Prenup tips
I am getting married next June to a girl I have been friends with since high school and dating for 4 years. She is the least selfish/greedy person I have been in a relationship. Even though I trust her and don't plan on divorcing, it never hurts to get some insurance (prenup).
BACKGROUND -
I have an internet business that has an agi of about 200K. I also have my own hoem and 6 rental properties all purchased in the last 2 years. If I were to sell everything my net worth is around 275K. She makes 40K as a dietician but will be quitting or switching to part time when we get married.
I am going to find an attorney and talk about a prenup in the coming weeks. What are some common things I should know about what I can and cannot do. If the worst were to happen (divorce) - I defiantly want to make sure she is taken care of, I just dont want her to walk off with half of my real estate business.
I purchased all this real estate while single, but plan on purchasing more as a married man. Can I make sure to protect these assets and future real estate through a prenup?
I am not familiar with Ohio, but in California there is transmutation, which is the transformation of property from separate to marital. In other words, there are actions that occur during marriage that transforms a separate asset (a house, which is owned by you) into a marital asset (a house, whereby the marital union has an interest in the house). Example: Right now you have a few rental properties. After marriage, you tell your wife that you are going to share the rental properties with her 50/50. You may not write up an agreement, but you treat it as being 50/50, e.g., you represent to third-parties that she also owns 50% of the property. A court may deem that rental property as no longer being yours, but rather belonging to the marital union. Just go over this stuff with your attorney. Perhaps you can roll all your assets into an entity and be the sole owner of the entity. As long as you don't transform the entity ownership from a single to a marital asset, you may be ok.
Good luck.
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Best tip, don't be asking about it on an internet forum.
Thanks for the explanation Christopher -
Adam,
Usually the prenup overides state laws as long as each party willingly signs it without being under pressure. I'm not sure what Cali state laws say but if i were you, i would be very careful. If you haven't mentioned that you want a prenup yet, do so asap so it's out there before you start doing wedding planning. The document should say what is separate before marriage remains separate during marriage as long as you do not commingle marital and non marital assets (aka be careful moving money between marital and non marital accounts). Google a search for your state's divorce laws. You will be amazed at what you'll learn. That would be a good starting point to see what kind of protection the basic state law offers you. Some states protect separate property better than others without the need for a legal document.
I would highly recommend that once you are married, you share everything you save/earn from that point on 50/50 from that point on and build a joint real estate portfolio for all future property acquisitions. You might consider involving her in the property management/search process once she goes part time. That being said, I don't think it would be an issue maintaining your existing real estate portfolio as separate as long as you are careful to maintain those asset's integrity as separate assets. Definitely consult a well regarded lawyer in your area. Getting two decent lawyers (to ensure each party is represented fairly) will run you at least a few thousand dollars just to be aware. Hope this helps!
How about not planning for a divorce by even worrying about a prenup. If someone absolutely trusts someone they would not need a prenup. Love always trusts, always hopes, always perseveres, love never fails
As a wife who has given up her career for her husband's I would be VERY careful about those views. (BTW I am 26.5 and have been married for 4.5 years so were were married young.) You know the old saying, your actions can dictate future events.
You said in your message,
"She makes 40K as a dietician but will be quitting or switching to part time when we get married."
So she's giving up her career but yet "I just dont want her to walk off with half of my real estate business."
Please don't take this badly but you might want to reevaluate getting married. I don't think you understand what it means. Two becomes one, what is his is hers. If you are not ready to take the step at your young age and combine everything than you might want to reevaluate and wait. There is nothing wrong with getting later in life. Not everyone is ready to get married young.
On the other hand, your attitude, ticks me off and I am a STRANGER. Can't image what you future wife thinks.
@ Elizabeth C. I agree with you.
There is some risk in love. But by wanting a prenup you are planning for failure before you are even married. Focussing on failure can help bring about failure. If you are not ready to deal with the risk, perhaps you might want to rethink marriage.
I have personally been married for almost 9 yrs with 4 children. And yes a marriage takes a lot of work and self sacrifice
I met my wife before I had much and we did have some discussions on how the businesses are setup and what the likely procedure would be if one of us wanted out. I opted to never get anything signed.
My personal opinion is to address it with your future wife before visiting a lawyer, after that you can have some basic contracts drawn up, if you guys deem it necessary.
275,000 is a lot of money, but you are struggling to make a 137,500 bet on your marriage? Hmm...
@Adam Craig, maybe you are not ready for marriage??
Husband and wife can be a great real estate team. I am home with two kids and do all the screening for tenants, call contractors, ads etc, and though my husband jokes that he's the only one bringing in a pay check, half of our income is from rent. Not to mention what his cost for two full time daycare positions would be if I wasn't home with the kids. So if you are planning on having kids (I assume that's why she's planning on going part time or quitting) forget the prenup, and get her involved with the business.
The girl I am marrying is terrific. I have known her for 15 years and we have been dating for almost 6 years - we are defiantly ready to get married. She is not greedy and I could never see her trying to turn hostile in the even things turned south.
With that said...
