Should you Protect your Assets with a Prenup?
Real Estate Agent · Santa Rosa, CA · Member since 2018 · 84 posts · 105 votes
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
@Chaz Mathias "Hell hath no fury like a woman scorned"
Just sayin' :)
I'd rather lose all of my assets than bring up a Postnup with my wife.
Ironically, RE investors crunch numbers and work spreadsheets - so why are some people dropping in a 50% divorce rate myth as a real number into their prenup equations that has been debunked countless times?!
Absolutely get one if it is a second or third marriage. I personally dealt with this. Most of the the thread talks about divorce, but what about death. And death in a second marriage. My dad divorced my mother when I was 5, she was a single mom with out a college education, and had to move back home for while before she could get a home for her and I to live in. When she finally did get a home it was in the 80s (remember those interest rates!!! I do) anyway over the years she worked very hard to get everything she had and everything she could give me as her child. She did very well as a single mom and and working parent. She had her small modest home for us and a nice sized 401k. She worked and retired well (Unfortunately she did lose a chunk of her retirement in the 2008 crash but thats whole other story.)
In the 90s she remarried my step dad. She made him sign a prenup...and thank goodness she did. When she died June 2017, I was her only child, only heir(and her granddaughter), and her executor. Before I could even fly back to NY he had already taken 10K from her bank account (by finding her passwords) stating he needed it to pay bills (lie #1) and then he seeking a lawyer to try to take part of her estate (which by the way was all hers the home on the water she paid cash for after selling the one i grew up in for a profit). They always had separate bank accounts etc. Luckily his lawyer told him he would never win because he willingly signed a prenup. Plus he was too cheap to follow through and pay the lawyer for any further advice. Lucky for me my mother was smart and if she didn't trust him well then kudos to her...not my marriage, not my judgment call. But it is interesting to see how fast people change when money and assets are involved. He had his own rentals and good pension from city of NY, plus a condo in Fla, he owns free and clear. Its not like he was homeless after she died. He was just greedy.
My suggestion is to get a pre nup especially in 2nd marriages and when previous children are involved. My mother's good decision saved me a lot of lawyers fees and anguish.
@Chaz Mathias I think if you have a net worth over ~2M then a prenup should be in place. Big money brings out the crazies and you never know.
What about debt that comes into a marriage, how would you handle that?
A prenup is fine if the document is two sided and if that is the case, both parties will be happy to sign it. Anyone who is saying their significant other won't agree to signing a document is for one of two reasons:
1. Document isn't fair to that individual
2. The person isn't the right choice to marry
If you can't figure out an agreement that both people are happy with, there is NO reason to marry that person. Marriage only works if there is communications and understanding. If your force her (or him) to sign as a condition of getting married, it IS starting the marriage on a shaky foundation. If they are not signing with a smile, find a new partner or re-evaluate if the agreement is fair or even necessary.
Ironically, RE investors crunch numbers and work spreadsheets - so why are some people dropping in a 50% divorce rate myth as a real number into their prenup equations that has been debunked countless times?!
Still high enough to where one should stop and seriously consider his/her options. Is 30-40% risk a non-issue to you? High risk = high reward, right? Not in this case...
@Account Closed That certainly was not the point I was making, nor the implication. It's safe to assume most attorneys do get paid to write some form of contracts, but if you read closely, you'll see I recommended he speak to a family lawyer. I'm not one of those. Just clarifying, but yes, most of us that go to law school take courses on contracts. But since you won't catch us attorneys giving legal advice on BP, we can actually be really helpful resources for general information about the law. I empathize with his situation and provided some general info to ask his own attorney about. That attorney likely won't be me, but someone with family law experience, with AP and real estate investing as "bonus points." A lot of people don't know exactly what to look for in a lawyer. That's where this community can be helpful.
Thank you for providing some more details on this commonly cited statistic. Are you a family lawyer? I didn't think to refine down to first marriages, just marriages in general (again--divorce isn't my specialty). But thanks for providing some more information and adding some nuance to the conversation. That gives a little more hope to those of us who have not yet been married. So thanks. I love being shown when I'm wrong--or in this case, when I'm not taking the full picture into account. I do genuinely appreciate that and hope you were still able to get something helpful out of my posting. Pick on me all you like if you think I'm inaccurate. Hypersensitive people don't tend to stay in my line of work. Or investing in general! Have a good day, man.
This is such a complicated topic. I can see good points on both sides but at the end of the day you need to protect any and every asset you can from lawyers. I watched my parents sue each other back and forth for 10 years over my fathers pension and when it was all said and done no one had it but the lawyers. Obviously the best course of action is to not get divorced, but that’s easier said than done.
Ironically, RE investors crunch numbers and work spreadsheets - so why are some people dropping in a 50% divorce rate myth as a real number into their prenup equations that has been debunked countless times?!
