Pre-nup questions

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lhl12
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Pre-nup questions

Post by lhl12 » Thu Aug 11, 2016 8:03 am

A female friend (age 53) is getting remarried and has asked for my advice regarding her post-remarriage financial arrangements and pre-nup. State of residence is CT.

She has a net worth of about $4 million -- $3.2 million at Vanguard (about $3 million taxable and $0.2 million in an IRA) and owns her own home worth about $0.85 million (debt-free). She presently works part-time as a paralegal/admin making about $40K/year (although she could work full-time at a different job and earn quite a bit more if she wished). Effectively all of her current assets were from her original divorce settlement eight years ago (including about $0.6 million of appreciation since then). She has worked continuously since her divorce (and during much of the first marriage as well, for part of the time at much higher paying jobs), so she has probably drawn about 2% annually from her financial assets to supplement her wage income.

The new husband is 55 and is a divorce attorney. He is a partner in a small firm and is also divorced himself (supposedly his wife left him totally out of the blue). Each spouse-to-be has two kids in their early 20's, all graduated from college. He owns a condo which he plans to sell, following which he will move in with her. I am told (without any details) that he has a net worth of about $1.0 million, but will have a substantially higher income than she will going forward (I don't know how much, but presumably multiple six figures annually).

She has received everything she is entitled to receive from her ex-husband. He is still paying his ex-wife -- I'm not sure of the details. He has a long-term care insurance policy. She does not.

Their general plan is to maintain their financial assets separately, with their assets going to their respective children at death. However they both expect that there will need to be some aspect of joint finances post-marriage.

She has an estate planning attorney who is advising her on a pre-nuptial agreement.

1. Is this choice of attorneys wise, or should she use a divorce attorney for this purpose?
2. What is the right way to handle her house given these facts? My intuition was that he should buy half the house from her and they should then split all expenses 50/50, but would appreciate input on this question.
3. How should they think about splitting expenses in the future given that he has a much higher income but she has a much larger net worth?
4. If the general goal is to maintain their financial assets separately, what sorts of issues will arise in the future that will make this tricky or difficult?
5. What other issues should she focus on?

Thanks in advance for input.
Last edited by lhl12 on Thu Aug 11, 2016 10:14 am, edited 2 times in total.

bsteiner
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Re: Pre-nup questions

Post by bsteiner » Thu Aug 11, 2016 8:45 am

Trusts and estates lawyers and matrimonial lawyers both do prenuptial agreements. I think about half the time the lawyer on the other side has been a trusts and estates lawyer and about half the time the lawyer on the other side has been a matrimonial lawyer (not counting the times where the lawyer on the other side was something other than a trusts and estates lawyer or a matrimonial lawyer). I think it's usually smoother if the lawyers are trusts and estates lawyers, but if the person she wants is a matrimonial lawyer that's OK.

This case should be relatively easy since they're both in good shape, she with her assets and he with his income. The three key issues are (i) who gets what if he dies first, (ii) who gets what if she dies first, and (iii) who gets what if they get divorced. Since he has a good income and she has substantial assets they should be able to work this out fairly easily.

The lawyers will know how to handle the details.

ajr22
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Re: Pre-nup questions

Post by ajr22 » Thu Aug 11, 2016 8:52 am

Have her go to a reputable family law attorney for the pre-nup. You can PM me if you would like a good referral.

All of the other questions she should go over with her attorney. Granted, she needs to be comfortable about what she wants to do and how to handle the day-to-day finances but she needs to run them by an attorney. She will also probably want to have her fiance sign away his "elective share" of his inheritance if she wants most of her estate to go to her children. The share is 1/3 of all assets (not including non-probate assets).

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dm200
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Re: Pre-nup questions

Post by dm200 » Thu Aug 11, 2016 8:53 am

The new husband is 55 and is a divorce attorney.
Red flag (to me). IMO, she needs an experienced divorce attorney to assist/advise her.

azanon
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Re: Pre-nup questions

Post by azanon » Thu Aug 11, 2016 9:52 am

Just my opinion, but if you're 50+, worth a few million or more, and not married (for whatever reason), then you don't get married unless it's to someone worth at least as much as you are, or close enough. I'm no attorney, but I've heard even pre-nups can't always be counted on. In life, some things are just either too risky or too expensive, or a combination of both. Just say no, and thank me later.