I grew up caddying at a prestigious country club for nearly 15 years and spoke with enough successful businessmen (and women) where prenuptial agreements are much more common and encouraged. I also grew up in a family where mom/dad, aunts/uncles, and grandparents are all divorced....not to mention her family is nearly the same. My accountant and attorney both wish they had drafted one for their first marriage. So it would be naive to say love trumps all and people don't change and feelings don't change. This is something like a life insurance policy - I don't plan on dieing tomorrow but if I do my family will be taken care of.
Call me greedy and think what you want. But she lived with me for 2 years rent/bill free. I pay for EVERYTHING including going out/groceries/and her living expenses and I enjoy doing so - she doesnt ask for it. I just dont think it would be right for all my business assets to be split in half when I work so hard and so far she has had no part in either of my businesses. If she starts to become a role in either business my feelings would obviously change.
Thanks for the tips everyone.
@Adam Craig , there is no shame in risk management planning in marriage. Those who are offended by prenuptial agreements probably have never been through a nasty divorce. My parents' took 7 years and occupied the bulk of my early childhood, so I know personally how hard it can be on kids.
The entire family law court system is designed to create conflict where there is none, and bankrupt both parties. A prenup is not about being greedy, it's about protecting both you and your spouse from divorce lawyers and custody evaluators and the court itself, who all have every incentive to push your case until both of you run out of money. Countless divorces have gone from amicable to all-out war because divorce lawyers use the prospect of getting more money to tempt their clients into making bad decisions where only the lawyers end up getting paid.
Watch the documentary Divorce Corp if you are interested in finding out more about how this awful system really works. Stay as far away as possible from it if you can.
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There are literally millions of divorces a year from folks who never planned to get divorced and were in love. You buy insurance in case of a lawsuit, get a prenuptial. Yes split everything from wedding day forward, but set your investment property aside in just your name. In 5 years if you want you can undo the prenuptial. You also need wills. if you have a car wreck and you die one day before she does then all of your property goes to her family and none to yours. plan your business and your life.
Hope for the best, plan for the worst...just like any other business partnership. Sucks you feel the need to justify your concern. With that said, i took a much different path.
I live unmarried with all assets in my "other half's name" I've asked her to marry me in the past and she laughs mostly at me. She finds comfort in my obvious bad financial decision. We just inched over the million dollars in assets this year, her full time job is our little boy.
I've seen many relationships carry on in some painful state because one partner needing the financial security of the other. I'd rather be alone than her being with me because of the money i make. It helps her parents have divorced a few times and mine did too, my grandparents had a 12+ million dollar lawyer bill fighting over 13 million in assets from the stories i've heard. We have been together 13 years on the 18th, in a few years we would of spent half of lives together. I find comfort in the idea if she runs off with every dime at least my kid won't suffer.
Originally posted by @Kendall T.:
@ Elizabeth C. I agree with you.
There is some risk in love. But by wanting a prenup you are planning for failure before you are even married. Focussing on failure can help bring about failure. If you are not ready to deal with the risk, perhaps you might want to rethink marriage.
I have personally been married for almost 9 yrs with 4 children. And yes a marriage takes a lot of work and self sacrifice
This is the most idiotic thing I've ever read. I'm guessing you don't buy insurance on your properties because it's "planning for failure"?
50% of marriages end in divorce; I'm sure the overwhelming majority of them don't go into the marriage planning to get divorced. Preparation does not equal surrender.
Originally posted by @Kendall T.:
How about not planning for a divorce by even worrying about a prenup. If someone absolutely trusts someone they would not need a prenup. Love always trusts, always hopes, always perseveres, love never fails
After seeing a few people bash me for this idea its nice to see some support. Thanks everyone
@Adam Craig I can understand what you're saying in a sense...I married my wife when I was 22 years old and everything I have she and I done it together. If I had purchased x amount of houses and also build a business from the ground up by myself the before she ever came along then "Yes" I would want to at least keep that if we did get a divorce...She had no input on any of that...
However, everything that you accumulate after you guys get married should be split in half because you attained it together (Not sure if you can do that legally, but check it out). I can understand you on that part. Just dont go into the relationship thinking its gonna fail. If my wife and I split up tomorrow for whatever reason I would still ensure that she is ok financially, and if she needed anything I would help her with it. Shes the Mother of my children, you never want to see your childs Mother suffer. At least I dont.
Good Luck, you seem to have a good head on your shoulders just dont treat your wife like its a business transaction lol.
Get a prenup if it makes u feel more comfortable. This is your life and no one else will be there to help when sh*t hits the fan and it does 50% of the time. No one plans to fail but many fail despite their good intentions. And whoever said maybe change it in 5 years, don't. Many marriages fail 7, 10 or 15 years down the road. You can always share your fortune but likely never recover a great loss. People change and its impossible to determine when and how or even why. Having typed that... Best of luck to you and yours.
This is a civil law question, not a real estate law question. A lawyer in your state with a family law practice will be well versed in the ramifications of divorce and what you need in a prenup to preserve separate ownership of assets you bring into the marriage, and what you need to do after marriage to keep those assets separate from marital property.
Ignore all those who tell you that you don't need a prenup if you really love someone. With more than 50% of first time marriages ending in divorce, it is wise to hope for the best but prepare for the worst. You can even have a sunset clause in your prenup that voids the prenup after X years if the marriage survives that long. Recognize that CA is a community property state with the law on this topic not the same as the marital property law in a non-community property state.