We have a prenup, now buying a house.

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HomeStretch
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Re: We have a prenup, now buying a house.

Post by HomeStretch »

8foot7 wrote: Mon Nov 25, 2019 12:14 pm I do tend to agree with the other posters -- you were wise to get a prenup. That's bought you quite a bit of protection. You did good. Now stop.
+1

Your wife is stressed over this. Buy a house in a way that doesn’t cause stress.

You have $3 million. Chances are you will have a very large portfolio when you retire. You can afford to be generous now with your family. Consider funding the down payment, splitting the mortgage (with lower earner paying lower %) with both of you on the mortgage and on the deed as equal owners.

Seriously, if it helps you can rationalize 1/2 the down payment is a gift to your wife for giving you both the priceless gift of a child.
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Brianmcg321
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Re: We have a prenup, now buying a house.

Post by Brianmcg321 »

sport wrote: Mon Nov 25, 2019 11:27 am IMO you have too much "me and she" and not enough "we". This is a marriage, not a business.
+1
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barnaclebob
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Re: We have a prenup, now buying a house.

Post by barnaclebob »

I'll add to the pile. Split the house. At some point as time goes on your prenup should matter less and less because you'll have accumulated assets as a couple. This is one of the times to value your marriage more than your balance sheet.
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jeremyj
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Re: We have a prenup, now buying a house.

Post by jeremyj »

Thank you all so much for the replies -- from the balanced, to the pointed, to the emphatic :). Your points and opinions have all been well-received.

I do think I didn't communicate a couple things as clearly as I should have, that may (or may not) have changed some of your reactions:

1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage. That, in a sense, would be converting the "nest egg I protected" to a joint asset, and likely led to the poorly-worded statement many of you justly found disagreeable. If it otherwise appears to be a reasonable financial decision to take a mortgage out vs pay cash, it garners the large additional advantage that we build equity together. I appreciate those of you who emphasized the advantage of this set-up

2) In the sake of brevity, I oversimplified and overemphasized these situations in a way I think misrepresents our relationship. My mindset has genuinely been entirely "we" in the 4 years from when we signed the prenup until when this situation occurred to me this week. Before our wedding, I asked my wife if I could pay off her student loans (with no expectation of repayment), if only because she was paying higher interest rates than I was earning on my cash, and we would financially better off as a team. She convinced me that her personal pride in paying off her loans herself meant more than some interest, and I wholeheartedly supported that.

Being in a job that requires me to calculate and protect against unexpected outcomes, plus having colleagues with spouses who initiated divorce immediately after the purchases of large joint assets admittedly has me thinking about these unsavory situations with more emphasis than I probably should. But honestly, the "transactional nature" I presented above hasn't occurred to me on transactions day to day, in the thousands, or tens of thousands -- it's only on this up-to-a-million one, and only from a legal perspective, not from an emotional perspective, in which it 100% has been and will be "we." But your observations and points stand -- I will be cognizant of the mindset that I have on these topics.

Just wanted to respond to a couple comments/questions, and/or to point out responses I appreciated:
KyleAAA wrote: Mon Nov 25, 2019 12:39 pm IANAL so I won't comment on the validity of the post-marriage prenup arrangement, but from a relationship perspective you are going about this the wrong way. Keeping prior assets separate is all well and good, but when you married you agreed the future should be 50/50. That means your wife is an equal owner in everything going forward, including the house. The easiest way to manage this situation is to not use prior assets to purchase the home. If that means you have to take on PMI because you can't come up with a 20% down payment using co-mingled fund, so be it. She absolutely should be on the title. There is no question about this.
This seems like my favorite approach right now to reframe the circumstance in a positive one going forward, regardless of how we split the payments month-to-month from our respective coffers.
mrspock wrote: Mon Nov 25, 2019 1:39 pm Now, if you moved to a HCOL area from a LCOL area for your career, then equal is out the window.
Current area is lower, FWIW.
WanderingPothos wrote: Mon Nov 25, 2019 12:20 pm What about if you buy the house and she lives rent free and only pays a portion of the utilities that are spent monthly, but nothing towards what would be spent to maintain (insurance, property tax, etc.) or upgrade the house. If you happen to divorce, then she moves out. Or it can be vice versa where she buys the house and the house is in her name, you share utilities, she pays for maintenance/upgrades to the house?
We are anti-materialistic, as well, but this seems to be a step to far for her, and I agree. (And WAY too far for most on here it seems, haha)
CAsage wrote: Mon Nov 25, 2019 12:18 pm You have your nest egg sheltered - ok, call it good. Now, going forward make it 50-50 all the way.
I agree -- I was just trying to find a way to achieve both these goals. It seems like paying a mortgage together preserves that.
Tamarind wrote: Mon Nov 25, 2019 12:01 pm If I were in your shoes, I would likely choose to 1) keep renting or else 2) scale your purchase to something she could afford to pay half of while still prioritizing her retirement accounts.
Seems reasonable, thanks for your nuanced combination of dramatic rhetoric and pragmatic compromises :)
mptfan wrote: Mon Nov 25, 2019 11:57 am OP, I am curious...if the roles were reversed and your wife proposed that idea to you, what would be your reaction?
I'd feel similarly to her, which is why I solicited and appreciate the thoughts here.
chevca wrote: Mon Nov 25, 2019 11:39 am
sport wrote: Mon Nov 25, 2019 11:27 am IMO you have too much "me and she" and not enough "we". This is a marriage, not a business.
If she will be paying anything to the house, she should be on the title. Simple as that. It's your together, right? She can be on the title and not the mortgage if you guys choose that, or it works better for financing. Although, I don't see how it would as you both seem to be doing well. Put both your names on the mortgage as well.