Still high enough to where one should stop and seriously consider his/her options. Is 30-40% risk a non-issue to you? High risk = high reward, right? Not in this case...
Probably more important than risk percentage is amount at risk. Whether the actual divorce rate is 30% or 50%, people should be more concerned with the imbalance of net worth. Taking 90% loss risk on $1000 is better than 10% risk on $1M.
"People change. "
Smartest thing I've read here.
I've been married 42 years. To probably 5 different men. All the same one. If I asked him he'd probably say he's been married to 10 women. (I'm NOT asking that question!). Prenups were not a household word when we were married.
At each stage, we each had to ask ourselves if this new person was someone we wanted to continue to spend our life with. It required compromise and adaptation, but we chose to stay together, but at any point that choice could have gone the other way. There were times we came close and started the discussion. IMO, a prenup might have made things easier. There were times, that the discussion of how to separate created conversation that revealed we really didn't want to part ways. Had there been a prenup, that conversation might not have happened.
That said? Yes, I think a well written prenup is an excellent idea in many circumstances.
I vote for absolutely get a pre-nup. I was on the other side of this argument no too long ago but I can say in retrospect I was as naive as anyone else who says "if you don't expect your marriage to fail, then.." That's a pretty bad argument with a lot of emotional bias if you think about it.
If you don't expect to get into an accident, why get insurance? If you don't expect to be fired from your job that you love and are doing very well in, why have an emergency fund? Because life is volatile.
People and relationships are also volatile, hence the divorce rates.
Here's a scenario that happens every day;
Two people get married. They're very much in love and are sure its going to last. One makes significantly more than the other, and also came into the marriage with real estate assets, lets say that's the women. Five years into the marriage they are growing distant due to the man not sharing her work ethic, ambition or whatever the reasons may be and after a couple of years of failed marriage counseling, she finds out he has been cheating. It doesn't have to have to be cheating involved, but I think it emphasizes on the emotional aspect. To her surprise, the man files for divorce to be with the other women. She's in a no fault state and the cheating is irrelevant to the court. He decides he wants to fight for a significant portion of her assets and spousal support just because he can.
She ends up in court. Court drags along and the cost is staggering against her, because no party except for her have an interest in a quick resolution as she is paying for all of them to be involved in the battle. She ends up paying for his attorney fees to fight her in court, her own attorney, spousal support for half of the duration of the marriage as well as having to sell a portion of her real estate to pay him off, as part of the settlement. For the next (half duration of marriage) 4 years, 25% of her income goes to him. He and his partner do not get re-married meanwhile because he knows he would lose that income.
If this example was some outlier special case, you should go for no prenup. This is not a special case
Hi @Chaz Mathias, In the mindset of protecting assets, you should speak with an Estate Planning attorney as well. Setting up a proper trust can protect your assets not only now, with your future wife, but also for the future should something happen to you. I work with some excellent Estate Planning Attorneys in Sonoma, who can also advise on pre-nups as well. I would be happy to connect you if interested.
Saying a pre-nup sets the precedent that you expect the marriage to fail is like saying giving condoms to kids encourages them to have sex. It's an emotional retort to a logical statement, completely gas-lighting, and asinine. Saying that someone considering a pre-nup should ask themselves why they feel like they need one is also gas-lighting.
I didn't put a fence up around my pool because I told my children to not go in there without me, and they know better than to disobey me. Ludicrous.
Keep emotion out of it. It's a business decision. No different than insurance, wise investing, hiring an accountant, pulling permits, etc. If you have assets that you don't want to lose, do all of the things to ensure you don't lose them. Pay your bills, do the maintenance, service the HVAC and appliances, have insurance, do appraisal audits. A pre-nup adds right to it.
It's not about feelings, it's not an emotional discussion, and for the love **** this is not kindergarten.
I don't have a pre-nup because I didn't have any assets when I got married, not for any emotional reason I was just broke.
As one with a very successful marriage, and being a Christian I wholeheartedly agree. The two questions you need to ask yourself is: 1.) Is this your livelihood? And 2.) Do you have children with someone else?
If my full time job was either to be mine despite what happens to the marriage, or I have to give half of it away and reduce my ability to earn an income and a living wage, then the answer is protect it. If I have kids from a previous marriage or even accidentally, I want them to inherit something from me. So I'll protect it.
Get with a lawyer in your state to confirm, but I think a trust has many more benefits and is less messy. If your assets are already locked away in a trust there is no discussion or argument. And should you decide to, you can add her to the trust or as a beneficiary. (Again, confirm with a lawyer in your state).
"Yes" is the only sensible answer. Marriage is a legal contract, like it or not. If you get pressured into not protecting your assets, you deserve to get taken to the cleaners if things go south.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
Prenups will cause you to discuss and think about things that are often not discussed in a relationship.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
Unless you have a major net worth ($10M+, not a few hundred thousand) at the time of marriage, you are better off without a pre-nup. Most people pretend that the fate of the world rests on their shoulders... lol.
