Pre-nup?

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DireWolf
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Pre-nup?

Post by DireWolf »

Any Bogleheads on here opt for a pre-nup?

I will be getting married next year and have been thinking about bringing the subject up with my fiancee. I earn significantly more money than her, although we both have similar financial principles.
dailybagel
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Post by dailybagel »

Can you give us an idea of how much assets you're bringing in, compared to your future wife?

Pre-nups for protecting existing assets can be fashioned, but my understanding is that, depending on the state, it is much more difficult to protect future *earnings* that you have during the marriage.
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DireWolf
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Post by DireWolf »

Good question... I actually don't have any assets since I recently finished residency. I didn't realize you couldn't protect future earnings. I'm most concerned with protecting future retirement account contributions.
Ben24
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Post by Ben24 »

With a 60% chance of failure, you should get a prenup.
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Post by chaz »

DireWolf, see a lawyer.
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Call_Me_Op
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Post by Call_Me_Op »

Not sure you can protect future retirement assets with a pre-nup, especially for a marriage that lasts a while.

And good luck bringing it up. That often ends in tears and/or resentment.
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Post by Hector »

as others said if it is not possible to include future earnings generally, it might be the case that it wont work and bribing it in might cause resentment for years.
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Post by Hector »

Ben24 wrote:With a 60% chance of failure, you should get a prenup.
It is my understanding that a majority of wealthy people stay married and I am sure that majority of bogleheads are wealthier than an average American. So I am positive that chance of failure is a lot less than 60% for bogleheads.
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Post by yobria »

I wouldn't - if I feld I needed legal protections from my future wife, I'd just stay single.

Some disagree, and their points are completely valid.

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Toons
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Post by Toons »

I think a pre nup might be in order,I have a close family member that is thankful he had one drawn up prior to marriage.He had significant assets before he married. :shock:
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Post by donocash »

My understanding is that protecting retirement assets under a prenup is fairly complicated.

I believe a spouse-to-be cannot waive her right to a retirement plan under ERISA; federal law forbids it.

Instead, federal law would require that the prospective spouse must state clearly in the prenup that she will sign a post-nuptial agreement surrendering any claim to your retirement assets. A separate post-nuptial agreement must be then signed by all parties.

In addition, I also believe that a judge can throw out that agreement if during divorce procedings it becomes evident that you were using a retirement plan to unfairly shield assets from an equitable division of assets.

That's a lot of lawyering, and I would think twice about it. Better off to consult an attorney specializing in the field without preconceptions or preconditions, and only then after reading a ton on the subject.

Also keep in mind that if a judge smells even a hint of coercion, your agreement is toast. Your spouse-to-be must be fully aware of the entire process, and in the end will need her own attorney to vet the agreement. That may mean you will have to set up a retirement plan for her that you can't claim under divorce proceedings to pass a fairness test.

If your idea is that, hey, I earned all the money, she gets nothing if I bolt, expect that the divorce judge will take any agreement with that attitude and urinate on it and you before he throws it in the trash.

If that's not what you are shooting for, well, what exactly are you shooting for? Seriously, sit down and ask yourself what you are trying to accomplish, and only then sit down with your honey, and then the lawyers, to see what you can come up with.
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Post by MWCA »

Bring it up now. Get it all out of the way with the person you want to spend the rest of your life with.
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Post by Babakhani »

U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
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Post by drewhaa »

I'm amazed we still have a one size fits all marriage contract. I'm with Nobel Laureate Gary Becker on this one. We should require people to tailor their marriage contract to their specific circumstances, including the divorce. Here's a quick Newsweek article on the subject from his website:

http://home.uchicago.edu/~gbecker/Busin ... 9_1997.pdf

He and others have written more scholarly articles on the subject that can be found with an internet search if you're interested. Maybe it's a place to start when discussing a pre-nup. I doubt it, but maybe she's into behavioral economic research.
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Post by travellight »

I had a prenup and am now divorced. It was a significant help. I would not consider getting married without a prenup. It helps that I am the female (in terms of presenting it to the other party). To me, a prenup is romantic. It says that neither of us are in it for the money; we just want to be together. If it all works out as we all hope it would, certainly you would take care of each other, financially and in every other way. If we happen to be wrong (about 50% are) and the relationship doesn't work out, neither of us should want to enslave the other to financial support for the rest of their lives.

This is really just applicable to two people of independent means who have no financial connection or dependence. It is a different scenario when one person puts another through school, bears the children, forsakes their own career, etc. In that scenario, all post marriage assets should be evenly divided. I would never put myself in the latter scenario, either as the wage earner with a house husband or as the person who decides to forsake her career to become a housewife.
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Post by bmelikia »

Could a person side step a prenup buy placing their assets into a trust?