It will be her house also, right?
I wasn't planning on a mortgage, but I see how not making that clear was an omission on my part. I agree with what you said as you said it.
HomerJ wrote: Mon Nov 25, 2019 12:49 pm
jeremyj wrote: Mon Nov 25, 2019 9:51 ambut registering 50/50 ownership of a potentially $1mm asset I largely finance doesn't seem like an appropriate solution to that problem. Has anyone been in a similar situation and could provide advice?
You paying cash for this house?

If you're not paying cash, put it in both your names. Over time, you'll pay it off together, and you both should own it.

You're going to have to accept that marriage is a partnership. Protect that first $2 million, sure...
...

If you ARE paying $1 million cash, then I will amend my above advice this one time only. Buy it in your name only, but amend the pre-nup (post-nup?) stating that she gets half of the gains if you guys split 10 years from now.

Since you will using prenup money to buy the house outright, you should be protected to keep it.
Just including this because I valued your post. It does seem like choosing a different path than this is better longer-term.
fortunefavored wrote: Mon Nov 25, 2019 1:30 pm
KyleAAA wrote: Mon Nov 25, 2019 12:39 pm ... The easiest way to manage this situation is to not use prior assets to purchase the home. If that means you have to take on PMI because you can't come up with a 20% down payment using co-mingled fund, so be it. She absolutely should be on the title. There is no question about this.
Before this thread gets locked due to all the marriage preaching instead of the financial question, this is the best comment on the thread. Yes, it may be financially (in aggregate) less efficient, but is the only way to preserve your previous arrangement.
Agree with you both, thank you.
mptfan
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Re: We have a prenup, now buying a house.

Post by mptfan »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm 1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage.
I understood that and it does not change my view.
mhalley
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Re: We have a prenup, now buying a house.

Post by mhalley »

You don’t mention actual income, but is 40/60 expenses equitable? Does she really make 40% of the income?
Barsoom
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Re: We have a prenup, now buying a house.

Post by Barsoom »

jeremyj wrote: Mon Nov 25, 2019 9:51 am - My wife and I have been married for 3.5 years, and we have a 1 year old daughter.
Have you had the opportunity yet to test this on a smaller purchase? Has your wife had to replace her car yet? How do you plan to handle that when the time comes?

On the one hand, she could wait until she has the funds to buy a new car herself, and on the other hand, you can buy the car for her. If you buy it for her, will your name go on the title or will hers?

If you buy the car for her, will you buy a larger family car with all the safety features to protect your young daughter? If so, is it really "your car" or "her car" at this point, even though she may be the primary driver? In the case of buying up to protect your daughter and plan ahead for more, you'd be solidifying the "our" mentality. One day you'll drive the new car, on another day she may need to drive yours.

Think about how you will handle buying her next car, and then transfer those feelings towards the house.

-B
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sperry8
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Re: We have a prenup, now buying a house.

Post by sperry8 »

jeremyj wrote: Mon Nov 25, 2019 9:51 am We have rented since we met, but will likely buy a house in the $500k-$1mm range in 2020.
Get a mortgage she can afford half of to build true joint equity?
You have three options:
1- Pay as little down as possible and take out a mortgage for the rest (instead of paying cash). You'll of course spend a lot more on the interest payments over the years, but think of it as insurance (the sooner divorce comes, if it comes at all, the less you'll lose).
2- Keep renting (why buy?). Buying makes the conversation real - and you shouldn't have even brought it up in the first place imo. Most people don't know how to properly price a housing investment/costs properly. And buying is not all that people think it is (from an investment perspective).
3- Pay cash, put her on the deed - and call it a day. Think of it as the price of having a loving wife for however long you have one (I don't mean to be snarky here... just saying nothing lasts forever).

Personally, I'd choose #2 if it were me (and I've thought long and hard about this for my personal situation). You can easily go back and explain you'll both get more house if you continue to rent, keep freedom should job opptys arise going forward, and likely have much better investment returns to boot all without the the headaches of house ownership.
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researcher
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Re: We have a prenup, now buying a house.

Post by researcher »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm My mindset has genuinely been entirely "we" in the 4 years from when we signed the prenup until when this situation occurred to me this week.
It doesn't sound like you are operating as "we" since marrying based on your initial post...
- I have $3mm. She has $200k, $150k of which is in retirement accounts. When we married it was $2mm and $50k (net of debts).
- going forward she prioritizes retirement accounts and savings first before sharing expenses 40/60 with me."
- Registering 50/50 ownership of a potentially $1mm asset I largely finance doesn't seem like an appropriate solution to that problem.


You are obviously keeping separate tabs in marriage, given your description of "I have $3mm" and "she has $200K".
Why isn't this treated as one pool of money, where as a couple you've amassed $1.2mm of savings since marrying?

Given you have $1.2mm in combined funds that have been saved together, why must you purchase the house with funds earned pre-marriage? Why not used the combined assets? This would presumably eliminate the concern that you are financing the house.

Also, it sounds as if you earn substantially more than your wife. If so, why is she required to "share expenses 40/60" with you?
Why not just dump both of your incomes into one account and pay for all expenses out of it?
Billionaire
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Re: We have a prenup, now buying a house.

Post by Billionaire »

Put the house 100% in your wife's name with you, the husband, paying all the expenses, including the down payment and monthly PITI. It's only money after all.
daheld
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Re: We have a prenup, now buying a house.

Post by daheld »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm 1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage.
Why does the time money was earned matter? I think you're probably misunderstanding why many people are disagreeing with the principle of your reasoning.
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Nate79
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Re: We have a prenup, now buying a house.

Post by Nate79 »

I think this entire situation is a recipe for a disaster. If you are not willing to put all of your resources to supporting the "we" then you will not have a strong and successful marriage and future as a "we." It doesn't mean you can't have a pre-nup but holding back some of "your" resources to not support the family to me is selfish and points to a poor future.
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Re: We have a prenup, now buying a house.

Post by junior »

Suppose you wrote your wife a check for 500k and bought the house together, and lost it in a divorce.

Was there something else important you were going to do with that 500k?