So, my advice is for her to reconsider her decision to marry this individual.
Last edited by azanon on Thu Aug 11, 2016 9:55 am, edited 1 time in total.

tim1999
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Re: Pre-nup questions

Post by tim1999 » Thu Aug 11, 2016 9:55 am

[OT comments removed - moderator prudent]

In the OP's friend's case, I think she needs to see a family law (aka divorce) attorney and not an estate planning attorney. As far as splitting expenses, I think that is a conversation the two of them should work out between themselves. My wife and I did this fairly quickly.

She needs to absolutely make sure she does not co-mingle any of her pre-marriage assets with his. If they want to open a low-value joint checking account, that's OK, but his income should not be going into her taxable Vanguard accounts, etc.

The house should stay in her name and be specifically called out in the pre-nup as being hers regardless of any monthly contributions he may make. Of course he will argue against that though.

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prudent
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Re: Pre-nup questions

Post by prudent » Thu Aug 11, 2016 10:01 am

I removed a number of off-topic posts. Please keep the replies focused on the OP's questions, not the general state of marriage, how the OP's friend might have come by her assets, or other off-topic commentary.

Nowizard
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Re: Pre-nup questions

Post by Nowizard » Thu Aug 11, 2016 10:05 am

Finances are only one part of a life together, and though there are statistics about the outcomes of second marriages that make it important to consider financial discrepancies, the psychology of the marriage is also important. In this case, it appears that the couple is in agreement about having a pre-nup, a positive sign. I would suggest that each determine what they feel is best in separate meetings with their own attorneys and then meet with an attorney to discuss the individual preferences with both presenting them in writing to the mediating attorney before a first meeting. This would give a clear indication of the thoughts of each and either further enhance their relationship if in basic agreement or validate the concerns of those who see red flags with either party. The attorney should obviously not be a colleague or acquaintance of the male divorce attorney. I would also encourage the OP to clearly give advice about who to see rather than specific advice about what they would do in a comparable circumstance.

Tim

Tal-
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Re: Pre-nup questions

Post by Tal- » Thu Aug 11, 2016 10:15 am

I'll sidestep the above derailment, and provide my own, personal, non-expert opinion on the original question:

Tal votes: It depends.

One of the things that every marriage needs to determine is how finances are handled. In these situations, where they have assets coming into the marriage, they also need to determine how those will be managed. Obviously, right.

But the catch is that for some couples, having separate assets conflicts with their view of marriage. For others, keeping previous assets apart is just good planning.

I'd suggest you ask your friend two questions:

1-If you were to get divorced in 5 years, should he get part of your $4M net worth?
2-If you die, where would you like your assets to go? To your kids, or your new husband?

For most people, they would not want to split their net worth after 5 years of divorce, and would prefer their kids to get any inheritance. That's fine, but it does mean that a prenup is a great idea. But, if she feels otherwise, maybe a prenup doesn't make sense. This is both her decision to make as an individual, and their decision to make as a couple. But, it does need to be made sooner than later.

If they get a prenup, how do they manage finances in the future?

Like above, your fiend and her husband need to determine how finances will be handled moving forward. It's (mostly) possible to keep her finances separate from his, or to commingle them to the extent that they are basically a single set of finances. Either works just fine. But, again, they need to decide sooner than later. A postnup is like a prenup, but determines how assets gained through the marriage would be handled - meaning if he makes $2M a year, he could invest that separate from his marriage.

Overall thoughts
If your friend wants to keep their finances separate, I think that doing a combined prenup to protect her, and postnup to protect him is a good idea. This provides them both protection for their respective assets, including his greatest asset: his income.