Sorry if that sounds silly, I don't fully understand trusts but didn't know if using one for that purpose would somehow separate funds somehow?
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Post by Call_Me_Op »

Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
Is this really a matter of trust? Are you trusting her to not "fall out of love" with you - something over which she has little or no control? A pre-nup is the prudent thing to do. After that, you can do all of the trusting you want.
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Post by gasman »

Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
I agree for a young first marriage. For a marriage later in life, maybe kids from a previous relationship, I think a prenup is preferred.
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Post by cheesepep »

Random question from a single guy, assuming you don't get a pre-nup, and you marry and divorce in one month or even one year (all hypothetical), does the lady get 50%? I'm in CA if that matters.
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Post by yobria »

ncounty wrote:I had a prenup and am now divorced. It was a significant help. I would not consider getting married without a prenup. It helps that I am the female (in terms of presenting it to the other party). To me, a prenup is romantic.
I can't think of anything involving lawyers I'd ever call romantic :) .

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Post by norookie »

:peace
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Post by redarmymembe »

Call_Me_Op wrote:
Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
Is this really a matter of trust? Are you trusting her to not "fall out of love" with you - something over which she has little or no control? A pre-nup is the prudent thing to do. After that, you can do all of the trusting you want.
+1, 50 years of life here on earth has given me the expertise to say "heck yeah!".
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Post by Christine_NM »

From the distaff side --

Be ready for any reaction. There is no right or wrong here, just feelings on both sides.

I never could figure out how I felt about prenups. You may be taking a big chance asking for one -- prepare to have the marriage cancelled.

I think my fiance had a misguided idea that I was pursuing him, rather than vice versa, and I was a bit doubtful, seeing some of his misconceptions, but proceeded with the marriage anyway. If he had asked for a prenup I never would have married him for sure, even if prenups had been as common as they are now. It did not last.

So, if you feel like you are a catch, you are doing her a big favor, and she's incredibly lucky, you are probably wrong. Don't marry now. Stay single, save up some money, then marry her or someone else. With a few years of work and single life you will have assets to protect so you can legitimately ask for a prenup and a reasonable fiance might understand. Otherwise without assets it looks like an ego trip.
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Post by yobria »

Call_Me_Op wrote:Is this really a matter of trust? Are you trusting her to not "fall out of love" with you - something over which she has little or no control? A pre-nup is the prudent thing to do. After that, you can do all of the trusting you want.
A pre nup means four things to me:

1. We may "fall out of love" or decide to separate
2. We won't be able to resolve the split amicably
3. If #2, a court would divide the assets. But whatever the judge deems fair won't be fair enough for me
4. I'm so worried about 1-3 happening that I'm willing to pay a large sum of money for attorneys to protect against it.

I could still marry a person if I felt there was a chance #1 would happen. But if I was worried about 2-4, I'd stay single.

My parents divorced after 25 years. Dad had a high paying career, Mom stayed at home. Like the caring, classy folks they are, they just split the assets down the middle.

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Post by Watty »

Splitting your assets if you divorce is one thing but I think that the thing that you really need to worry about is spousal support or alimony that you could end up paying paying for many years.

If possible in your state then a mid ground might be a pre-nup reaffirming that you will split your assets at the time of divorce evenly and how it will be decided but limiting spousal support unless one of you is disabled. In all likelihood this would not eliminate it entirely but it could put a reasonable cap on it.
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Post by Watty »

yobria wrote:
ncounty wrote:I had a prenup and am now divorced. It was a significant help. I would not consider getting married without a prenup. It helps that I am the female (in terms of presenting it to the other party). To me, a prenup is romantic.
I can't think of anything involving lawyers I'd ever call romantic :) .

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Post by TheEternalVortex »

Hector wrote:
Ben24 wrote:With a 60% chance of failure, you should get a prenup.
It is my understanding that a majority of wealthy people stay married and I am sure that majority of bogleheads are wealthier than an average American. So I am positive that chance of failure is a lot less than 60% for bogleheads.
It's actually about 40% on average, but much lower if you are:
- wealthier
- more educated (have a college degree)
- are older (25+)
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Post by TheEternalVortex »

I am getting married soon. My fiancee asked me if I wanted to get a prenup (I have more assets/income than her), but I said no.
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Post by TxAg »

gasman wrote:
Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
I agree for a young first marriage. For a marriage later in life, maybe kids from a previous relationship, I think a prenup is preferred.
sums up my thoughts
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Post by rylemdr »

Bring it up with your fiancee.

