Congrats. Now cover your assets. Via BestPix Photography @ Flickr.
I’ve just spent a couple weeks hanging out with friends who are getting married. It’s been fun, and I’m happy for them, but I’ve been surprised by how so many of them–perfectly intelligent, educated, successful professional women–seem to think that their looooove will gloss over all the icky risks and realities of married life…including divorce. Not one of them has paused to consider the very serious legal and financial implications of marriage. To a certain extent, you can’t blame them. Our media culture–movies, novels, reality TV, ladymags–constantly force-feed women a diet of unrealistic romance whose only goal is to tie off every storyline with a fairy-tale wedding. What comes after is unimportant, because, y’know, you’re married.
Problem is, if you wind up in divorce court–as happens about 50% of the time for first marriages and even more often with second marriages–you will find out real fast that marriage has some very unpleasant legal ramifications that your fairy godmother didn’t warn you about.
That’s when you–and your spouse–may wish you had a prenuptial agreement. For a full explanation of how prenups work, who needs them, and how to contract them, go here.
Back in the days when men made all the money, it used to be that pre-nups’s sole purpose was to protect wealthy men from fortune-hunting women (as Kanye West eloquently describes in the lyrics to “Golddigger”–which are the title of this post). These days, however, women are making money, buying homes and owning businesses, and they are asking for pre-nups. It’s trend which can only be good for womanity.
I am an unashamed fan of pre-nuptial agreements, in large part because I live in a state with outdated and notoriously difficult divorce laws. There is no such thing as “no-fault” divorce in New York, as there is in other states. One party has to bring suit against the other, forcing even amicable splits to become adversarial, and turning non-amicable ones into living nightmares. New York is also a community property state, which means that anything acquired during the marriage–or any debts incurred–must be split 50/50 upon divorce, regardless of who earned the money or who racked up the debt. The only people who benefit are the lawyers. Everyone else usually winds up with a lot less money and long-lasting emotional damage.
Author Elizabeth Gilbert, of Eat Pray Love fame, describes her interminable–but not exceptionally so–divorce thusly:
The divorce–long after I’d walked out on the marraige, was still not happening. I started doing dreadful things out of my worst divorce nightmares, like writing damning legal accusations (required by New York State law) of his alleged mental cruelty–documents which left no room for subtlety, no way in which to say to the judge “Hey, listen, it was a really complicated relationship and I made huge mistakes too and I’m very sorry about that, but all I want is to be allowed to leave.”
He wanted the cash and the house and the lease on the Manhattan apartment–everything I’d been offering the whole while. But he was asking for things I’d never considered, a stake in the royalties of books I’d written while we were married, a cut of possible future movie rights to my work, a share of my retirement accounts.
It took Gilbert–who at that point in her career was earning a good living, but was hardly wealthy–more than two years to settle her divorce, because of claims and counter-claims and disputes over marital property. At the end of that chapter, she adds a wry note:
Here, I pause to offer a prayer for my gentle reader: may you never, ever have to get a divorce in New York.
Elizabeth Gilbert recently remarried–it’s the subject of her about-to-be published follow-up book–and I think it’s a safe guess that she had an iron-clad prenup this time around, in order to spare her another soul-sucking round of “cover your assets” (especially as she made a small fortune off the book sales and movie rights for Eat Pray Love).
Like Gilbert, there are more women realizing–sometimes belatedly–just how damaging a divorce can be to their finances and peace of mind. A recent article in the Guardian looked at the rising number of women asking for pre-nups:
“We’re moving on as a society where women are a bit more realistic about relationships and whether or not they’re going to endure,” says Amandeep Gill, an associate of the law firm Davenport Lyons. “Times have changed. These days, you’ve got far more women in the workplace, they’ve generated wealth independently and, particularly if you’ve got a woman marrying later on in her thirties or forties, it’s natural to want to protect one’s wealth.”
I once sat with a lawyer and drafted a pre-nup for my own anticipated marriage. We both owned homes, had retirement accounts and roughly equal net incomes, and he had a lot of debts and liabilities–child support, credit card debt and a big, ARM mortgage. I wanted to make sure that if things didn’t work out, that I wouldn’t be stuck with his debt nor could he claim a share of my earnings, as Elizabeth Gilbert’s ex did. Things broke down for other reasons, and the papers were never filed, but I’m grateful for the experience–I received a good education in how to protect myself financially from the consequences of divorce.