I suppose this is a rhetorical question, though I admit I'm wondering why the money is so important to you.
Jags4186
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Re: We have a prenup, now buying a house.

Post by Jags4186 »

Because you’ve crafted a complicated financial relationship with your spouse there is no simple answer to this question.

Here are the options as I see fit:

1) You purchase the house under the best terms possible. Both of you go on the deed and your wife contributes her reasonable share based on her income. If you split up then the proceeds of the house are split however the judge decides.

2) You purchase the house solely with your separate assets, you keep the house solely in your name, you assume all expenses for the house. Your wife does not contribute to the taxes, mortgage, or maintenance on the house. If you split the proceeds are split however the judge decides.

I think 1) is the answer.

Be aware that regardless of whether or not you own the house 100% or you own it 50/50 if you were to split up you’d likely be kicked out of the house while she got to stay until the divorce was finalized.
Last edited by Jags4186 on Mon Nov 25, 2019 4:19 pm, edited 3 times in total.
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Tamarind
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Re: We have a prenup, now buying a house.

Post by Tamarind »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm
Tamarind wrote: Mon Nov 25, 2019 12:01 pm If I were in your shoes, I would likely choose to 1) keep renting or else 2) scale your purchase to something she could afford to pay half of while still prioritizing her retirement accounts.
Seems reasonable, thanks for your nuanced combination of dramatic rhetoric and pragmatic compromises :)
Glad I could help. :beer

I think considering the absurd outcomes that may follow from our logic helps keep the real choice in perspective.

I was actually here 18 months ago asking if I should get a prenup to cover my ~$150k equity in the house I purchased while single. :oops:

I got my head handed to me and it helped me reacquire my perspective. My wife and I refinanced together after getting married and I put her on the deed, which gave her 50% of the equity. Of course she also took on 50% of the remaining mortgage, which gave her a moment's pause as she'd been debt free until that moment.

Our numbers have fewer zeros than yours but the anxiety of the higher earner is real. We just shouldn't let it drive everything we do.
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Re: We have a prenup, now buying a house.

Post by sergio »

junior wrote: Mon Nov 25, 2019 4:13 pm Suppose you wrote your wife a check for 500k and bought the house together, and lost it in a divorce.

Was there something else important you were going to do with that 500k?

I suppose this is a rhetorical question, though I admit I'm wondering why the money is so important to you.
When I was a graduate student in my 20s, I made $20k/year, of which I paid $9k/year for my small 1BR apartment. It was one of the best 4-5 years of my life. When not in school, I went to the gym a lot, spent time learning languages, biking, hiking outside, trying to go to as many free events as I could, learning to cook for myself, fixed my beater car, went out with friends, gaming etc.

I make a lot more than my wife and I had maybe $300k when I met her vs her $10k. If I divorce, I know I always have that life to fall back on LOL so the last thing I need to do is nitpick over mine/hers/ours etc. It makes life a lot simpler... As long as I have my $20-30k/year I'm golden.
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Re: We have a prenup, now buying a house.

Post by stoptothink »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm Thank you all so much for the replies -- from the balanced, to the pointed, to the emphatic :). Your points and opinions have all been well-received.

I do think I didn't communicate a couple things as clearly as I should have, that may (or may not) have changed some of your reactions:

1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage. That, in a sense, would be converting the "nest egg I protected" to a joint asset, and likely led to the poorly-worded statement many of you justly found disagreeable. If it otherwise appears to be a reasonable financial decision to take a mortgage out vs pay cash, it garners the large additional advantage that we build equity together. I appreciate those of you who emphasized the advantage of this set-up

FWIW, in my first marriage I paid off my (ex) wife's undergrad student loans and then cash-flowed her way through dental school - altogether, the cost of a home in my area - with funds I had pre-marriage. When it came to our divorce none of that mattered a bit. The dissolvement of her education debt and the free (to her) DDS did not influence what she got in the divorce, which was half of everything we (I) saved during our 5yrs marriage, even though she did not earn a penny. This is just going to create resentment in your marriage, and in the event the marriage ends, likely not be of any benefit.
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mrspock
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Re: We have a prenup, now buying a house.

Post by mrspock »

Nate79 wrote: Mon Nov 25, 2019 4:13 pm I think this entire situation is a recipe for a disaster. If you are not willing to put all of your resources to supporting the "we" then you will not have a strong and successful marriage and future as a "we." It doesn't mean you can't have a pre-nup but holding back some of "your" resources to not support the family to me is selfish and points to a poor future.
Check with a good lawyer, but I am reasonably sure in a bunch of states, that as soon as you start co-mingling you prenup assets (including growth), you might as well light it on fire (for the portion of assets you co-mingled). It’s just not a smart idea if you want to maintain rights to those assets per the prenup.
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Re: We have a prenup, now buying a house.

Post by smitcat »

mrspock wrote: Mon Nov 25, 2019 4:28 pm
Nate79 wrote: Mon Nov 25, 2019 4:13 pm I think this entire situation is a recipe for a disaster. If you are not willing to put all of your resources to supporting the "we" then you will not have a strong and successful marriage and future as a "we." It doesn't mean you can't have a pre-nup but holding back some of "your" resources to not support the family to me is selfish and points to a poor future.
Check with a good lawyer, but I am reasonably sure in a bunch of states, that as soon as you start co-mingling you prenup assets (including growth), you might as well light it on fire (for the portion of assets you co-mingled). It’s just not a smart idea if you want to maintain rights to those assets per the prenup.
+1 mrspock
mptfan
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Re: We have a prenup, now buying a house.

