Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

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PhillyPhan
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Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby PhillyPhan » Wed Jul 12, 2017 6:46 pm

I will be tying the knot in a matter of months and wanted a quick and simple answer to the age old question regarding what will be viewed legally as pre marital assets (that would be not subject to split if the D word ever happened) and what would be. PA resident, all assets are in the form of USD held in 2 401k's (one active employer sponsored, one is in an old employer plan), a rollover IRA (vanguard), a Roth IRA (vanguard), a taxable mutual fund account (vanguard), Ibonds, and an online savings account (cap one) :sharebeer .
Last edited by PhillyPhan on Wed Jul 12, 2017 7:02 pm, edited 1 time in total.

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BL
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Re: Marriage on horizon - Question on Pre-Martial $ vs. Post Married $

Postby BL » Wed Jul 12, 2017 6:52 pm

PreNup comes to mind.

ikowik
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Re: Marriage on horizon - Question on Pre-Martial $ vs. Post Married $

Postby ikowik » Wed Jul 12, 2017 6:58 pm

"Pre-Martial"? Hope that is not a Freudian slip

JGoneRiding
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Re: Marriage on horizon - Question on Pre-Martial $ vs. Post Married $

Postby JGoneRiding » Wed Jul 12, 2017 7:02 pm

If a significant sum (sounds like it) a prenup listing everyone assets and accts excluded sounds like a good idea.

If you don't like that then document throughly and record

PhillyPhan
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby PhillyPhan » Wed Jul 12, 2017 7:05 pm

Setting aside the prenup, my question is more centered on what is considered for equitable distribution, is there consideration on the value of accounts pre.post marriage?

JGoneRiding
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby JGoneRiding » Wed Jul 12, 2017 11:58 pm

PhillyPhan wrote:Setting aside the prenup, my question is more centered on what is considered for equitable distribution, is there consideration on the value of accounts pre.post marriage?


Whatever the judge, lawyers, and or the two of you decide could be fair game right or wrong :)

My state is community property with equitable laws. Technically all assets kept separate should remain so but I know plenty of examples where judge ordered a uneven split of marriage assets to help make it more "equitable" so really who knows.

Rmbrennan
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Rmbrennan » Thu Jul 13, 2017 12:45 pm

If you want better answers I would try to get a consultation with a matrimonial law attorney as a potential new client. I would just tell them you are interested in a prenuptial agreement and want to interview them, I would anticipate it should be free. Then you can ask a bunch of questions and get answers.

My best guess/advice knowing nothing about your state law or your own situation and not being an attorney:

These first two are absolutely critical:

1) For all investments/accounts keep them in your name only if you want any chance of them being considered separate property

2) Do not comingle any marital funds with the separate accounts. Meaning if you earn money from your job as an example (marital funds) and deposit it in any of these accounts you most likely lost status as "separate" and they are now most likely marital, but if you took money from your separate savings account or invested dividends from one of your separate accounts you are OK.

You can move funds and earnings between accounts that are separate to other separate accounts and marital to marital, but if you mix separate and marital you are out of luck.

3) I believe, but don't know, that retirements accounts are more like to be based on equitable distribution meaning it may not be 50/50 but your wife will probably get something here. You probably have a case to say that you should get the $'s in the account before you were married, but again equitable distribution so its based on what the judge thinks most likely.

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midareff
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby midareff » Thu Jul 13, 2017 12:47 pm

Consult a lawyer in your area who specializes in marital law in your state.

c1over8
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby c1over8 » Thu Jul 13, 2017 12:56 pm

JGoneRiding wrote:Technically all assets kept separate should remain so but I know plenty of examples where judge ordered a uneven split of marriage assets to help make it more "equitable" so really who knows.


+1

I don't know the law specific to PA but that applies in my state and I wouldn't be surprised if it applies in PA. Talk to a lawyer if you want to know how your state's law would apply to your situation. It will be a couple hundred dollars well spent.

Jags4186
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Jags4186 » Thu Jul 13, 2017 12:56 pm

Open all new accounts (iras, taxable, savings). Stop contributing to accounts where you already have money. Any paycheck you get after you get married is both of yours so by further making contributions to those accounts you are turning them into commingled assets. Same goes for inherited money.

The thing you need to keep in mind is that even if you keep the money separate but start using it for things involving the marriage it could also be considered commingled. For example, say you have a taxable account with $100,000 and you use $25,000 it to do some work on the marital home. The account is now being commingled. Or say you have an IRA in your name with $500,000 and you are drawing $20,000 a year from it to fund living expenses...commingled.

I would download the latest statement of your 401k so you know what you had in it before you got married as well. Anything after that is again, commingled monies.