Newsflash: If you're middle class, you might as well pretend you have NO money.
In a divorce, in most jurisdictions, your partner will get a portion of the marriage assets (pre-nup or otherwise). If you have a kid, best of luck. Child support is going to be a killer.
If folks spent half as much time on their marriage as they did worrying about a pre-nup, the divorce rate in this country would dramatically go down.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
My opinion is that the answer to the problems you rightly mention isn't a prenup. If someone thinks they should get a prenup then just don't get married. In today's culture I think there are a lot of people who basically no one should marry. They are just too high risk.
@Karl B. I agree! Definitely need a prenup in place. Its always best to protect your assets and things that you have worked so hard to obtain before marrying your loved one. Also outline everything before hand is just a good thing to do. If there is an issue maybe you weren't supposed to marry that person, and it could be possible that they were marrying you for what you brought to the table. either way its best to communicate this upfront and move forward. I'm pretty sure the super rich and famous have pre-nups before getting married so follow what they do. I have also heard that you have to re-new the agreement every couple years... does anyone know if this is true? or is it based on your state or something along those lines?
And while you are looking at a pre-nups you should also be writing up a will too or atleast keeping that up to date too.. sounds horrible but you never know when things may happen in your life so it always best to plan ahead.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
Unless you have a major net worth ($10M+, not a few hundred thousand) at the time of marriage, you are better off without a pre-nup. Most people pretend that the fate of the world rests on their shoulders... lol.
Newsflash: If you're middle class, you might as well pretend you have NO money.
In a divorce, in most jurisdictions, your partner will get a portion of the marriage assets (pre-nup or otherwise). If you have a kid, best of luck. Child support is going to be a killer.
If folks spent half as much time on their marriage as they did worrying about a pre-nup, the divorce rate in this country would dramatically go down.
If your partner takes more than what was agreed upon then there was a prenup. Next, many "middle class" individuals do fall into poverty as a result of a divorce.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
Unless you have a major net worth ($10M+, not a few hundred thousand) at the time of marriage, you are better off without a pre-nup. Most people pretend that the fate of the world rests on their shoulders... lol.
Newsflash: If you're middle class, you might as well pretend you have NO money.
In a divorce, in most jurisdictions, your partner will get a portion of the marriage assets (pre-nup or otherwise). If you have a kid, best of luck. Child support is going to be a killer.
If folks spent half as much time on their marriage as they did worrying about a pre-nup, the divorce rate in this country would dramatically go down.
If your partner takes more than what was agreed upon then there was a prenup. Next, many "middle class" individuals do fall into poverty as a result of a divorce.
The point I was making (and failed to do) was that people focus on prenups more than their marriage. These are the same investors who also spend thousands of dollars on "asset protection" when buying their first few $50-80k houses.
Yes, divorce is a leading reason for poverty but unless you're super rich, you're going to get eaten up alive in lawyer fees regardless of prenup or not (unless, someone luckily has an amicable divorce). Can't enforce the prenup easily if one can't afford lawyer fees.
Hi All,
I wanted to begin a discussion on prenuptial agreements when bringing assets into a new marriage. I know this is a controversial topic, however I thought that the BiggerPockets community was the best place to begin a conversation on this important issue.
I have always had the mindset that marriage should not be about money, it should be about your relationship with your partner. Therefore, if you have earned assets and have a portfolio of properties and investments prior to marriage, wouldn't the marriage be better off if these assets were protected by a prenuptial agreement? Then everything earned after marriage (outside of these assets) could be communal property.
I've personally seen too many marriages end when one individual brought significantly more into the marriage and it caused for a messy divorce. When this happens, the divorce lawyers are the only ones who wins!
Please share your thoughts!
Unless you have a major net worth ($10M+, not a few hundred thousand) at the time of marriage, you are better off without a pre-nup. Most people pretend that the fate of the world rests on their shoulders... lol.
Newsflash: If you're middle class, you might as well pretend you have NO money.
In a divorce, in most jurisdictions, your partner will get a portion of the marriage assets (pre-nup or otherwise). If you have a kid, best of luck. Child support is going to be a killer.
If folks spent half as much time on their marriage as they did worrying about a pre-nup, the divorce rate in this country would dramatically go down.
If your partner takes more than what was agreed upon then there was a prenup. Next, many "middle class" individuals do fall into poverty as a result of a divorce.
The point I was making (and failed to do) was that people focus on prenups more than their marriage. These are the same investors who also spend thousands of dollars on "asset protection" when buying their first few $50-80k houses.
Yes, divorce is a leading reason for poverty but unless you're super rich, you're going to get eaten up alive in lawyer fees regardless of prenup or not (unless, someone luckily has an amicable divorce). Can't enforce the prenup easily if one can't afford lawyer fees.
Valid points as well. Many fail to recognize that a long term relationship takes work to make it last just like a business and need I add just like real estate investing.