Post by mptfan »

mrspock wrote: Mon Nov 25, 2019 4:28 pm Check with a good lawyer, but I am reasonably sure in a bunch of states, that as soon as you start co-mingling you prenup assets (including growth), you might as well light it on fire (for the portion of assets you co-mingled). It’s just not a smart idea if you want to maintain rights to those assets per the prenup.
Yes, but you should understand what it means to "comingle." Comingling is to combine marital assets with premarital assets...once combined the total becomes marital assets...the most common example would be to deposit a paycheck while married into an account with premarital assets... that is comingling marital assets (your earnings while married) with premarital assets (an account with premarital savings). That is different from withdrawing some of your pre-marital assets to pay for a marital asset.

So in the OP's case, if he has a premarital account with $2 million and he withdraws $500,000 to pay for a marital home titled in both names, the $500,000 becomes a marital asset but the remaining $1.5 million remains premarital, unless of course he deposits some marital assets into the premarital account...that would be comingling.
Last edited by mptfan on Mon Nov 25, 2019 4:38 pm, edited 2 times in total.
chevca
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Re: We have a prenup, now buying a house.

Post by chevca »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage. That, in a sense, would be converting the "nest egg I protected" to a joint asset, and likely led to the poorly-worded statement many of you justly found disagreeable. If it otherwise appears to be a reasonable financial decision to take a mortgage out vs pay cash, it garners the large additional advantage that we build equity together. I appreciate those of you who emphasized the advantage of this set-up.
I can see how that lines up with your viewpoint on it. But, my answer wouldn't change. Either buy the house with your money for your family and you both go on the title/deed. Or, take out a mortgage together and keep your money as yours.

As others have mentioned, the house would be acquired together while married. If a divorce were to happen, it would likely matter little how it was paid for or who is on the title. It's going to be split between the two of you. The courts would likely tell you, too bad you used YOUR money.

Bottom line... if you want to keep your prenup money separate, just keep it separate. As of 3.5 years ago, everything acquired since and going forward is both of yours.
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mrspock
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Re: We have a prenup, now buying a house.

Post by mrspock »

mptfan wrote: Mon Nov 25, 2019 4:34 pm
mrspock wrote: Mon Nov 25, 2019 4:28 pm Check with a good lawyer, but I am reasonably sure in a bunch of states, that as soon as you start co-mingling you prenup assets (including growth), you might as well light it on fire (for the portion of assets you co-mingled). It’s just not a smart idea if you want to maintain rights to those assets per the prenup.
Yes, but you should understand what it means to "comingle." Comingling is to combine marital assets with premarital assets...the most common example would be to deposit a paycheck while married into an account with premarital assets... that is comingling marital assets (your earnings while married) with premarital assets (an account with premarital savings). That is different from withdrawing some of your pre-marital assets to pay for a marital asset.

So in the OP's case, if he has a premarital account with $2 million and he withdraws $500,000 to pay for a marital home titled in both names, the $500,000 becomes a marital asset but the remaining $1.5 million remains premarital, unless of course he deposits some martial assets into the premarital account...that would be comingling.
Interesting. This must get interesting when it comes to 401k’s, and paying an existing mortgage you might have. Like I said.... get a good lawayer :D .
yohac
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Re: We have a prenup, now buying a house.

Post by yohac »

Now that you've clarified it makes somewhat more sense. Getting a mortgage, where you both have some skin in the game, does sounds like the best option. That's what we did. At the time we had a big difference (7 or 8x) in net worth also. It took years before she really felt secure, like a truly equal partner in the big money decisions. My preachy advice to you would be to do whatever you can to help her feel that way.
mptfan
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Re: We have a prenup, now buying a house.

Post by mptfan »

mrspock wrote: Mon Nov 25, 2019 4:38 pm Interesting. This must get interesting when it comes to 401k’s, and paying an existing mortgage you might have. Like I said.... get a good lawayer :D .
Think of it this way... imagine that a premarital account is a bucket of pure fresh drinking water, and imagine that marital assets (including earnings while married) are represented by Cherry Kool Aid. If you deposit one of your paychecks earned during the marriage into a premarital account, that is like pouring a cup of Cherry Kool Aid into your bucket of pure water...all of the water will turn to a light red as the Kool Aid mixes with the water...your bucket of clear premarital water has now been comingled with your marital earnings. This is different than taking some of the clear premarital water and pouring it out of the bucket into a separate container and mixing in some Kool Aid powder in the seperate container...yes the seperate container is now a marital asset but the remaining water in the bucket was not comingled...it is still clear and pure premarital water.
Last edited by mptfan on Mon Nov 25, 2019 4:50 pm, edited 3 times in total.
playtothebeat
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Re: We have a prenup, now buying a house.

Post by playtothebeat »

But it through an irrevocable trust established for the benefit of your child(ren).
That way neither you nor wife benefit from appreciation, etc, but your children do.

Consult with an attorney and accountant first, of course.
chevca
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Re: We have a prenup, now buying a house.

Post by chevca »

This isn't really a prenup thread. That's already been done. It's about buying a house NOW as a married couple.
dboeger1
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Re: We have a prenup, now buying a house.

Post by dboeger1 »

Tamarind wrote: Mon Nov 25, 2019 4:16 pm My wife and I refinanced together after getting married and I put her on the deed, which gave her 50% of the equity. Of course she also took on 50% of the remaining mortgage, which gave her a moment's pause as she'd been debt free until that moment.
I think this is a very interesting point that shouldn't be taken lightly. Tamarind's wife got what she wanted... but in a way, she had her stake and ate it too. It becomes a totally different decision when both partners put equal skin in the game, and that means taking on the risks in conjunction with reaping the rewards.

I wonder, OP, are you the one who decided to buy this house? Did you come to this decision on your own? Or was your wife involved in the process? And if so, was she taking into account any potential loss in net worth or accumulated debt in her name? Did she have all the information she needed to make a wise, informed decision available to her? And if so, are you and/or she even qualified to make these decisions?