There are still the nay-sayers, though, who think that a prenup–by confronting the possibility of divorce–somehow disrespects or dooms the marriage.
To some women, though, the idea of planning the divorce before the marriage has even begun makes a mockery of the vow ‘for richer, for poorer’. Mother of two Julie Spalding, 32, from Dorking, married banker David, 36, four years ago without a prenup. Even now, mid-recession, Julie doubts whether they would have proposed the idea. “I don’t know if I would have signed it. The whole notion of marriage is that it’s forever, so if I thought that David was thinking ‘Well, if our marriage ends …’ then that’s quite sad really. I think I would have been disappointed and slightly offended.”
This is akin to the ass-backwards argument that being knowledgeable about birth control makes a woman slutty. A pre-nup doesn’t make you more likely to end your marriage–it just protects you from the worst of the consequences if you do.
I also suspect there’s a gender element to this particular woman’s distaste for the pre-nup. If it had been Julie who was the banker and breadwinner, instead of David, she might not have felt a pre-nup was “quite sad.” She was in her 20s when they married, and quit working, so it wouldn’t be to her advantage to have a pre-arranged division of property, because none of the money or assets coming into the marriage were hers. A stay-at-home mom who’s dependent on her husband is better off suing for a generous settlement in the divorce. (Although it should be noted here that prenups are not actually enforceable in England as they are in the US, but judges will take them under advisement during divorce proceedings)
Some of us, however, have income and assets we’d hate to part with. I don’t care how much I love a man–my financial security is hard-won and vitally important to me, and any man worth his cojones will appreciate that. In fact, if he didn’t, that would be a big red flag. Says another woman interviewed by the Guardian:
As unromantic the proposal might sound, Williams believes prenups are a basic financial decision. “It is 100% practical and it has nothing to do with love and romance. Prenups create more certainty and it will also protect us from each other’s debts. I deeply love my partner and we are devoted to each other. I worked extremely hard for my money and my partner appreciates my intentions.”
Unless you’re willing to risk your financial stability for the sake of a rosy and idealized vision of marriage, or you trust that you’ll marry a rich man who will generously kick some of his money your way if you divorce, for the love of Dog, ladies, get the pre-nup.
I was discussing with my girlfriend the other night how I think the residual emphasis on permanence when it comes to wedding vows is dissonant with modern reality. One of the reactions to Sandra Tsing Loh’s piece in the Atlantic a couple of months ago proposed that we don’t look at divorce as massive failures, merely the natural end of a good college try. This stuck with me, and made me consider how much less neurotic we would be about divorce if the vows were tweaked to focus more on the present tense rather than obsessing about infinity and beyond. One problem with traditional marriage vows is that they make hypocrites out of us when we divorce, unless we come equipped with a reason our partner has “dishonored” us. And since so many marriages end because of money matters, that “richer or poorer” stuff is obviously a load of crap for at least one of the pair, so why should we, as a culture, put them up to it?
And that would make people feel less bad about pre-nups, I suppose.
while I agree wholeheartedly – this is what my pre-nup would look like: my ridiculous debts plus his ridiculous debts x my book collection minus his dvds = sweet fa for both of us and childhood a la Dickens in a debtors jail for the kids.
I offered to sign a pre-nup when I got engaged because my husband was entering the marriage with considerably more money than I had. He didn’t take me up on it and found the whole conversation very uncomfortable but I was more than willing to do so. I do admit I wanted to be the one to offer. I don’t know how I would have felt to be asked but I would have done it.
I think for many people money is hard to talk about and many couples don’t even discuss basic money management before marriage – let alone a pre-nup. In my experience, many families don’t talk about money at all, its a taboo subject.
I’m sure part of the reason I offered to get a pre-nup was because I know my father made the same offer to my stepmother when he got remarried. Again, that was a case where she had more money than he did.
@beardown “richer or poorer” there are no ironclad across the board marriage vows anyhoo – you vow whatever the hell you feel like. One day maybe we’ll call all marriages civil unions and be done with it.
@rodriguez: Yeah, I know, but most people still want to take that idealistic tack, you know? Or at least that’s my impression. I’ll see if that’s the case when I attend one this Saturday.
I don’t know anything about CP laws but wouldn’t your future husbands mortgate, credit card debt and child support payments all count as pre-marital? Meaning you would not be held liable if you two had got divorced?