If this is a late in life marriage with a lot of money or a second marriage, consider a prenup--especially if you have kids from a prior relationship. If this is a first marriage and you're in your late 20s early 30s, thats a little harder to get through unless you have serious wealth.

freebeer
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby freebeer » Thu Jul 13, 2017 1:22 pm

Rmbrennan wrote:If you want better answers I would try to get a consultation with a matrimonial law attorney as a potential new client. I would just tell them you are interested in a prenuptial agreement and want to interview them, I would anticipate it should be free. Then you can ask a bunch of questions and get answers.

My best guess/advice knowing nothing about your state law or your own situation and not being an attorney:

These first two are absolutely critical:

1) For all investments/accounts keep them in your name only if you want any chance of them being considered separate property

2) Do not comingle any marital funds with the separate accounts. Meaning if you earn money from your job as an example (marital funds) and deposit it in any of these accounts you most likely lost status as "separate" and they are now most likely marital, but if you took money from your separate savings account or invested dividends from one of your separate accounts you are OK.

You can move funds and earnings between accounts that are separate to other separate accounts and marital to marital, but if you mix separate and marital you are out of luck.

3) I believe, but don't know, that retirements accounts are more like to be based on equitable distribution meaning it may not be 50/50 but your wife will probably get something here. You probably have a case to say that you should get the $'s in the account before you were married, but again equitable distribution so its based on what the judge thinks most likely.


This is very state dependent but 1 & 2 are not true in WA State. Titling (whose name an account is) doesn't intrinsically transmute separate property into community property. OTOH that is a matter of precedent not statute, and some nuances are based on relatively recent appellate court rulings. So I don't disagree with 1 & 2 just noting that it's not a "no chance" situation if violated, at least not in all states. And, this cuts both ways - just because you kept something titled in your name only in an account that existed pre-marriage doesn't mean it *didn't* get transmuted (if there is an argument why that may be the case).

I would just add another point of guidance:

4) Keep account statements *forever* and just in case keep a separate scanned copy in cloud storage that only you can access. Without statements, tracing is likely to fail, especially if there has been some commingling. Again in WA some gaps in tracing can be "bridged" with compilations that make reasonable assumptions about what happened, but this is arguable and expensive. Statements are the gold standard. And you may find (as I did) that printed statements tended to vanish when your soon-to-be-ex had control over the physical files and there was no digital backup.

Rmbrennan
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Rmbrennan » Sat Jul 15, 2017 10:38 pm

Washington State sounds amazing for the monied spouse. You can have a separate account then jointly title it and throughout the marriage deposit maritial funds into it and then the judge will still rule the entire account is still your separate property?

Greatness
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Greatness » Sun Jul 16, 2017 4:52 pm

Now why would you want to do something silly like that? Do you like risking in all on 50% chance on black or red? Why not just live together and have a cohabitation agreement setup and put in place. (http://www.thepublicdiscourse.com/2015/12/15983/)

Be wise, don't get the State involved with your love life. You will pay dearly. Or, maybe you'll be one of the 6% lucky one's. Pre-nups are thrown out all the time as soon as you commingle money for expenses on pre-marital assets. You cannot 100% protect your assets aside from an irrevocable trust.

bsteiner
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby bsteiner » Sun Jul 16, 2017 5:23 pm

The statute is Pa. Code Title 23, § 3501, at page 76 of this: http://www.legis.state.pa.us/WU01/LI/LI ... /23/23.PDF.

It may be hard to determine the marital property portion of the 401(k) benefits.

Of course, you could move to another state, or the Pennsylvania statute could change.

If you're concerned, make sure that anyone who might leave you an inheritance leaves it to you in trust rather than outright, so it's easier to trace, and so it won't be in the pot even in a state where marital property is more comprehensive.

JGoneRiding
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby JGoneRiding » Mon Jul 17, 2017 10:53 am

Rmbrennan wrote:Washington State sounds amazing for the monied spouse. You can have a separate account then jointly title it and throughout the marriage deposit maritial funds into it and then the judge will still rule the entire account is still your separate property?



Uh NO. Its a community property state and ON TOP of that there is an "equitable" clause which can be even worse. if you put martial assets into your pre marital acct you may loose half.

If you put non marital assets in that is a different story. I keep my rental property income in a separate acct. Occasionally I deposit it to a joint and at that point consider it marital.

junior
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby junior » Mon Jul 17, 2017 12:01 pm

I would take advice here with a grain of salt. The real question is how a judge might rule in practice, not what sounds like a good idea based on people's understanding of the law. Probably best to talk to an attorney if it really bothers you, or consider a pre-nup.

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JaneyLH
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby JaneyLH » Mon Jul 17, 2017 1:39 pm

My husband and I sat down with my financial planner a couple months before the wedding and provided her with a list of all assets with statements. She prepared a financial statement listing all our balances. I prepared a pre-nuptial agreement that I modeled after others I found online (I know, I know... but I did my own divorce the same way and that worked out fine.) We attached the financial statement and we both signed the agreement. Our basic agreement says that all investment accounts and my husband's pension would remain our own individual property in the event we divorce.