The reason I ask these questions is because her thought process could be anywhere on the spectrum, from "I want him to spend his pre-marital assets so I get access to them" to "I just want to live in a big, fancy house, and I don't care how much it costs, as long as he pays for it." Either of those extremes would be terrible. Somewhere in the middle lies the sweet spot where you're both mature, married adults who come together, share all available information, consult any experts who can help you, and come to a mutual decision on what is best for you all as a family. If her answer changes dramatically when you explain to her that she'd be taking on additional debt in her name, then it means she either didn't have all the information available to her, didn't understand it, or didn't care. You need to assess your part in that whole equation, as she does hers.

My wife and I aren't likely going to buy a house any time soon, but we are thinking about starting to have children about a year from now. And naturally, we've had a lot of emotional discussions around that recently, as I'm sure any couple planning to have children does. My wife feels she's getting older, and her mother in particular has been pressuring her to have children, saying terrible stuff like I won't be committed to her if we don't have children right away. However, I have a very specific financial goal I want to reach before having children, and this is something I not only told me wife years ago and she agreed to, but I've already revised it downwards due to an unexpected period of unemployment last year. The crazy thing is, we're now about a year away from hitting my savings target, in part because she more than doubled her income switching to a new employer, and my wife is now saying she wants to pursue a higher degree in order to help her career, less than a year after she transitioned to her new job. She also says she wants to use that degree to go into a field that would require her to travel much of the year, yet she still wants to have a child. But when I ask her if she's willing to commit to that career for an extended period of time, she says she actually aspires to retire early, rather than work longer. My contention is of course, it's one thing to spend your own time and money on an advanced degree before marriage, but this is the first time we're both making high incomes in marriage, we're saving more than we ever have before, and we're less than a year away from our savings target to start having children, and she wants to put that on hold, spend our shared assets to get this degree, and then go into a field that is going to make it harder to raise children which she's not even willing to commit to for at least 5 years. So what is this investment in a degree getting us as a family? I could go out and get a fancy new degree too, but if I'm not planning to use it to earn more income for an extended period of time, and it pushes out our plans to have children longer than either of us ever wanted, then what benefit exactly would it provide to us as a family?

The reason I share this story is not because it matches yours exactly, but because it highlights how I framed the discussion in terms of my wife's obligation to our family. It's one thing for a spouse to ask for support in gaining some personal benefit when they think of it as just another gift, but when you ask them to accept responsibility for the consequences as well, and consider the long-term impact it will have on your shared plans, then suddenly it becomes an entirely different decision. You're not talking about buying your wife a burrito at Chipotle. This is a $1 million house you're talking about. You both owe it to your family to come together and make an informed decision, both taking on joint responsibility of both the assets and the liabilities. When you do that, you might realize she's not ready for the $1 million house. Or you might realize you want more house because she's willing to treat it as a proper investment. As far as I can tell from your posts, the $1 million house is currently your idea based on your pre-marital assets, and she's just along for the ride.
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Re: We have a prenup, now buying a house.

Post by Buckeye Chuck »

Interesting discussion. Observations... No one gets married believing divorce will occur but look at statistics. MANY joint accounts are drained by one person leaving the other hIgh and dry...at least temporarily...still painful. The Male is often ordered out of the house as someone else mentioned. It goes on and on. Divorce is costly. I feel for the guy who put his wife through dental school. Wow.

Don't blame you for wanting to protect yourself. Probably still requires some flexibility. You don't want your wife stressing. I would take steps to eliminate that asap.
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Re: We have a prenup, now buying a house.

Post by RickBoglehead »

I want to commend the OP on the thoughtfulness of his response. Well done.
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Re: We have a prenup, now buying a house.

Post by LadyGeek »

I removed an interchange which got into a contentious disagreement over something said "partly in jest". This may be a misunderstanding of intent.
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Re: We have a prenup, now buying a house.

Post by greg24 »

jeremyj wrote: Mon Nov 25, 2019 2:52 pm1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage.
You had $2M when you got married. You've added $1M during the 4 years of marriage.

Why would you need the prenupped $2M when you have $1M that more than covers your $500k-$1M house?
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Re: We have a prenup, now buying a house.

Post by mrspock »

greg24 wrote: Mon Nov 25, 2019 7:49 pm
jeremyj wrote: Mon Nov 25, 2019 2:52 pm1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage.
You had $2M when you got married. You've added $1M during the 4 years of marriage.

Why would you need the prenupped $2M when you have $1M that more than covers your $500k-$1M house?
That’s a very good point, my guess is: the after marriage assets might be illiquid, have capital gains, or otherwise not usable for the entire purchase.
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Re: We have a prenup, now buying a house.

Post by truenorth418 »

This thread reminds me of that old joke: "Don't get married. Just find somebody you hate and buy them a house."
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Re: We have a prenup, now buying a house.

Post by dekecarver »

To me it's fairly simply financially; keep your pre-marriage money separate, invest and let it ride as though you never had it. With two million at your age, and the length of time that pot has to grow, you have it made.

Buy the house with your wife with her on the deed and never throw up the fact that you make more money yada yada; you go into this together; after all you, she and your child need a place to live. Otherwise there's gonna be big trust issue (if there already isn't) and what you potentially lose is gonna be a lot more than a percentage of a house. The question I think you really have to answer is, are you married or is your marriage a contractual business relationship that you are now trying to write/plan out a potential exit strategy?
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greg24
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Re: We have a prenup, now buying a house.

Post by greg24 »

mrspock wrote: Mon Nov 25, 2019 8:02 pm
greg24 wrote: Mon Nov 25, 2019 7:49 pm
jeremyj wrote: Mon Nov 25, 2019 2:52 pm1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage.
You had $2M when you got married. You've added $1M during the 4 years of marriage.

Why would you need the prenupped $2M when you have $1M that more than covers your $500k-$1M house?
That’s a very good point, my guess is: the after marriage assets might be illiquid, have capital gains, or otherwise not usable for the entire purchase.
Then take out a mortgage, like nearly everyone else.