But, if they want to do the 2-become-1 thing, and want to sacrifice access to personal finances in the spirit of combined finances, they are adults and can make that decision. All that I would hope is that they are purposeful in making that decision.
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Dulocracy
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Re: Pre-nup questions

Post by Dulocracy » Thu Aug 11, 2016 10:33 am

What type of attorney to get:

I handle both estate and family law matters in a different state. If I only handled estate matters, it would be irresponsible for me to draft a prenuptial agreement in my state, because of the strict rules regarding these documents. I have had numerous prenuptial agreements that were created by attorneys thrown out because of silly details that the attorney simply left out for lack of knowledge of the specific requirements. In my state, at least, this document is scrutinized. As an example, without specific consideration (often done with a check written to the name of the other party), the document is not valid here.

I am not familiar with the laws of New Jersey, so I do not know whether an estate attorney there would be appropriate, but I would think it would be worth the money to pay a respected divorce attorney to craft this document. You want someone who actually litigates the issue and understands what landmines may exist to be the one to prepare this type of document.

Edited to add:
The other questions should ALL go to her attorney, who will be able to help her navigate the laws and how they specifically apply to her situation. Sorry that I am not more helpful on that front, but she really does want to present that to her attorney.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

lhl12
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Re: Pre-nup questions

Post by lhl12 » Thu Aug 11, 2016 10:42 am

A few points of clarification:

1. She most definitely will have a pre-nup. That is not a question.
2. It is definitely her intent to maintain her assets separately and ultimately to have whatever's left go to her kids. Also not a question.
3. Given 1 and 2 above, the real questions are:
a. Is an estate planning attorney sufficient or does she need a matrimonial attorney for the pre-nup? bsteiner says the estate planning attorney should be fine, so that's good enough for me.
b. How should she deal with her house (both legally and especially economically) in light of the fact that the new husband will be moving in with her? I thought he should buy half from her and have it become a joint asset, but would appreciate others' views.
c. Since they will mostly be keeping things separate but since some degree of commingling seems inevitable, what are the things to be especially careful about? For example, post-marital retirement plan contributions seem like they might be an issue. Depending on how the house gets treated, expenses to maintain and improve it might also be an issue. What else should be on her radar?

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Re: Pre-nup questions

Post by bsteiner » Thu Aug 11, 2016 10:46 am

They're in Connecticut. The state-specific quirks are the pot for equitable distribution (see this from the Connecticut courts: https://www.jud.ct.gov/lawlib/Notebooks ... bution.pdf), and the elective share (here is the statute: https://www.cga.ct.gov/current/pub/chap ... ec_45a-436). But they'll deal with these things in the prenuptial agreement.

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Re: Pre-nup questions

Post by EnerJi » Thu Aug 11, 2016 11:02 am

lhl12 wrote: b. How should she deal with her house (both legally and especially economically) in light of the fact that the new husband will be moving in with her? I thought he should buy half from her and have it become a joint asset, but would appreciate others' views.
Why complicate things? Since she owns the house and he is presumably earning a very solid income, why not just have him pay the property taxes, utilities, and maintenance as a sort of "rent?" I don't see the advantage of making it a joint asset.

lhl12
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Re: Pre-nup questions

Post by lhl12 » Thu Aug 11, 2016 11:09 am

EnerJi wrote:
lhl12 wrote: b. How should she deal with her house (both legally and especially economically) in light of the fact that the new husband will be moving in with her? I thought he should buy half from her and have it become a joint asset, but would appreciate others' views.
Why complicate things? Since she owns the house and he is presumably earning a very solid income, why not just have him pay the property taxes, utilities, and maintenance as a sort of "rent?" I don't see the advantage of making it a joint asset.
My thoughts on why making it a joint asset might make sense:

1) It allows her to take half the value of the house out of residential real estate and shift it to a diversified portfolio at Vanguard, where it will earn the same overall return as her total portfolio (which might be meaningfully higher or lower than the ultimate return on the house itself).
2) It's not at all clear to me that taxes plus utilities plus maintenance equals sufficient "rent". Also, what happens if the house appreciates or depreciates significantly in value? Does the "rent" figure get revisited? By making the house a joint asset, it moots these issues.
3) What happens if one of them wants to make a more significant investment in the house (an addition, say, or a big remodel)? If it's a joint asset then it's simple - they each pay 50% and they just have to agree beforehand on how much they are jointly willing to put into it. If she retains 100% then there could be difficult issues around attribution of cost.