I don’t live in a CP state, so that’s part of my opinion on the subject, but unless I felt like my income totally dwarfed my future spouse’s income I wouldn’t feel the need for a pre-nup. And I mean like by 50k or greater.
@Melly The point that most people don’t talk about finances before marriage is one not to be ignored.
Anyone who thinks that marriage is anything other than the merging of assets, property, and debt is fooling themselves. If I want to stand up in front of all our family and friends and make vows to my partner, great! But signing legal paperwork is a whole other thing. I have often been labeled cynical for my support of a pre-nup but my debt is mine and my earnings are mine; likewise for my partner.
No one wants to talk about this because it does acknowledge the possibility that it might not work. I don’t know about other people but I’m not terribly good at predicting where I’m going to be or who I’m going to be in the future. So predicting (and banking on) the fact that my partner and I will be together X years down the road seems unrealistic. But many people do like their false sense of security.
(And divorce rates are not really 50% – it’s a misinterpretation of the data and it is a pet peeve of mine. I can point to the reference)
@bluebears
There’s also nothing to stop your spouse from raiding your bank accounts. And as a family member of mine experienced it can involve quite a lot of legal hassle to get it back.
@misscalculate: ok but a prenup wouldn’t prevent that.
@bluebears
You’re right, I just got fired up about marriage and finances. That last comment is irrelevant to the discussion at hand.
So, everything prior to the date of marriage you’re not responsible for and everything afterwards you can be?
I was very interested in a pre-nup when I got married. My parents had a very bitter, decade-long divorce, and they BOTH urged me to make a pre-nup. However, like other posters, DH actually had more money than I did and actually made several multiples of my salary at the time, so it really wouldn’t have benefited me. And DH would have signed one if I’d really wanted, but again, he didn’t want one from me, and I only stood to lose from the deal. Now, I’m making more than he is (he’s a stay-at-home dad, while I work the corporate world). But we’ve moved to another community property state, and it likely would all come out in the wash, anyway.
However, the biggest obstacle I had to getting married in the first place was coming to terms with the fact that we could possibly get divorced in the future. Facing that, and thinking about all the ramifications (would it mean I’d failed – not necessarily – divorce can be a necessary thing) actually gave me the freedom to get married.
So in short, I think everyone should think about a prenup, whether or not they decide to get one.
@misscalculate Can you talk a little about the misinterpretation of divorce rates? I was trying to read the UN yearbook of raw divorce rate stats but got a little lost. Maybe you have some insight?
@bluebears and misscalculate: Theoretically whatever you bring into the marriage–a home solely in your name, a mortgage, etc. is your sole property even after marriage.
BUT–if you sell that property and use the money as an interest for the down payment on another home, that home is communal property, even if you put down 100% of the down payment from property you owned by yourself.
Also, if, say, your partner has $50k in credit card debt when you marry, the interest that compounds and increases the debt after marriage could be considered communal. So if he incurs another $20k in interest, you could be responsible for $10k of that in the event of a divorce.
And if you inherit money or property during your marriage that could also be considered communal. So if I got $100k from a dead parent and then divorced my husband a week after inheriting, he’d be entitled to $50k.
In nearly all states, your spouse is automatically entitled to 50% of your 401k upon divorce. If you’re the breadwinner and you’ve been socking it away, you can kiss half of it goodbye.
I actually know a couple that got a prenup because of their debt. They met while law students, so each of them had six-figure debt and wanted to ensure that neither could be saddled with the debt of the other in the event of divorce. I think a lot of people wouldn’t think about that because they associate prenups with HAVING money rather than OWING money. I know that it wouldn’t have occurred to me.
@miscalculate: I mean it depends on the state you live in. Usually though property acquired before the marriage isn’t in play during divorce proceedings.
@becky: I know that in MI at least inherited is not considered marital property unless you inherit it jointly plus I know its considered separate property in AZ as well (the only CP prop state I have a somewhat up-to date understanding of) same reason.
I’m not trying to bash pre-nups I just feel like, personally, I wouldn’t want to sign away on ANYTHING prior to actually being in the midst of a divorce. Yeah, it might make the divorce proceedings more unpleasant but still, you never know what position you’ll be in. you know?
@rodriguez
Yes, I can try to explain and can point you to a reference if you’d like to read more. The “50% of marriages end in divorce” is a nonsensical statistic because it compares the marriage rate in a year with the divorce rate in a year. So, we’re not even comparing the same people (more than likely). This is a problematic comparison not only because the two groups of people are not the same but because marriage rates in the US are on the decline.
