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Prenuptials

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July 19, 2017
6 upvotes

What are your guys' thoughts on them? I just don't want alimony type stuff and don't care if we split future assets (we have none right now and I carry a lot is student debt. She has no debt.)

Should I care about more than that?


Post Information
Title Prenuptials
Author LeftAndRed
Upvotes 6
Comments 11
Date 19 July 2017 02:13 AM UTC (3 years ago)
Subreddit askMRP
Link https://theredarchive.com/post/205837
Original Link https://old.reddit.com/r/askMRP/comments/6o5iny/prenuptials/
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[–]Red-Curious6 points7 points  (2 children) | Copy

Divorce lawyer here. In my state, pre-nups are usually a solidification of already existing rights, except as to spousal support. So, if you want them to have real value, you need to know what types of issues are significant and negotiable where the court will actually let you get out of the statutory default. You cannot pre-nup custody or child support issues away, so that just leaves property division and spousal support.

Property Division

Property division is usually split into two categories: separate property and marital property. Marital property is usually defined as "anything that's not separate property." It's always split 50/50 unless such a split would be impossible or inequitable. For example, if the parties have a house worth $250k (paid off) and a retirement account worth $250k, you can't just do a this for that. The retirement account likely has tax-consequences to withdraw the money, so has to be tax-effected. The house isn't liquid and an attempt to liquidate the money from it would cost realtor fees, brokerage fees, transfer tax, etc. So, although they technically have equal appraised values, you have to deal with all that stuff in the prenup or otherwise accept the fact that any marital components will have to be divided like-for-like. This gets ridiculous when one person insists on keeping the house, but has no resources to pay your half of the equity.

Separate property (in my state) is defined as (1) anything owned before the marriage, (2) received as a gift to one spouse only, even if from the other spouse, or (3) received by inheritance. Your pre-nup had better have an exhibit at the end identifying all of your assets and all of hers, otherwise you're wasting your time on the property division section. Really, preserving separate property is 90% of the value of a pre-nup.

It's also worth noting that you'll need some provisions on conversion of separate property to marital and vice versa, as well as a statement on how to deal with commingling. For example, suppose you have a paid-off $75,000 starter home you're bringing into the marriage. You live there for a while, but after having kids you sell it and use the money to pay for a down-payment on a $250k home. You then proceed to pay the mortgage out of the marital funds. By the time you're getting divorced a decade later, the house is worth $300k. How do you want your separate property component calculated? $75k flat (the court's assumed method)? $75k + pro rata value of the appreciation? Or did you screw yourself because the new house has both your names on it, making it look like you gifted the $75k to become marital property?

The third key property division factor is passive v. active appreciation of separate property. If you are bringing $250k of your 401K into the marriage and 10 years later it's worth $500k, who gets the $250k of growth? If all of the growth was from passive (i.e. market fluctuation) appreciation, it all remains separate under most laws. But what if you kept contributing to that account after the wedding day? Now you have no way of knowing how much is market growth and how much is from the dollars you put in that are technically marital. You screwed yourself and will likely get stuck with only $250k as pre-marital.

Also, the FIFO rule says that the first money in (which is your separate property) is the first out. So, if you pay $50k into your 401k during the marriage, then withdraw that $50k later, the presumption is that the $50k withdraw came from the $250k of separate property, not the $50k of joint property. Pretty awesome, right? /s

Spousal Support

Every state is different, so I can't comment too much here. Most courts will not enforce a "no spousal support under any circumstances" clause. In my state, if the court determines a clause to be unconscionable or predicated on a lack of information, then that clause is stricken and the court does what it wants. How does this play out?

Suppose at the time you're married you're earning $25,000/yr working as a manager at McDonalds. 10 years later, you're running a couple dozen franchises in your city and banking a cool mil/yr. The court's going to nix that "no spousal support" clause without batting an eye. Why? Because the wife was ill-informed at the time of the true earning capacity you had, and therefore was not competent to make an informed decision.

So, you've got to put qualifiers on that crap. "No spousal support for so long as husband earns $500,000/yr or less. If he earns more than that, only the excess beyond this may be calculated as income for spousal support computation purposes."

Also, duration and modifiability are key. In my state, it usually works something like this:

  • 0-5 years: no spousal support, 1 year if the court feels for her

  • 5-10 years: 1-3 years of support depending on the judge's feels

  • 10-20 years: about 1 year of support for 3 years of marriage (rule of thumb; flexibility based on feels)

  • 20-25 years: about 1 year of support for 2 years of marriage (apply previous rule if the judge doesn't like her)

  • 25+ indefinite

If you want to constrict this stuff and just go with a 1/3 rule flat, put that in there. Don't give the option of indefinite support. That said, be prepared that a judge can strike that clause to smithereens if your wife ends up being a 60yr old woman with no education, no work experience, and is really struggling with her health. Bonus points if English is her second language and she's good at faking a lack of comprehension.