It seemed to me that making it a joint asset simplified things a lot.

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Re: Pre-nup questions

Post by mouses » Thu Aug 11, 2016 11:39 am

Their lives would be much simpler if they did not get married, it seems to me. They could do powers of attorney for healthcare, etc.

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CAsage
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Re: Pre-nup questions

Post by CAsage » Thu Aug 11, 2016 11:52 am

Let's assume these two people are getting married because they want to be together for a long time. Having their home be only 'her' house is fraught with divisive emotional and financial mine fields - they want it to be theirs. Having him buy in and then foot half the bill for upkeep, expenses and future upgrades makes it 'theirs'. I have seen it where the house belonged to one person, and the new spouse never lifted a finger to pay for upgrades or pull weeds - causes a lot of trouble.
Frankly, I think they are pretty evenly matched - she was greater assets which create income, he has future income which will build assets. The very necessary prenup should consider multiple outcomes - divorce in the short or long term, or one of their eventual deaths. They can keep all other assets separate (not like CA, community property takes a lot of planning...), and plan for them to go their respective children, while also planning that one of them remain in the house after the first one passes. The prenup can specify that he is then bought out of the house at some price should that be necessary.... They have lots of money, how to sort it out should not be a barrier to their future.
And open one joint credit card and one checking account, into which they each funnel enough cash to pay the bills. Beats one set of my affluent friends who actually take turns paying the bills and then write each other checks - after 30 years of marriage!
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lhl12
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Re: Pre-nup questions

Post by lhl12 » Thu Aug 11, 2016 4:47 pm

CAsage wrote:Let's assume these two people are getting married because they want to be together for a long time. Having their home be only 'her' house is fraught with divisive emotional and financial mine fields - they want it to be theirs. Having him buy in and then foot half the bill for upkeep, expenses and future upgrades makes it 'theirs'. I have seen it where the house belonged to one person, and the new spouse never lifted a finger to pay for upgrades or pull weeds - causes a lot of trouble.
Frankly, I think they are pretty evenly matched - she was greater assets which create income, he has future income which will build assets. The very necessary prenup should consider multiple outcomes - divorce in the short or long term, or one of their eventual deaths. They can keep all other assets separate (not like CA, community property takes a lot of planning...), and plan for them to go their respective children, while also planning that one of them remain in the house after the first one passes. The prenup can specify that he is then bought out of the house at some price should that be necessary.... They have lots of money, how to sort it out should not be a barrier to their future.
And open one joint credit card and one checking account, into which they each funnel enough cash to pay the bills. Beats one set of my affluent friends who actually take turns paying the bills and then write each other checks - after 30 years of marriage!
This makes very good sense to me - thank you! One followup - how should they treat all of her furniture, dishes, plants, paintings, etc. -- all the home furnishings that she already owns but that will be part of the joint house. Should those be made joint as well, or should they be maintained as separate property? The value isn't significant, but the emotional value could be quite large. He will bring very little to the house - it will almost all be her things.

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Re: Pre-nup questions

Post by CAsage » Thu Aug 11, 2016 5:54 pm

If there are any household furnishings with significant value, those can be spelled out in the prenup, just like you would in a will. (not an expert, life experience only!). Here a divorce lawyer would be really helpful, as I am not sure to what level people divide things up when they break up. If you are arguing over the china.... you just spent more on lawyers than most household items are worth.
I like the posts recommending they both get separate advice, then mediate. Sounds like they can work it out fairly, it's impossible to control the outcomes but be as prepared as possible. With decent assets, they would have enough for two households before or after. And not fight about paying the bills!
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Dulocracy
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Re: Pre-nup questions

Post by Dulocracy » Thu Aug 11, 2016 6:53 pm

lhl12 wrote: a. Is an estate planning attorney sufficient or does she need a matrimonial attorney for the pre-nup? bsteiner says the estate planning attorney should be fine, so that's good enough for me.
Again, I cannot emphasize enough that I think this could be a mistake. Bsteiner is better at investing than I am, I am certain. Bsteiner is more knowledgeable in investing than I am. Bsteiner is probably also an attorney who is more knowledgeable than I in that realm. I would like to emphasize one point:

I am a senior partner of a law firm that does a large amount of domestic work with approximately 200-250 active family law matters every month. We deal with mostly middle to high income clients. My experience after 13 years of trial work is that I have regularly had prenuptial agreements thrown out. This includes those drafted by attorneys. I cannot emphasize enough how it is worth it to hire someone who regularly handles these and knows how it plays out in court. As I do not practice in New Jersey, I obviously do not have a dog in this fight, but my experience would be that for a document that has such a large impact, it is worth making sure it is correct and will not be thrown out.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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Re: Pre-nup questions

Post by randomguy » Thu Aug 11, 2016 8:27 pm

lhl12 wrote:
EnerJi wrote:
lhl12 wrote: b. How should she deal with her house (both legally and especially economically) in light of the fact that the new husband will be moving in with her? I thought he should buy half from her and have it become a joint asset, but would appreciate others' views.
Why complicate things? Since she owns the house and he is presumably earning a very solid income, why not just have him pay the property taxes, utilities, and maintenance as a sort of "rent?" I don't see the advantage of making it a joint asset.
My thoughts on why making it a joint asset might make sense:

1) It allows her to take half the value of the house out of residential real estate and shift it to a diversified portfolio at Vanguard, where it will earn the same overall return as her total portfolio (which might be meaningfully higher or lower than the ultimate return on the house itself).
2) It's not at all clear to me that taxes plus utilities plus maintenance equals sufficient "rent". Also, what happens if the house appreciates or depreciates significantly in value? Does the "rent" figure get revisited? By making the house a joint asset, it moots these issues.
3) What happens if one of them wants to make a more significant investment in the house (an addition, say, or a big remodel)? If it's a joint asset then it's simple - they each pay 50% and they just have to agree beforehand on how much they are jointly willing to put into it. If she retains 100% then there could be difficult issues around attribution of cost.

It seemed to me that making it a joint asset simplified things a lot.
It complicates divorce a lot though:) Legally I would definitely spell all this type of stuff. You wouldn't want someone arguing that paying x entitles them to a share of the property later. Easy to say now that is doesn't matter. In 5 years when you hate each other, it is a different story.

And for fun now that they are married, who pays for the marriage penalty/bonus?:)

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Re: Pre-nup questions

Post by bsteiner » Fri Aug 12, 2016 1:23 pm

randomguy wrote:who pays for the marriage penalty/bonus?:)
That's a standard provision in a prenuptial agreement.
Dulocracy wrote:... I have regularly had prenuptial agreements thrown out. This includes those drafted by attorneys. ...
They don't get thrown out very often, though we had an estate where the surviving spouse successfully challenged the prenuptial agreement (the case was settled on appeal), and another where the surviving spouse challenged a postnuptial agreement (the case was settled).

We've sometimes brought in matrimonial lawyers as co-counsel in large and complicated situations. In a matter of this size we might not, except in this case we would probably get local counsel in Connecticut review the agreement as to Connecticut matters, so we might pick a matrimonial lawyer to get a different viewpoint.

The original poster was concerned about the wife, but the husband would have some concerns as well. She has more assets and he has more income. From his standpoint, if they live on his income, and her assets grow, what happens if she dies first?

From her standpoint, she might want him to agree to have his estate elect portability if he dies first, since her estate could easily end up being more than the estate tax exclusion amount (presently $5,450,000, indexed) but that would be a standard thing for her lawyer to ask for.

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Re: Pre-nup questions

Post by sperry8 » Fri Aug 12, 2016 10:34 pm

The key part is to make sure she does not co-mingle her assets in Vanguard. In fact, don't even have her ACH/Wire money from Vanguard into the joint account. I would set up an intermediary account (Bank 1). Then move money from Vanguard to Bank 1. And only via Bank 1 to the joint account. As long as Vanguard monies are never co-mingled (NO money goes into or from it to a joint account or to pay ANY joint bills, etc.) that money would remain hers regardless of whether a pre-nup was thrown out. The extra step of creating Bank 1 account ensures no slip ups as any/all monies to/from it connect to joint account. It's overkill, but avoids any potential problems later.