His prenupped $2M doesn't even come into the picture. But he is trying to make it come into the picture.
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Re: We have a prenup, now buying a house.

Post by Sam1 »

Op, you have gone to great lengths and used many words to talk about your assets and salary versus hers. It genuinely makes me sad. I don’t think you even need to worry about finances, especially with a high net worth and fair prenup already in place. Instead, you need to figure out what is driving you to act this way about finances with the person you should trust most in this world. I understand wanting to protect assets you bring into a marriage, but what you’re proposing and have in place now is simply overkill in a normal relationship. I don’t even understand why you are married. I get that this is a finance forum but have you even said anything about how she is a great mother or you love her?

You should get to the bottom of what is causing this because it may eventually hurt you financially in the end. My in-laws have a miserable marriage. Their separate finances and complicated and unromantic means of dealing with each other’s salaries and assets are pretty consistent with the rest of their marriage. They will split the bill at a family dinner and argue over who pays for what. But I only had one soda refill! I owe $18 and not $23!! My FIL was a lot like you and my MIL in a similar financial position as your wife. Guess who got the pseudo surprise $5 million inheritance? My MIL. Guess who insisted on keeping the separate accounts and silly tit for tat accounting style? Yeah my MIL. She is enjoying early retirement and bought herself a vacation condo. My FIL still goes to work every day.
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Re: We have a prenup, now buying a house.

Post by Cobra Commander »

I think either I, or substantially all of the other posters, have misinterpreted the actual agreement that you guys have. It sounds like your prenupt covers both pre and post-marital assets (i.e. your statement that "Hers is hers, mine is mine; going forward she prioritizes retirement accounts and savings first before sharing expenses 40/60 with me") such that accounts in your name are yours and accounts in her name are hers. This is further supported by your statement that would provide a disbursement to her if you guys divorce.

You haven't really said what your goals are so I'll assume you're trying about protecting your assets. If my prior paragraph is correct then it sounds like you guys are on the same page in terms of keeping earnings substantially separate. If my stream of assumptions is correct then the easiest way to go about this is to add a brief addendum to your prenupt that specifies the ownership of the asset upon dissolution of the marriage. In this case, 40/60 seems like the best split since that is how you are paying the expenses and she could continue to pay her 40% and you your 60% of the mortgage and related expenses.

You'd have to check with an attorney in your state re: enforceability of your prenupt. A slight majority of states have adopted some version of the uniform premarital agreements act and the trend is in favor of enforcing pre and post-nuptial agreements (among other arrangements). You could probably save some money on lawyer fees with the addendum if you include a choice of law clause in favor of the state where the original agreement was drafted (again, you need to check on whether your jurisdiction will honor that provision).

Just as an observation. I did some family law work in the beginning of my career and although people may sound magnanimous on here re: 50/50 split on everything the universe of people that actually walk the walk when it comes time to divorce is small. Everyone wants a greater share due to whatever way they perceive themselves to have been wronged and that was a pretty universal experience among my fellow practitioners. With that in mind, I think a lot of the posters here are treating your concern unfairly which I think is unfortunate.
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Re: We have a prenup, now buying a house.

Post by EddyB »

Cobra Commander wrote: Mon Nov 25, 2019 9:53 pm I think either I, or substantially all of the other posters, have misinterpreted the actual agreement that you guys have. It sounds like your prenupt covers both pre and post-marital assets (i.e. your statement that "Hers is hers, mine is mine; going forward she prioritizes retirement accounts and savings first before sharing expenses 40/60 with me") such that accounts in your name are yours and accounts in her name are hers. This is further supported by your statement that would provide a disbursement to her if you guys divorce.

You haven't really said what your goals are so I'll assume you're trying about protecting your assets. If my prior paragraph is correct then it sounds like you guys are on the same page in terms of keeping earnings substantially separate. If my stream of assumptions is correct then the easiest way to go about this is to add a brief addendum to your prenupt that specifies the ownership of the asset upon dissolution of the marriage. In this case, 40/60 seems like the best split since that is how you are paying the expenses and she could continue to pay her 40% and you your 60% of the mortgage and related expenses.

You'd have to check with an attorney in your state re: enforceability of your prenupt. A slight majority of states have adopted some version of the uniform premarital agreements act and the trend is in favor of enforcing pre and post-nuptial agreements (among other arrangements). You could probably save some money on lawyer fees with the addendum if you include a choice of law clause in favor of the state where the original agreement was drafted (again, you need to check on whether your jurisdiction will honor that provision).

Just as an observation. I did some family law work in the beginning of my career and although people may sound magnanimous on here re: 50/50 split on everything the universe of people that actually walk the walk when it comes time to divorce is small. Everyone wants a greater share due to whatever way they perceive themselves to have been wronged and that was a pretty universal experience among my fellow practitioners. With that in mind, I think a lot of the posters here are treating your concern unfairly which I think is unfortunate.
I had the same impression of their deal.

While I also agree with your assessment that many posters here might not be as magnanimous in their own divorce, I do wonder whether the OP is trying to get the “deal” without recognizing that he’s benefited from out-of-scope aspects going his way (like the move they made at his initiation). I know we have only a small window into the relationship, but I wonder if he’s setting himself up for a much more transactional relationship in the future, when his wife realizes that maybe she should protect herself as more decisions come up that are beyond the scope of the prenup.
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Re: We have a prenup, now buying a house.

Post by aristotelian »

jeremyj wrote: Mon Nov 25, 2019 9:51 am We have rented since we met, but will likely buy a house in the $500k-$1mm range in 2020. After viewing some houses this past weekend, I asked her how important it would be to her that her name be on the deed/title, with the promise that we would figure something out that made us both comfortable. She expressed concern that if she were merely a tenant, I would have all the power in a potential separation (effectively threatening her with homelessness), which would also bleed into a custody battle; she also fairly points out that we changed states for my new job. I said I understood her concerns and we would figure something out. Two days later, she admitted that she's been stressed about this since we had the conversation, so I am hoping to find some information to reassure both of us.