As to modifiability, my state presumes that support awards are non-modifiable. This means that even when you retire, you're stuck with the same support amount. Sometimes this can work in the guy's favor, like if he gets a decent number for a short duration and he knows he's going to get some raises and promotions in the near future. But for the most part it sucks and there's relatively little risk that the court will ever modify support upward anyway. They tend to take the position that if you earn a promotion after the marriage, she didn't contribute to that promotion, so you keep the raise rather than it going into support calculations all over (this doesn't apply if it was something anticipated at the time of the divorce). So, it's usually best for the guy to stick with a modifiable order, especially if the marriage is long-term (note: in my state the supreme court said that 18 years is NOT a long-term marriage ... go figure).

NEVER EVER EVER EVER EVER FORGET: A pre-nup is almost always void and unenforceable if she does not have her own private, independent attorney review the document and sign off on it. Do not think you will just manipulate her into signing it over a fancy dinner. If her attorney doesn't sign it, it's almost certainly getting thrown out of court. Her attorney will review it carefully. These negotiations aren't fun and I've seen people call off the wedding over prenup issues. If she doesn't want to get an attorney involved because she trusts you ... screw that, give her someone's business card (without you calling them first!) and make her dial the number right then and there.

[–][deleted] 0 points1 point  (1 child) | Copy

"This gets ridiculous when one person insists on keeping the house, but has no resources to pay your half of the equity."

Right. So what do you usually see with this?

[–]Red-Curious0 points1 point  (0 children) | Copy

We usually push it to trial. The court won't budge on these types of issues, and if they do it's clearly reversible error, so you just appeal and get them overturned.

Most often, the quick answer is to give a time-frame. For example, if the youngest kid is 15, you let so and so stay in the house until the kid graduates, then sell it and split the proceeds. Alternatively, you get a close approximation of offsets of dissimilar assets and hope to convince the other side to go along with it, and they do the same back (i.e. accounting for agents' fees, brokerage fees, transfer tax, closing costs, taxation on retirement accounts, etc.). In some cases (including one I'm doing right now), the husband is offering to give my client the house in exchange for a reduction in spousal support for the next 10 years. In that type of a situation, I advise my client to consider the present v. future value of dollars and make sure she's not doing something stupid, especially in light of the fact that we don't know what inflation will look like down the road.

[–][deleted] 3 points4 points  (0 children) | Copy

Easiest way to avoid a pre nup is to avoid marriage

[–][deleted] 1 point2 points  (3 children) | Copy

Not a divorce attorney, but wtf are you asking?

Prenup is for couples with significant assets aquired individually before marriage. You are broke and don't care about splitting married assets and she has no debt but limited asssets- are you planning to quadruple her income in the near future? If not why are you asking?

.

More importantly ( coming from a married guy), why the fuck are you wanting to get married?

[–]beta_no_mo0 points1 point  (2 children) | Copy

Wrong. Pre-nups are for everyone. When I got married 15 years ago I rode a bicycle to work, lived in my mom's trailer and could pack everything I own into the back of a 92 Crown Victoria.

Now I own two houses, three cars, retirement accounts, make six figures and will be paying alimony and a portion of my retirement to my ex for at least the next five years.

Ask me if I wish I'd had a pre-nup when I had nothing.

[–][deleted] 1 point2 points  (1 child) | Copy

What difference would a prenup have made?

I'm assuming that everything you described was purchased with income made during the marriage. Income made during the marriage is marital income, and therefore the assets you purchased (or fed into in the case of your retirement) are marital assets. They will be divided according to your state's laws on marital asset division. Provisions in a prenup regarding the distribution of marital assets are "generally" not enforceable.

You may have been more successfully on the area of alimony, but it depends on the state. Some go with the marital standard of living and some go with enough to stay off welfare. Whatever the standard is, the presumption is that you cannot contract away that level of support.

[–][deleted] 0 points1 point  (0 children) | Copy

Exactly. If you u/beta-no-mo had nothing when you got married and later you got shit going financially she's entitled to half- you did all that together like it or not. What exactly would you have listed in your prenup 15 years ago, a POS Crown Vic?

[–]UEMcGillI am become McGill, Destroyer of Blue Pill1 point2 points  (0 children) | Copy

The best prenup? Don't get married.

Tell her you'll have the ceremony but not the paper. "I don't believe in the legal institution of marriage"

[–]RPShitlord0 points1 point  (1 child) | Copy

Tom Leykis general tips on prenups:

Don't do any action towards your marriage until the prenup is signed. (No proposal, no date set, no announcement or invitations, nothing booked).

Have her own lawyer review it. He will attempt to convince her to demand more, and you'll see before marriage how greedy she is or not.

Videotape the signing presided by a retired judge who will ask her questions to make sure she knows what she's signing.

Prenups aren't the place for custody of children or child support, how much she will weigh, or how often she will fuck you.

[–]BluepillProfessorMod / Red Beret1 point2 points  (0 children) | Copy

So....forsaking all others is still in but have and to hold from this day forth is out.

That is good to know.



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