Prenups - Avoid Financial Disagreements & Divorce
Updated: Sep 16, 2019
One of the top 3 reasons for divorce is disagreement or tension over financial matters. With most couples, it’s number 1 or 2. Many couples get married without ever discussing their goals and beliefs about money. Not a good plan.
Before you get married is the best time to start those discussions. It’s important to put your expectations and goals about money on the table now because once you get married, you’re subject to the general rule that all assets and liabilities acquired after marriage are joint and will be divided equally. While there are some exceptions, consider this as the basic starting point.
A prenup is a great way to have that discussion and make certain decisions. Florida law requires that both parties provide a fair and reasonable disclosure of the property and financial obligations. Start there! List everything you own and everything you owe. It may be fairly easy to list your property (real estate, bank accounts, etc.), but not so easy to reveal your debts. Approach it with each other openly and without judgment. Consider the fact that they’ll probably find out anyway, so you might as well deal with it now.
Some years ago, I bought a house and watched an unfortunate situation unfold across the table at the closing. The woman selling the house was engaged and her fiancé attended the closing with her. He was under the belief that she would be receiving about $70,000 after paying off the mortgage. They were working on a future home purchase and he probably had factored that money into the plan. The reality was that she received only about $1,500 because of a second mortgage she hadn’t told him about. I don’t know what happened after that, but it was probably a rocky situation for a while.
So make your lists and come together to determine what will remain separate and what will be joint. You can decide now that certain things you earn or acquire after you’re married will remain your sole and separate property. You don’t have to figure out every detail of how you will manage your money as a married couple, but you can make certain decisions.
For example, if you both already own homes, you may want to keep those separate. If you have children from prior marriages or relationships, you may want them to inherit that home rather than have it go to your new spouse. You don’t have to have a separate Will if it’s handled in a prenup.
You can also waive the right to inherit from each other if that works better for you. This is usually important to people who have been married before and already have plans for who will receive their assets.
You can also decide that you will each keep the full benefit of your 401(k) or other retirement plan.
We prepare Preups for a flat fee of $1,200, which is well worth the investment over having later disputes that could cost 10 or more times that amount. Schedule your free consult here.