As for the house - the pre-nup needs to cover it - but she should assume she will lose 1/2 in a divorce. I'd have him buy half of it (over time). Create some sort of schedule to do this if he doesn't have 1/2 now).
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Re: Pre-nup questions

Post by MulesFan » Fri Aug 12, 2016 11:31 pm

Similar marital situation, no where NEAR the assets, but both of us wanted to keep things separate. We both went to separate attorneys for the prenup. Fast forward a few years & I'm now in the position that I want a trust for my assets, DH is considering a trust for his assets & we are trying to figure out what to do with the house (jointly owned, 50/50) - we may need another trust for that - waiting to hear from lawyer how to set up the plan. We want the survivor to stay in house as long as s/he wants but when the time comes & house is sold, 50% goes to my trust, 50% to his. Any revenue generated by either trust will go to surviving spouse & when survivor dies the 2 trusts will distribute to heirs.

We keep all our financial assets separate - no commingling. We split groceries, utilities, home maintenance, etc - all 50/50. I suggested getting a joint account, pitch in an equal amount monthly or yearly and use that for shared expenses but DH likes the way it is now. It works, so no big deal. Cars are owned & insured separately too (TOD in place for convenience).

BTW, both our prenups stipulate that should either need extensive or long term care, that s/he is to spend her/his money only & the other person won't have to pay for support if the money of the person in the nursing home runs out.

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Re: Pre-nup questions

Post by randomguy » Sat Aug 13, 2016 8:03 am

MulesFan wrote:
BTW, both our prenups stipulate that should either need extensive or long term care, that s/he is to spend her/his money only & the other person won't have to pay for support if the money of the person in the nursing home runs out.
The prenup might say that, but what does the legal system and medicaid say?

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Re: Pre-nup questions

Post by sperry8 » Sat Aug 13, 2016 11:59 am

randomguy wrote:
MulesFan wrote:
BTW, both our prenups stipulate that should either need extensive or long term care, that s/he is to spend her/his money only & the other person won't have to pay for support if the money of the person in the nursing home runs out.
The prenup might say that, but what does the legal system and medicaid say?
Doesn't matter since they never co-mingled assets prior to marriage. Those assets since they were never mixed, remain the owner of each person and as such are not used for the other. This is key. I'd go so far as to say - this is as important as having a pre-nup itself. Do NOT co-mingle your assets if you want them protected.
Humbling BH contest results: 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

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Re: Pre-nup questions

Post by burt » Sat Aug 13, 2016 6:02 pm

mouses wrote:Their lives would be much simpler if they did not get married, it seems to me. They could do powers of attorney for healthcare, etc.
+1
At that age ?
There is no good reason for them to get married.
Romance and finances don't mix.

Maybe write a $250,000 check and see what happens. Cheap insurance.

burt
Last edited by burt on Sat Aug 13, 2016 6:23 pm, edited 1 time in total.

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tainted-meat
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Re: Pre-nup questions

Post by tainted-meat » Sat Aug 13, 2016 6:06 pm

I can see them both at a restaurant together...

"So um... you're paying for your portion since you got the lobster, right?"

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Re: Pre-nup questions

Post by Dulocracy » Thu Aug 18, 2016 9:32 am

bsteiner wrote:
Dulocracy wrote:... I have regularly had prenuptial agreements thrown out. This includes those drafted by attorneys. ...
They don't get thrown out very often, though we had an estate where the surviving spouse successfully challenged the prenuptial agreement (the case was settled on appeal), and another where the surviving spouse challenged a postnuptial agreement (the case was settled).

We've sometimes brought in matrimonial lawyers as co-counsel in large and complicated situations. In a matter of this size we might not, except in this case we would probably get local counsel in Connecticut review the agreement as to Connecticut matters, so we might pick a matrimonial lawyer to get a different viewpoint.

The original poster was concerned about the wife, but the husband would have some concerns as well. She has more assets and he has more income. From his standpoint, if they live on his income, and her assets grow, what happens if she dies first?