We have kept all accounts separate, no co-mingling except for new joint and savings accounts that we contribute to in an agreed upon proportional way to fund our living expenses. All my investment accounts remain in my former name--I did research to confirm there is no legal need to put my married name on these accounts.

Jack56
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Jack56 » Mon Jul 17, 2017 2:44 pm

If there is a sizable amount of money involved in your premarital assets retain a lawyer to advise you. In NY, premarital assets are not deemed part of the marital estate so long as they are kept segregated.

Zonian59
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Zonian59 » Mon Jul 17, 2017 4:33 pm

Very wise and prudent recommendations: keep everything acquired before marriage as separate accounts with proof of acqisition and open new accounts after marriage and DO NOT comingle between accounts. Future paychecks to be deposited in new account.

My situation: I live in California, age 58, single, no children, purchased house 10 years ago, is titled in my name only. I also have checking, savings, investments, IRAs, 401K in my name only. Currently semi-retired due to layoff. Social security and pension funded while single. Total asset value about $1.7M including house, car and present value of pension.

Questions:
If I do get married, will the house acquired BEFORE marriage, remain separately titled, with all maintenance/repair expenses, insurance, property taxes paid from separate account, become marital asset and subject to division once both spouse are living in the house together?

Will future social security and pension and IRA/401K distributions during marriage be subject to community property after divorce, even though was funded BEFORE marriage?

Even though California is a community property state and all assets acquired BEFORE marriage are considered separate and remain so even after divorce, I've heard this doesn't always work out, even though reinforced with a prenuptial agreement. California divorce courts will through out the agreement and split the assets (even though acquired BEFORE marriage) 50/50.

So, how does one minimize the risk of loss where one has a larger percentage of assets and have taken special care to keep assets separate, identified as acquired before marriage and have prenuptial agreement? I don't want to be in a position where I lose 80% of my assets through a divorce.

Thanks.

Greatness
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Greatness » Mon Jul 17, 2017 4:52 pm

In terms of community prop. states, without a prenup, irrevocable trust or co-hab agreement (non-married, but living together). Any growth from the asset while together the other partner/spouse will have claims to that appreciation. Pre-nups do not always work. If you are going to do the unwise thing and get married, you need to transfer the assets into an irrevocable trust and not commingle. If not, you are playing Russian Roulette. Please remember, the person you marry or co-hab with, is not the same when the relationship or marriage ends.

THY4373
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby THY4373 » Tue Jul 18, 2017 9:08 am

I currently going through an amicable divorce and my suggestions would be:

1). I would speak to a lawyer before tying the knot. I believe as a society we under play the economic aspects of marriage and folks going in don't completely understand the impact of these aspects on them. I would also strongly consider a prenup if we are talking significant assets (that is they are significant to you). Keep in mind that while the first marriage divorce rate is less than 50% (first marriages fail less frequently than later marriages) their is still a very significant chance your marriage will fail. I think as a society we also underplay this risk while over playing the benefits of marriage.

2). Keep documentation on everything premaritial all your statements, etc. I was actually pretty good at this but I could have been better. Luckily because my spouse and I are cooperating I didn't have to spend many hours trying to get copies of all statements etc.

3). Nothing to do with finance but I wish I had spent more time on educating myself on relationships. I am a male and we don't really spend much thought on this generally speaking but if I had the relationship knowledge I had now I would certainly have done things very different and likely not married my soon to be ex. She is a good person as am I but we aren't right for each other with very different expectations in certain areas.

Zonian59
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Re: Marriage on horizon - Question on Pre-Marital $ vs. Post Married $

Postby Zonian59 » Tue Jul 18, 2017 11:39 pm

Greatness wrote:In terms of community prop. states, without a prenup, irrevocable trust or co-hab agreement (non-married, but living together). Any growth from the asset while together the other partner/spouse will have claims to that appreciation. Pre-nups do not always work. If you are going to do the unwise thing and get married, you need to transfer the assets into an irrevocable trust and not commingle. If not, you are playing Russian Roulette. Please remember, the person you marry or co-hab with, is not the same when the relationship or marriage ends.


Pretty much agree with your comments. Unfortunate nowadays one has to resort to complicated contractual terms & conditions or devices to safeguard assets. Very true the person at the time of divorce is NOT the same person at the beginning.

1) But why Irrevocable trust? Most suggest Revocable trust. Is there something about Irrevocable that safeguards assets better than Revocable? What is the difference between an Irrevocable trust vs Revocable trust?

2) Any growth or earnings/dividends/interest from assets identified and designated as acquired PRIOR to marriage will be subject to claim by other partner/spouse? But principal will not be subject to claim, will it?


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