I find her position legitimate and don't want her feeling marginalized and upset, but registering 50/50 ownership of a potentially $1mm asset I largely finance doesn't seem like an appropriate solution to that problem. Has anyone been in a similar situation and could provide advice?
Her position is absolutely legit. Moving for your job is a tremendous sacrifice. According to the spirit of the prenup, she probably should have demanded some compensation from you. Putting her name on the title seems like a reasonable solution but you may need to go back to a lawyer to update the prenup. If you are worried about disproportionately financing a $1M house, you should buy less house.
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Re: We have a prenup, now buying a house.

Post by JGoneRiding »

I am female and have been the higher earner. Also had the money to buy the house on marriage. I would expect my down payment out and then 50 50 after that (though we do live in community property so this was for gone)

That would be what I would consider fair. You put down the down payment and that is "yours" but everything after that is "ours"
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Re: We have a prenup, now buying a house.

Post by fyre4ce »

I'm surprised no one else suggested this: buy the house entirely with your premarital assets, put your name only on the deed, and treat her as a tenant. Write up a lease, agree on a fair market rental price for a bedroom plus use of common areas of the house, and both sign it. She can give you a security deposit and set up automatic rent payments from her account to yours. You can make it longer-term (2 years or longer) and renew it well in advance of the current lease expiring. That way, if you split up, then you can't kick her out, or it would be an unlawful eviction.

Disclaimer: not a lawyer.
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Re: We have a prenup, now buying a house.

Post by basspond »

Sounds like talking to your buddies means more to you then your spouse. Only thing in the prenup should be the asset value at the time of marriage. After that marriage vows/contract (two shall become one clause) supersedes any other idea of your union being a business contract.
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Re: We have a prenup, now buying a house.

Post by engineerahead »

The approach feels scarily surgical and disconnected from marriage to me.
Also, what feels weird is that most of the advice comes from the other (wrong, hopefully) way around. Let's not start thinking from the divorce side.

I'm not from the US and may not understand enough about how things work. If prenup means an agreement that you both keep what is yours from the time before marriage, then the part is set.
Now the rest of how you run and pay things going forward in marriage should be approached jointly, you are a team now. The payment 40/60 I guess is what you're comfortable with and now you should never think nor that you pay more as an argument.
If you're not paying cash for the house, consider having both names on the mortgage and house ownership, both pay for the mortgage 50/50 if possible or whatever proportion you're comfortable with.
If you're paying cash, then a tenancy until the other person's share has been paid off might be in order, but that is something only you can figure out and agree upon.
Buying a 1mm house is a big decision even with your net worth and it's vital that you both agree on everything. Maybe even try going through this forum's replies with your SO and discuss the advice and possibilities.

A little food for thought: you mentioned you very much think as "we" since you're married, but the entry post mentions you had you - 2mm she 200k before marriage, now YOU have 3mm and SHE has 50k net debts. This is contradicting to what you've said but both outcomes are possible if that's what you've both agreed upon. If a marriage is a team approach for you, it should have been that you have 2mm and 50k (guessing 150 was debt) from prenup and now as a team you have 1mm or so jointly. This is kind of hard to swallow in one's mind, which is why both the joint and sort of separate approach seem possible.

Good luck with the decisionmaking
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Re: We have a prenup, now buying a house.

Post by Yukon »

mrspock wrote: Mon Nov 25, 2019 4:38 pm
mptfan wrote: Mon Nov 25, 2019 4:34 pm
mrspock wrote: Mon Nov 25, 2019 4:28 pm Check with a good lawyer, but I am reasonably sure in a bunch of states, that as soon as you start co-mingling you prenup assets (including growth), you might as well light it on fire (for the portion of assets you co-mingled). It’s just not a smart idea if you want to maintain rights to those assets per the prenup.
Yes, but you should understand what it means to "comingle." Comingling is to combine marital assets with premarital assets...the most common example would be to deposit a paycheck while married into an account with premarital assets... that is comingling marital assets (your earnings while married) with premarital assets (an account with premarital savings). That is different from withdrawing some of your pre-marital assets to pay for a marital asset.

So in the OP's case, if he has a premarital account with $2 million and he withdraws $500,000 to pay for a marital home titled in both names, the $500,000 becomes a marital asset but the remaining $1.5 million remains premarital, unless of course he deposits some martial assets into the premarital account...that would be comingling.
Interesting. This must get interesting when it comes to 401k’s, and paying an existing mortgage you might have. Like I said.... get a good lawayer :D .
Sure, but who's going to pay for that lawyer!?!? 40:60 split costs? Make the wife use her assets since she's causing the predicament without having appropriate assets?
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Re: We have a prenup, now buying a house.

Post by celia »

On the day you married, I would assume all your pre-marital assets would remain in accounts with your individual names. Once you're married, it seems all income after that should go to a new account that is joint. This is true even if only one of you brings in the income. And either of you can always add some of your "separate" assets to the joint pot.

Regarding the house purchase, just use joint assets (or anything you're willing to add to joint) to buy the house 50-50.
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Re: We have a prenup, now buying a house.

Post by winterfan »

fyre4ce wrote: Tue Nov 26, 2019 3:25 am I'm surprised no one else suggested this: buy the house entirely with your premarital assets, put your name only on the deed, and treat her as a tenant. Write up a lease, agree on a fair market rental price for a bedroom plus use of common areas of the house, and both sign it. She can give you a security deposit and set up automatic rent payments from her account to yours. You can make it longer-term (2 years or longer) and renew it well in advance of the current lease expiring. That way, if you split up, then you can't kick her out, or it would be an unlawful eviction.

Disclaimer: not a lawyer.
I hope this is meant to be facetious! Could you imagine? Would she get a rent reduction if she mows the lawn, paints the house or rakes the leaves? Not only that, but she is deprived of any future real estate gains. Since they have a child, she can't realistically go out and buy her own house.