Let’s say (totally made up stats) that in 1990 there were 12 marriages per 1000 people and 4 divorces. Then in 2000 there are 8 marriages per 1000 people and 4 divorces. The marriage rate has declined and comparing it to the same divorce rate makes the divorce rate look that much more dramatic.
Estimating the percentage of all marriages in the US that end in divorce shows that the divorce rate is declining slightly and has never been higher than 41%.
@bluebears: Yeah, I hear you. And it definitely depends on the state–some are MUCH worse than others when it comes to division of property and ease of divorce. Of course, the relevant laws in your state of residence are something that you should know well before you marry. And, of course, your state of residence when you divorce is the one with jurisdiction–i.e. don’t move to NY if there’s any chance of your marriage ending.
I disagree with the idea that you don’t know what position you’ll be in so you shouldn’t sign anything ahead of time. If you have a contentious divorce, you’ll be looking at tens of thousands of dollars in legal fees BEFORE you even get around to settling the division of property. A prenup protects you from losing that money, too, since if there are no terms to wrangle over, the lawyers won’t be racking up their fees.
This kinda stuff in another reason I will never marry, and always have my own accounts.
@becky: I hear what you’re saying. I would just like to say, I could find a divorce attorney in MI for waaaaaaaay less then the $$ you’re describing. But I take your point.
@bluebears: True. It’s so different by state. And I know people who haven’t spent a ton on divorce or divorce lawyers. But where I live? It’s INSANE.
I think people should have a break-up plan regardless of marital documents. If you share a dwelling with your significant other who stays if you break up? Who gets what? It’s easier to think through these things when you’re not driven by irrational emotions and fear.
And if you inherit money or property during your marriage that could also be considered communal. So if I got $100k from a dead parent and then divorced my husband a week after inheriting, he’d be entitled to $50k.
Generally not so. Unless the inheritance is co-mingled, it’s separate property.
Also, New York is not a community property state. There are only 9 CP states in the US, and they’re pretty much all western.
One other thing to keep in mind: some states (such as Washington, which is the state I am most familiar with) don’t require equal distribution of property, they require equitable distribution. It’s a big difference.
And we’re into one of my specialisms: Women and money. These people are worth knowing about for you American ladies: http://www.wife.org/
Actually as much of the info is universal it’s worth knowing about for the rest of us too.
One of the founders is a forensic accountant specialising in divorce who has some hair-raising stories and clever suggestions.
Their book is called A Man Is Not A Financial Plan. I haven’t read it but I love the title.
I won’t be signing a pre-nup, and it’s not because I have some idealized, rosy view of marriage. I survived two separate divorces from my parents. (They are married to each other for the third time now.) I know both how messy divorce can be and how difficult marriage can be, and so does my future spouse. I just don’t believe in divorce, as silly and naive as it may sound. Watching my parents go through not one, but TWO messy, expensive divorces, only to get back together a few years later, I’ve strangely come out with the perception that most marriages can survive pretty serious troubles, if you’re willing to put out the effort. (Crazy, I know.) My SO went through similar things with his parents.
We both know marriage is incredibly difficult. That there will be times when we will hate each other and will want to walk away. The truth is, if I honestly thought either of us didn’t have the ability to ride out the bad stuff and have things to fight for in the end, I wouldn’t get married at all. I’m not so committed to the idea of marriage that I’d do if I thought that divorce was an acceptable conclusion for the relationship I was in. I refuse to waste my time and money on something that patience and communication can almost always fix. I believe most people get divorced not because there’s any real reason to, but because they lack the willpower and courage to stick with it…or they just made really stupid choices to begin with. Divorce is easy. Having a marriage isn’t, and if you aren’t capable of making a permanent commitment to another human being, then maybe you should just cohabitate, set up some legal arrangements in the event you break up, and spare yourself the pain and expense of divorce.
I’m not really sure WHY anyone would get married at all if they thought that divorce was a reasonable or acceptable outcome. Have you ever lived through a divorce? It’s seriously one of the worst things I’ve ever been through. If you think a divorce might happen, just don’t get married. The end.
And while you’re signing that pre-nup, put some money aside in a separate account that’s only in your name. Enough $ for a plane ticket and security deposit.