From her standpoint, she might want him to agree to have his estate elect portability if he dies first, since her estate could easily end up being more than the estate tax exclusion amount (presently $5,450,000, indexed) but that would be a standard thing for her lawyer to ask for.
I should have stated that I have gotten prenuptial agreements thrown out rather than had them thrown out, as (knock on wood) every one that I have drafted has held up thus far. Also, I should note that "regularly" thrown out means several a year in a firm that has a heavy caseload. This is a frequent rate, but when you are in the middle of it, "frequent" is different than a casual observer would likely consider frequent. Also, every state is different, and I am in one that is among the most strict, however I would still recommend an attorney whose primary area is domestic law for a document that is domestic in nature.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

Calhoon
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Re: Pre-nup questions

Post by Calhoon » Thu Aug 18, 2016 10:03 am

My father died 20 years ago, leaving my mother and inheritance and she paid off the house. About 750k altogether now just so you have an idea of worth.

10 years ago she got married to this guy who a year later falls down the stairs and puts himself in the nursing home. He's on medicaid.

For my mother there are strict limitations on what she can and can't do with her money while she is alive. Very strange in that if he dies in the nursing home than the state isn't interested in recovering the bill he racked up. However if my mom dies first, the state will grab at least half of the house and 50-100 percent of the ira to pay for his stay. My understanding is that whether or not there was a prenup they could care less about and the fact that all of these assets predate this guy by a couple decades does not matter, the state of Wisconsin will automatically cease 50 percent of the house and 50-100 percent of her retirement fund.

Anyway, after helping my mom work her way through this mess, there's no way I'd remarry in my later years if something happened to my wife.

c1over8
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Re: Pre-nup questions

Post by c1over8 » Thu Aug 18, 2016 2:26 pm

sperry8 wrote:
randomguy wrote:
MulesFan wrote:
BTW, both our prenups stipulate that should either need extensive or long term care, that s/he is to spend her/his money only & the other person won't have to pay for support if the money of the person in the nursing home runs out.
The prenup might say that, but what does the legal system and medicaid say?
Doesn't matter since they never co-mingled assets prior to marriage. Those assets since they were never mixed, remain the owner of each person and as such are not used for the other. This is key. I'd go so far as to say - this is as important as having a pre-nup itself. Do NOT co-mingle your assets if you want them protected.
I disagree with sperry8. While probably not the best explanation out there, see: http://www.nolo.com/legal-encyclopedia/ ... -home.html
It is clear that both spouses assets are considered for medicaid regardless of whether they are separate assets. The section on "the home" discusses the benefits and drawbacks to different forms of titling in terms of whether assets are deemed countable.

See also Calhoon's post above.

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sperry8
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Re: Pre-nup questions

Post by sperry8 » Thu Aug 18, 2016 4:48 pm

c1over8 wrote:
sperry8 wrote:
randomguy wrote:
MulesFan wrote:
BTW, both our prenups stipulate that should either need extensive or long term care, that s/he is to spend her/his money only & the other person won't have to pay for support if the money of the person in the nursing home runs out.
The prenup might say that, but what does the legal system and medicaid say?
Doesn't matter since they never co-mingled assets prior to marriage. Those assets since they were never mixed, remain the owner of each person and as such are not used for the other. This is key. I'd go so far as to say - this is as important as having a pre-nup itself. Do NOT co-mingle your assets if you want them protected.
I disagree with sperry8. While probably not the best explanation out there, see: http://www.nolo.com/legal-encyclopedia/ ... -home.html
It is clear that both spouses assets are considered for medicaid regardless of whether they are separate assets. The section on "the home" discusses the benefits and drawbacks to different forms of titling in terms of whether assets are deemed countable.