Anyway, OP, if I'm reading between the lines, your spouse does not seem like a spendthrift and you say your marriage is good. My opinion is you are spending too much time talking to your slighted coworkers about this subject. If you want to be objective, the data on divorce among college educated adults on their first marriage is actually pretty positive.

As an aside, when my husband and I married almost 20 years ago, he had a larger net worth than I did just because he owned a house already and had been investing in his retirement accounts for a longer time (he is older than me). At the time, I wondered if he wanted a prenup. He did not (no judgment on prenups though!). He didn't have the wealth you did anyway. It makes me chuckle because the NW then is such a small portion of our overall NW today.
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Re: We have a prenup, now buying a house.

Post by dachshunddad »

Ignoring the relationship aspect that others have covered. I agree your options are to get a mortgage and pay for it "going forward". Alternatively, depending on your state, you could set up a trust for the house. You could be primary beneficiary and she could be second. This would be less personalized than a name on the deed and give her some protection should something happen to you. An estate attorney should be able to guide you.
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Re: We have a prenup, now buying a house.

Post by msk »

I have been married twice for a total of 50 years, all spent under jurisdictions that have separation of property, no 50:50 stuff that sounds (surprisingly on this forum?) nonsensical to people who have grown up under separation rules. When we were poor, we each had an own account and each contributed to joint expenses, like rent, etc. on the basis of earning capacity (a NW of a million $ can be gauged at $50k a year). When I earned enough to support the family on my own, we had a joint account (what's mine is ours and what's hers is hers). When we lived in her house (mortgage in her name obtained via her employer) I paid the going commercial rent into her account. But all my investments and retirement accounts were in my sole name. Decades later my NW dwarfed hers and when we wished to acquire a new house, I put it in her sole name. The latter makes it impossible for any of my heirs (estranged step kids?) to kick her out. My observations:

What looks "fair" to one partner does not necessarily seem fair to the other. Even 50:50 commingling does not solve this issue. What's important to one partner (a new Porsche for DH?) may still seem too wasteful to DW, especially if DW is the wealthier contributor. Just as financial contributions from each partner are probably unequal, so are the values of "wants". All I can say is, if you wish to retain separation of property in perpetuity, contribute to current "needs" according to your earning capacities, not 50:50 since IMHO that is very unfair. $3million NW is good for $150k a year... Unfortunately housing falls under "needs", so, OP, just pay for it 100% cash and have it in your name. No nonsense of her contributing to the mortgage if you can possibly avoid it. Even better, can you have it registered in your child's name? OK the kid when adult can kick out both of you! But like divorce, you all wish it never happens. A big chunk of human beings live under separation of property, so I am a bit skeptical of commingling 50:50 as the only valid model. E.g. even in North America, AFAIK the Province of Quebec has separation of property as the default. All this stuff is becoming horribly complicated since these days living-together rather than marriage seems to be on the rise.
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Re: We have a prenup, now buying a house.

Post by fyre4ce »

winterfan wrote: Tue Nov 26, 2019 6:07 am
fyre4ce wrote: Tue Nov 26, 2019 3:25 am I'm surprised no one else suggested this: buy the house entirely with your premarital assets, put your name only on the deed, and treat her as a tenant. Write up a lease, agree on a fair market rental price for a bedroom plus use of common areas of the house, and both sign it. She can give you a security deposit and set up automatic rent payments from her account to yours. You can make it longer-term (2 years or longer) and renew it well in advance of the current lease expiring. That way, if you split up, then you can't kick her out, or it would be an unlawful eviction.

Disclaimer: not a lawyer.
I hope this is meant to be facetious! Could you imagine? Would she get a rent reduction if she mows the lawn, paints the house or rakes the leaves? Not only that, but she is deprived of any future real estate gains. Since they have a child, she can't realistically go out and buy her own house.
Only half-facetious. Maybe I'm misunderstanding, but it seems like that's exactly what the OP wants. He wants him and wife to live in the $0.5-1M house but he doesn't want her to have any financial interest in it. Purchasing the house with premarital assets *might* (again, not a lawyer) accomplish that. It sounds like a landlord-tenant relationship to me, so why not formalize it?
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Re: We have a prenup, now buying a house.

Post by sperry8 »

chevca wrote: Mon Nov 25, 2019 4:36 pm
jeremyj wrote: Mon Nov 25, 2019 2:52 pm1) I had written this post under the assumption that I intended to purchase the house with funds I earned pre-marriage. That, in a sense, would be converting the "nest egg I protected" to a joint asset, and likely led to the poorly-worded statement many of you justly found disagreeable. If it otherwise appears to be a reasonable financial decision to take a mortgage out vs pay cash, it garners the large additional advantage that we build equity together. I appreciate those of you who emphasized the advantage of this set-up.
I can see how that lines up with your viewpoint on it. But, my answer wouldn't change. Either buy the house with your money for your family and you both go on the title/deed. Or, take out a mortgage together and keep your money as yours.

As others have mentioned, the house would be acquired together while married. If a divorce were to happen, it would likely matter little how it was paid for or who is on the title. It's going to be split between the two of you. The courts would likely tell you, too bad you used YOUR money.

Bottom line... if you want to keep your prenup money separate, just keep it separate. As of 3.5 years ago, everything acquired since and going forward is both of yours.
That is correct. However, just for safety purposes, I advise opening an intermediary bank... so that premarital is in Bank A, Bank B is a new bank account opened, and Bank C is comingled. Then, whenever one party with premarital assets wants to contribute to marriage, have monies move from Bank A to Bank B and then Bank C. This ensures that monies are never considered comingled. And in reverse, if ever taking monies out of Bank C for some reason... put them all in Bank B. Nothing ever goes into Bank A after marriage. It stays separate and monies only come out of it and only to Bank B.
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