If she agrees, then good for you.

If she does not, marry her anyway and then squander all your money(not hers) and just be a lazy bum until she divorces you.. then you can say,

"Ha!! Told you we shoulda gotten a prenup!!"

:D
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Post by orlandoguy »

I think you should seek competent legal counsel before even deciding if you even need/want a prenup. Some questions to consider:

I understand that you have no assets today, but do you have liabilities, i.e. loans from your education?

Have you considered the possibility that SHE might be interested in a prenup in order to shield herself from assuming a portion of these liabilities?

Why would you treat future retirement assets any differently than other assets?

Why would she agree to a prenup in any case?

You may want to try to think through a few potential scenarios in terms of 1) length of marriage and 2) assets to distribute. Will she think your proposal is "fair" under each of these? What is she gaining or giving up in each?

I'm a fan of prenups in general but think people really need to think through 1) why they want them; 2) what impact having one may have on both the pre- and post-wedding relationship and 3) how to deal with the myriad possibilities in terms of tenure, lifestyle, and need in the future.
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Post by wilson08 »

Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
If it worked out that way it would be the ideal world, no one goes
into a marriage expecting to get a divorce or expecting their spouse
to be unfaithful. For a marriage where both people are trustworthy
and everything works out it is inconceivable there would be a need
for anyone to get pre-nup but for the other 50%+ where things did
not work out a pre-nup could be a life saver.
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Post by stoptothink »

wilson08 wrote:
Babakhani wrote:U either trust her and marry her or don't trust her and stay single. Trust and honesty is the foundation of a good marriage. If you don't have it, it will become a self-fullfilling prophecy.
If it worked out that way it would be the ideal world, no one goes
into a marriage expecting to get a divorce or expecting their spouse
to be unfaithful. For a marriage where both people are trustworthy
and everything works out it is inconceivable there would be a need
for anyone to get pre-nup but for the other 50%+ where things did
not work out a pre-nup could be a life saver.
Ditto. My hopefully soon-to-be ex-wife swore up and down that we shared similar financial ideologies, but it all changed when we got married. We are getting divorced solely because she wanted to live well beyond our means while we were both still students and I was the sole provider. After the absolute nightmare I have been going through, having 10yrs of hard work and sacrifice literally stolen from me because of a 13 month marriage, there is no way I would enter into a marriage without protecting myself the next time.

I have, since my separation over a year ago, been dating a woman who is significantly more financially well off than I and it may very well result in marriage. I have told her that I will not do it again without a pre-nup and she adamantly disagrees(love conquers all, it's not romantic mumbo jumbo) although it would be for her protection.
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Post by JasonR »

Man, pre-nup threads are always so depressing.
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Post by travellight »

To not do a prenup implies either of two things to me:

1) You are all knowing, extremely wise, and are never wrong.... especially about this. You would never end up in the 50% or even 30% who end up divorced.

or,

2) It won't bother you to pay half your net worth, and possibly more, possibly for the rest of your life to someone you may not even like any more.
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Post by JasonR »

ncounty wrote:To not do a prenup implies either of two things to me:

1) You are all knowing, extremely wise, and are never wrong.... especially about this. You would never end up in the 50% or even 30% who end up divorced.

or,

2) It won't bother you to pay half your net worth, and possibly more, possibly for the rest of your life to someone you may not even like any more.
Pre-nups are not romantic. They ain't sexy. There's nothing in them that says passionate, fairy-tale, love of my life-type love.

That kind of love is out there, you know. Why get married if not for that?
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Post by yobria »

My views:
ncounty wrote:To not do a prenup implies either of two things to me:

1) You are all knowing, extremely wise, and are never wrong.... especially about this. You would never end up in the 50% or even 30% who end up divorced.
I'm certainly not all knowing, however, if I were *so* uncertain about the qualities of the person that I felt the need to hire attorneys to protect myself against her, I wouldn't marry her.

While 50% may end up divorced, only a small fraction of those end in acrimonius divorces, so it's not a fair statistic.
ncounty wrote:2) It won't bother you to pay half your net worth, and possibly more, possibly for the rest of your life to someone you may not even like any more.
Again, if my feelings about this person were so uncertain that, in the event of divorce, I wouldn't want to give her what an impartial court says is fair, I wouldn't marry her.

Nick
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Post by bottlecap »

You're not going to get many rational responses to your question, so you should talk to a lawyer about it. Bring your fiancee. Decide together.

I don't think "I have more earning potential than you and I want to protect it" is a great rationale, but there are good reasons to protect yourselves in the unlikely event of a divorce. Hopefully you'll never need it, but if you do, youll both pay a lot less in attorneys fees.