See also Calhoon's post above.
I disagree with myself too! I didn't mean to say that non-comingled assets wouldn't be counted towards medicare. Not at all.
What I meant was that not co-mingling assets will protect you, perhaps even more so than a pre-nup. As for medicaid I have no idea (but would likely agree they will consider all marital assets).
Humbling BH contest results: 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

fpr4
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Re: Pre-nup questions

Post by fpr4 » Thu Aug 18, 2016 6:50 pm

mouses wrote:Their lives would be much simpler if they did not get married, it seems to me. They could do powers of attorney for healthcare, etc.
I would second this. Emphatically.

fpr4
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Re: Pre-nup questions

Post by fpr4 » Thu Aug 18, 2016 7:00 pm

Dulocracy wrote:
bsteiner wrote:
Dulocracy wrote:... I have regularly had prenuptial agreements thrown out. This includes those drafted by attorneys. ...
They don't get thrown out very often, though we had an estate where the surviving spouse successfully challenged the prenuptial agreement (the case was settled on appeal), and another where the surviving spouse challenged a postnuptial agreement (the case was settled).

We've sometimes brought in matrimonial lawyers as co-counsel in large and complicated situations. In a matter of this size we might not, except in this case we would probably get local counsel in Connecticut review the agreement as to Connecticut matters, so we might pick a matrimonial lawyer to get a different viewpoint.

The original poster was concerned about the wife, but the husband would have some concerns as well. She has more assets and he has more income. From his standpoint, if they live on his income, and her assets grow, what happens if she dies first?

From her standpoint, she might want him to agree to have his estate elect portability if he dies first, since her estate could easily end up being more than the estate tax exclusion amount (presently $5,450,000, indexed) but that would be a standard thing for her lawyer to ask for.
I should have stated that I have gotten prenuptial agreements thrown out rather than had them thrown out, as (knock on wood) every one that I have drafted has held up thus far. Also, I should note that "regularly" thrown out means several a year in a firm that has a heavy caseload. This is a frequent rate, but when you are in the middle of it, "frequent" is different than a casual observer would likely consider frequent. Also, every state is different, and I am in one that is among the most strict, however I would still recommend an attorney whose primary area is domestic law for a document that is domestic in nature.
So you make a business of having agreements between consenting adults invalidated? Congrats?

littlebird
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Re: Pre-nup questions

Post by littlebird » Thu Aug 18, 2016 8:06 pm

Calhoon wrote:For my mother there are strict limitations on what she can and can't do with her money while she is alive. Very strange in that if he dies in the nursing home than the state isn't interested in recovering the bill he racked up. However if my mom dies first, the state will grab at least half of the house and 50-100 percent of the ira to pay for his stay. My understanding is that whether or not there was a prenup they could care less about and the fact that all of these assets predate this guy by a couple decades does not matter, the state of Wisconsin will automatically cease 50 percent of the house and 50-100 percent of her retirement fund.
Nothing strange about it at all. If he dies in the nursing home, your mother still has to live somewhere. The state doesn't want to throw her out of her house. Where would she live? So it does nothing until your mother dies, then it reimburses itself from the proceeds of the house and possibly other assets which are not needed anymore by the 2 people who owned them and who were helped out by the taxpayers.

Should your mother have needed state-supported care before her death the results would have been somewhat different, but still fair (IMO)

Calhoon
Posts: 106
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Re: Pre-nup questions

Post by Calhoon » Thu Aug 18, 2016 10:24 pm

Little bird, you're not understanding. If she dies first, the state will recoup half of the assets for his stay. Makes sense. Now if he would die first, then the state is no longer interested in recovery regardless of what happens to my mother. If she would die five years later they don't go after the assets then. At least that's how it is at this point in time. I don't doubt that they'll change that in the future.

Dulocracy
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Re: Pre-nup questions

Post by Dulocracy » Fri Aug 19, 2016 8:58 am

fpr4 wrote:
So you make a business of having agreements between consenting adults invalidated? Congrats?
As any attorney handling a contract: I make a business of having improperly drafted agreements that do not conform with the state law set aside. Absolutely. If the document is valid, I advise my client that he/she should not fight it, as they would lose and probably pay the attorneys' fees for the opposing side.

An example is that my state requires disclosure of assets. If you are going to say that "my assets are protected," you must state what they are. Disclosure is an important part of informed consent under the laws of my state.

There are several similar requirements to ensure such agreements ARE the agreements between consenting adults and that neither party is doing anything untoward in order to take advantage of the other party.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.

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