@Katie: Divorce is an entirely “reasonable and acceptable outcome.” People should never be required–either legally or morally–to stay in a relationship that makes them miserable.
If you don’t ever want to get divorced, that’s your decision. But it’s ridiculously judgemental–and unkind–for you to make such sweeping generalizations about other people’s reasons for marrying or divorcing.
(My parents divorced when I was five. They both have very happy second marriages. I am 100% convinced that I had a MUCH better family life than if they had stayed together.)
I have some issues with the idea of a pre-nup.
Pre-nups are meant to protect the person who has the most money (or least debt), from having to share that money with the other party (or in more cynical terms “keep your money-grubbing hands off my money”).
Correct me if I’m wrong, but I think the most common reason that one partner makes significantly less than another is because they are staying home with the children. In that case, isn’t that person entitled to money that they aren’t technically earning?
I just don’t see how we can say we are trying to raise the status and value of “women’s work” when something like a pre-nup reduces people who stay at home with the children to money-grubbing people who don’t want to make an honest wage.
I do see the value of a pre-nup, but I see it as a way to ensure that the person not making a wage remains powerless unless it specifically stipulates that if one person stays at home with the kids/takes care of the house, that they are entitled to be compensated should the marriage dissolve.
@Alyssa: A pre-nup can also ensure that the person who stays at home is entitled to an agreed-upon amount should the marriage end. There are plenty of people–mostly women, obviously–who request one for just that purpose. In that case, it automatically compensates them for loss of income caused by staying home.
But yes, pre-nups mainly used to protect the assets of the higher-paid spouse. These days, increasingly, that spouse might be the wife.
@Becky:
I didn’t consider that a pre-nup can be used to protect the stay-at-home spouse. I wish that were more well known.
While I know a pre-nup doesn’t necessarily mean that a stay-at-home spouse remains powerless, I think it turns works out that way more often than not.
As I said earlier, I do see the value of a pre-nup, and I do believe they can be fair. Anyone who wants one should have one if both parties consent. But I also feel there should be judgement for people who do not want one either (I know you all weren’t being judgmental, but there is a lot of judgement out there). I also think that people who are signing one, should take into consideration that if one person does stay home, then he/she is entitled to compensation should the marriage dissolve. Maybe I’m wrong, but I have the impression that doesn’t happen that often.
@Alyssa: It’s true that women generally are less well-off financially when marriages dissolve. Not surprisingly, that’s because men tend to earn more than women, and women take time out of the workforce to raise children (or never enter it at all, in some cases). SAHMs are dependent on their husbands, which puts them at risk of serious financial damage if they divorce (which is the core argument of Leslie Bennetts’s argument in “The Feminine Mistake.”) I’d actually advise a woman who planned to stay home to have a pre-nup or post-nup for that reason as well.
A pre-nup can actually be whatever the two parties want it to be. For example, it has been widely rumored that Catherine Zeta-Jones has one that in the event of a divorce entitles her to a set amount for every year that she and Michael Douglas are married, and if he cheats, he pays an additional monetary penalty. Not what I’d want, personally, but if both parties are willing to sign, it’s a deal.
EVERYONE who gets married should have a pre-nup. Period.
It’s not about love or faith, it’s about asset (and debt) protection.
Late to the game here, but a family crisis just highlighted to me the importance of smart financial planning in marriage. My parents had about $5 to their names when they got married, so a pre-nup wouldn’t be something they ever thought about. They settled into a very traditional pattern wherein my dad dealt with the bills and was the chief breadwinner. He received and sorted the mail, took out the bills, gave my mom her magazines and assured her that everything was taken care of. Flash forward 36 years, and he has somehow lost their life savings – and possibly their house. We don’t know if he has mental health issues that played into this series of events, or if it was just a series of terrible financial decisions, but the upshot is that on the eve of their 60th birthdays my parents have zero money left. They will receive a pension in my dad’s name (about half what he had been making before retirement), but since my mom gets only survivor benefits on that if anything happens to him she will lose another half of that. She has no retirement savings or pension in her own name, and if they lose the house she will have no appreciable assets that could be leveraged to provide for possible long-term care needs. She is freaking out because her supposedly super-stable spouse turned out to have done all this, and because she doesn’t even have a clue how much the electric bill usually runs or how to call to cancel a credit card.
Because of all this, when/if I marry, I will insist on knowing EVERYTHING about any financial dealings, down to the amount spent on groceries.