JT
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Post by stoptothink »

yobria wrote:My views:
ncounty wrote:To not do a prenup implies either of two things to me:

1) You are all knowing, extremely wise, and are never wrong.... especially about this. You would never end up in the 50% or even 30% who end up divorced.
I'm certainly not all knowing, however, if I were *so* uncertain about the qualities of the person that I felt the need to hire attorneys to protect myself against her, I wouldn't marry her.

While 50% may end up divorced, only a small fraction of those end in acrimonius divorces, so it's not a fair statistic.
ncounty wrote:2) It won't bother you to pay half your net worth, and possibly more, possibly for the rest of your life to someone you may not even like any more.
Again, if my feelings about this person were so uncertain that, in the event of divorce, I wouldn't want to give her what an impartial court says is fair, I wouldn't marry her.

Nick
I dated my ex-wife for over 3yrs and we talked about money/budgeting/fiscal ideals probably a thousand times before we married...and our marriage lasted 13 months. I didn't have a single concern either and I truly believe she thought the same(at the time). Protect yourself, there is no upside to not doing so. If your significant other has a problem with it they are either totally irrational(love conquers all) or looking for a free ride.

I have made some pretty large speculative investing mistakes in my life, including losing nearly half a million in real estate investing in my early 20's; marriage sans pre-nup was without a doubt the worst of them. EVERYTHING changes once that ring is on the finger.
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Post by yobria »

jenny345 wrote:
yobria wrote:While 50% may end up divorced, only a small fraction of those end in acrimonius divorces, so it's not a fair statistic.
Is that small fraction based on research or wishful thinking? In the divorces among the people I know, the whole family, parents and kids, often end up in counseling because there is so much trauma.
It's based on the 100+ couples I've known in the past 30 years that have been divorced, including my parents.

While divorces are by definition traumatic, I was talking about the cases where a pre nup would have been needed, eg where a) the couple couldn't work out the financials amicably, and b) there was something wrong w/the way an impartial judge split the assets.

Again, personally, if I were worried about such corner cases, I wouldn't marry.

Nick
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Post by Call_Me_Op »

stoptothink wrote:
yobria wrote:My views:
ncounty wrote:To not do a prenup implies either of two things to me:

1) You are all knowing, extremely wise, and are never wrong.... especially about this. You would never end up in the 50% or even 30% who end up divorced.
I'm certainly not all knowing, however, if I were *so* uncertain about the qualities of the person that I felt the need to hire attorneys to protect myself against her, I wouldn't marry her.

While 50% may end up divorced, only a small fraction of those end in acrimonius divorces, so it's not a fair statistic.
ncounty wrote:2) It won't bother you to pay half your net worth, and possibly more, possibly for the rest of your life to someone you may not even like any more.
Again, if my feelings about this person were so uncertain that, in the event of divorce, I wouldn't want to give her what an impartial court says is fair, I wouldn't marry her.

Nick
I dated my ex-wife for over 3yrs and we talked about money/budgeting/fiscal ideals probably a thousand times before we married...and our marriage lasted 13 months. I didn't have a single concern either and I truly believe she thought the same(at the time). Protect yourself, there is no upside to not doing so. If your significant other has a problem with it they are either totally irrational(love conquers all) or looking for a free ride.

I have made some pretty large speculative investing mistakes in my life, including losing nearly half a million in real estate investing in my early 20's; marriage sans pre-nup was without a doubt the worst of them. EVERYTHING changes once that ring is on the finger.
To deny the realities of human nature is imprudent. How many times has a friend told you that she has met the most wonderful man (or woman). A year later they tell you the person was a real jerk. Romantic relationships, as wonderful as they might be at times, are subject to the many variables and uncertainties associated with human beings and their interactions. It is much like putting all of your money into a single stock. It may be a great company, but there is still a significant risk that it won't be around in 30 years.

Now I would still purchase the single stock if I fell in love with it. But I would want to enter into an agreement (were it available) that would leave me solvent in the event of a corporate bankruptcy.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Post by yobria »

stoptothink wrote:I dated my ex-wife for over 3yrs and we talked about money/budgeting/fiscal ideals probably a thousand times before we married...and our marriage lasted 13 months. I didn't have a single concern either and I truly believe she thought the same(at the time). Protect yourself, there is no upside to not doing so. If your significant other has a problem with it they are either totally irrational(love conquers all) or looking for a free ride.

