is just spectacularly bad advice in my opinion. In 10-15 years, there should be/probably will be some real money on the table. You'll find that people change when there is a large pot of cash on the table to be divided (or not).
The analogy speaks to me, because I'm incredibly risk-averse in a lot of ways. However, I'm not entirely sure it holds. We both understand that our marriage, as signed off with the county, is a legal arrangement (my fiance wanted to quote from a court case about the legal importance of marriage in society in our vows, for heaven's sake--that was too dry even for me!). Where it seems to differ from your analogy is that there are already laws in place that dictate the consequences of dissolving that arrangement. You can enter into a contract where your a priori requirements for that dissolution differ from the existing laws, but doing otherwise is just an employment programs for lawyers. I'm not saying it's a bad idea or that you're incorrect in your conclusions, just that it may have missed the thrust of my question.
Dear ryuns, the analogy holds exactly. There are laws in place that would dictate the dissolving of a shared business, whether there are signed incorporation contracts or not.

You write in another post: My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.

Firstly, that situation can change over a decade. Your career may take off and hers languishes. She may decide for a variety of reasons to stop working. Both of you are going to (and should) change. Sometimes, you change in directions that are not conducive to the marriage continuing. You can't predict these things no matter how much you think you can or want to. Secondly, you are being married in a certain place (California, right?) but the marriage may very well be terminated in another local. And I absolutely assure you that "unfair judgements" to people with similar incomes happens ALL THE TIME ... again I don't want to sound political in this but especially in many "traditional jurisdictions", the male WILL get the short end of the stick. And the short end of the stick can be very short indeed.

For some reason, we all seem to have to make our own mistakes. The lord knows that I insisted upon it. I sincerely wish you the best and hope that you never need or regret not having a prenuptial agreement. Take care.
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Re: Any benefit to a prenup for us?

Post by Twins Fan »

mptfan wrote:
ryuns wrote:My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.
I can. Let's say 6 months after you get married, your spouse decides to stop working, against your wishes, and earns no income from that point forward. You are against the decision, but you support your spouse and stick by him or her. 12 years later, your spouse files for divorce, again, against your wishes (perhaps he or she found someone else), and the judge rules that your spouse is entitled to alimony for the rest of his or her life because you supported him or her for the last 12 years in a lifestyle to which he or she has now become accustomed. In the absence of a prenup waiving alimony, that may be the outcome, whether or not you think it's fair.
Could happen... but, I doubt it in this situation. Here she has prior employment history, I'm guessing education background, and has the ability to work. OP may be on the hook for alimony for a couple years or so, but I think the courts would expect her to get back to work at some point.
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Re: Any benefit to a prenup for us?

Post by ryuns »

pezblanco wrote:
Dear ryuns, the analogy holds exactly. There are laws in place that would dictate the dissolving of a shared business, whether there are signed incorporation contracts or not.

You write in another post: My other point is that I can't really conceptualize of an outcome where a divorce would end up with something that did seem truly unfair, since our incomes and net worths are not that dissimilar.

Firstly, that situation can change over a decade. Your career may take off and hers languishes. She may decide for a variety of reasons to stop working. Both of you are going to (and should) change. Sometimes, you change in directions that are not conducive to the marriage continuing. You can't predict these things no matter how much you think you can or want to. Secondly, you are being married in a certain place (California, right?) but the marriage may very well be terminated in another local. And I absolutely assure you that "unfair judgements" to people with similar incomes happens ALL THE TIME ... again I don't want to sound political in this but especially in many "traditional jurisdictions", the male WILL get the short end of the stick. And the short end of the stick can be very short indeed.

For some reason, we all seem to have to make our own mistakes. The lord knows that I insisted upon it. I sincerely wish you the best and hope that you never need or regret not having a prenuptial agreement. Take care.
Thanks for your response. It's much appreciated. It gives me a lot to think about. As I consider it more, I understand that it may be the wise decision in many ways, but I'm having trouble with the specifics that deal with such an uncertain future. I know no one else can hash these out for us, but I struggle with how to fairly protect ourselves without limiting our flexibility or doing something which may honestly be fair in some situations but unfair in others. I outlined a situation in the post to mptfan below.

As another for instance, what if her income goes up massively and I work part-time for the half the money. Or quit my job, become a goat farmer for 10 years, and lose much of my earning power. We then divorce. We may be able to sit down together today and write a contract that spells out what would happen if she became a CEO and I became a doctor, but that's just one situation. Again, short of claiming that we both have the potential to support ourselves and alimony is out of the question, how do you deal with the uncertainty in a contract like this?
An inconvenience is only an adventure wrongly considered; an adventure is an inconvenience rightly considered. -- GK Chesterton
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