I have made some pretty large speculative investing mistakes in my life, including losing nearly half a million in real estate investing in my early 20's; marriage sans pre-nup was without a doubt the worst of them. EVERYTHING changes once that ring is on the finger.
That's one view - that people you love can change in an instant. And I guess it happens. My Mother could one day start stealing things when she comes over to my house. I supposed I could install security cameras to keep an eye on her - there's no downside. I don't think she will, but I've been wrong on things before.

But I'm not going to install those cameras. Instead I choose to believe in a baseline level of quality and consistency in those closest to me, including my wife. That's how I roll, I don't judge anyone for doing otherwise.

Nick
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Post by Call_Me_Op »

yobria wrote:
stoptothink wrote:I dated my ex-wife for over 3yrs and we talked about money/budgeting/fiscal ideals probably a thousand times before we married...and our marriage lasted 13 months. I didn't have a single concern either and I truly believe she thought the same(at the time). Protect yourself, there is no upside to not doing so. If your significant other has a problem with it they are either totally irrational(love conquers all) or looking for a free ride.

I have made some pretty large speculative investing mistakes in my life, including losing nearly half a million in real estate investing in my early 20's; marriage sans pre-nup was without a doubt the worst of them. EVERYTHING changes once that ring is on the finger.
That's one view - that people you love can change in an instant. And I guess it happens. My Mother could one day start stealing things when she comes over to my house. I supposed I could install security cameras to keep an eye on her - there's no downside. I don't think she will, but I've been wrong on things before.

But I'm not going to install those cameras. Instead I choose to believe in a baseline level of quality and consistency in those closest to me, including my wife. That's how I roll, I don't judge anyone for doing otherwise.

Nick
Not the best analogy for two reasons:

1.) 50% of mothers do not go from trusted loved-ones to thieves overnight.

2.) Losing a $20 bill you had lying around is quite different from losing half of your net worth.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
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Post by yobria »

Call_Me_Op wrote:
1.) 50% of mothers do not go from trusted loved-ones to thieves overnight.

2.) Losing a $20 bill you had lying around is quite different from losing half of your net worth.
A pre nup offers zero protection against a 50% divorce rate. It only protects against a corner case where:

a) You split up

b) You can't resolve things fairly and

c) You want to walk away with more assets than what an impartial judge thinks is fair

If this unique sequence of events is really keeping you up at night, to the point where you need to involve attorneys, why marry and take the risk in the first place?

Nick
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Post by bottlecap »

The existence of millions of divorce attorneys would suggest there is nothing "unique" about that sequence of events.

What would be interesting is to limit the responses to those that have actually experienced a.divorce - someone with actual knowledge.

We've heard from at least one. Anyone else?

JT
Last edited by bottlecap on Sat Sep 03, 2011 1:44 pm, edited 1 time in total.
TRC
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Post by TRC »

yobria wrote:I wouldn't - if I feld I needed legal protections from my future wife, I'd just stay single.

Some disagree, and their points are completely valid.

Nick
My thoughts exactly.
Call_Me_Op
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Post by Call_Me_Op »

What is being missed here is that some people enter a marriage with significant assets. That is very different from the case where two people marry in their 20's and build assets together. In the former case, a pre-nup is essential (that is, you need legal protection), especially if wealth is highly imbalanced. In the latter case, it's not nearly as important.

This is really about ensuring fairness. It is not fair that someone can marry and then get divorced in 1 year and lose 10 or 20 years of hard-earned wealth. Yet this does sometimes happen. Relying on a judge to enforce fairness is very imprudent.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Harold
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Post by Harold »

yobria wrote:If this unique sequence of events is really keeping you up at night, to the point where you need to involve attorneys, why marry and take the risk in the first place?
We insure against all kinds of things we don't expect to happen (and are pretty sure won't) why not this one?
yobria
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Post by yobria »

Harold wrote:
yobria wrote:If this unique sequence of events is really keeping you up at night, to the point where you need to involve attorneys, why marry and take the risk in the first place?
We insure against all kinds of things we don't expect to happen (and are pretty sure won't) why not this one?
My point, again, is that I personally wouldn't expose myself to the risk in the first place, if I had to insure against it.

Nick
Harold
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Post by Harold »

yobria wrote:
Harold wrote:
yobria wrote:If this unique sequence of events is really keeping you up at night, to the point where you need to involve attorneys, why marry and take the risk in the first place?
We insure against all kinds of things we don't expect to happen (and are pretty sure won't) why not this one?
My point, again, is that I personally wouldn't expose myself to the risk in the first place, if I had to insure against it.

Nick
But you are exposed to it -- even if you don't think it's going to happen, it doesn't keep you up at night, etc.
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