[DownButNotOut]

A few family members (boys) are planning to get married in the next couple years. One question I am frequently asked is how do I keep what I earn separate from spouse. Initially my reaction was to advise not marrying, but I researched more about prenups/post nups and community property and there is a lot men can do if they want this type of arrangement
1) Reside in a non-community property state (if in the US)
2) Always marry a woman who has a job that can feed her
3) Sign a well vetted prenup with presence of attorney
4) Do not buy a house, it is considered community property in most states, always rent and always pay portion of rent
5) Always use separate bank/financial institutions to deposit any and every form of earning, ask wife to sign assignment of interest form from financial institution
6) File taxes as married filing separately (is this needed?)
7) Regularly sign postnups after marriage
8) Banks/financial institutions in your name should only have month or two of expenses, any and every investment $ to be invested through a gift to your parents or a trust (if you have the $$$$)
9) Any remaining assets to be in non traceable form ex. gold, crypto, buried cash etc. (assuming its legal in your state to hide assets)

Any other tips from members here? Don't want the 'don't marry if you don't trust her'. Its impossible to fully vet someone prior to marriage leave alone predicting their behavior several years later

Go with your first instinct. Advise them to not get married. If they want good advise, tell them to wait until they're established in their purpose. Say 32, with their own home and retirement assets. By then, they will have the resources, experience, and maturity to not need advice. If at that time they want a family, they're in the best position to establish one.

As far as your list. Pre-nups are good. But the rest is a recipe for a very litigious and expensive divorce. Any hint of hidden assets, and a divorce lawyer worth his hourly will instantly bring in forensic accountants. Judges aren't too happy with hidden assets either.

 

[DownButNotOut]

That's what I am trying to find out, what are their options if they decide to marry

A prenup. The rest of your list is whackadoodle, and a recipe for a long, expensive divorce.

 

[DownButNotOut]

And it's a shame, really.


I do appreciate the spirit of these laws. You can't just throw a SAHM out on the street with nothing. That isn't fair or morally right. I don't even blame some of the women that abuse these laws. A change is coming to their lives, they get scared and go into survival mode. They aren't necessarily looking to hurt the man severely even though they do - then realize years later they did something terrible to another human being but by then it is too late. Some women unfortunately are vindictive and abuse these laws in purpose. I think those are the minority.

And let's not fool ourselves: if the laws were written in reverse, there are men that would abuse them in the same way. It is a matter of some humans have integrity while others do not.

This is why I believe in today's environment a prenup is a must. Both parties ensure their interests are protected; will know in advance exactly how a divorce will go; and have the chance to reach agreement in the beginning when they're still in love. Then they can get on with trying to never have to use it.

 

[DownButNotOut]

I don't want to go into marriage with the attitude that I need to protect 'my' money and making arrangements for a divorce.
Whatever happened to 'with all my wordly goods I thee endow?'

Everything we have had is ours, even two small inheritances we got were never his or mine.

I know where you're coming from. But, respectfully, I'm not talking about you, or me for that matter. I'm talking about my advice for young men considering their first marriage to young women with today's family law environment.

Given that divorce is a statistical coin flip, it seems prudent to me to plan for both outcomes. Besides, if a couple can't work through a difficult topic at the height of their good will, how will they work through difficult topics after the honeymoon ends?

 

[DownButNotOut]

Since about 50% of women earn as much or more than their husband, it's pretty clear that there are women who can have careers that are as lucrative as their husband's careers at the very least.

Of course, the divorce rate when the wife earns more is 50% higher. So there's that.

 

[DownButNotOut]

I wouldn’t hide assets in the marriage. That is dishonest.

I do think that assets gained in marriage should have more nuance than 50/50.

what if both spouses worked for the entire marriage? What if one spouse saved their money, paid all the bills and paid the mortgage while the other spouse blew all of their money and didn’t save anything?

the law says 50/50.

personally, I think that is stealing in a divorce, but that is just me. I’d be hard pressed to be convinced otherwise.

Or like when one spouse (cough my-ex cough) hid 20 credit cards to the tune of 60k? 50/50 pal.
Or when one spouse (cough my-stupid-butt cough) uses inheritance to buy a new family home. Because marriage is forever. 50/50 oops.

Well, in my case the debt ended up 0/100 to me, and the house 100/0 to her. So much for that 50/50 deal. At least there's only 18 more years of alimony left.

Yeah, my advice is probably just a wee bit colored by my personal experience. But I still advise young men to not get married. If they must, a prenup is mandatory.

 

[DownButNotOut]

Yes, and the rate of the husband cheating is many times higher if his wife earns more.

Trying to paint one sex as being evil is not ok. There are good on bad people in both sexes.

If you're talking about the 2010 Cornell study,
Actually that's if the wife is the sole breadwinner. And the rate is 15%. versus 4% if the husband is the sole breadwinner. That's male infidelity.

Meanwhile, women who earn equal to their partner are twice as likely to cheat than women solely dependent on their partner.

Interestingly, in the same study, men are least likely to cheat if their partner earns about 75% of what they do.

So as you can see, there's plenty to go around. There is a higher rate on infidelity for both parties when the woman earns more than her man.

Saying that the rate of divorce is higher is a simple statistic. It isn't casting either party as evil.

 

[DownButNotOut]

We need government out of marriage entirely. Civil unions if people choose. Custom contracts would be even better, that way some dudes can say "she can live here but I will give her NOTHING. Not even cab fare, she's just trying to steal my money." 😂

It's not about the marriage, it's about the divorce.

 

[DownButNotOut]

There is also a generational shift going on with younger couples preferring separate finances. The law will eventually catch up to this shift (similar to what happened with same sex marriages)

Why More Young Married Couples Are Keeping Separate Bank Accounts

It doesn’t signal a lack of trust—to some, it’s a way for spouses to show they trust each other more.

www.theatlantic.com

The issue isn't during the marriage. It's during the divorce. Divorce discovery requires you to disclose all assets, even separate accounts like the couples in your article. If the other side suspects you may be hiding something, they will engage forensic accountants. Being the high earner, chances are very good you're on the hook for both side's legal bills, including experts like accountants. Unless you are very, very wealthy you're going to find that the legal fees eat up any possible benefit your hidden asset may have for you.

Will the law eventually change? Maybe. But until then you have to work with the laws you have , not the laws you want. Stick with the prenups and don't try to hide anything. In fact, full disclosure during prenup creation will only make it more binding. If you hide something and it's later discovered, that prenup might be tissue paper when you try to use it.

 

[DownButNotOut]

That's what I am trying to do here, 'work with the law'. However there are many options other than pre-nups I am trying to explore. One example, Dad buys a house and rents to Son and wife. Son pays rent for a few years and divorces. All rent payments are removed from marital property. Few years after divorce is final Dad gifts house to Son. This is perfectly legal in at least 20 states, in many cases judges don't want to hear about these legal transactions and your 'forensic accountants' can't do much

Sounds to me like a lawsuit waiting to happen. Plus is Dad happy paying income tax on the rent income?

edit: Also, Dad may find himself the target of depositions during the divorce proceedings concerning the disposition of that rental property. If the other side's lawyers or accountants are suspicious, he could face some pretty uncomfortable questions, including of the intention to use the home as a haven for the son's assets.

 

[DownButNotOut]

The income tax is offset by mortgage deduction. The lawsuit will be thrown out in at least 20 states as all transactions are perfectly legal. Judges don't care if one partner blows away all the marital property. Only assets at time of divorce are considered

Yes, actually they do depending on the judge. Only assets at time of divorce unless there are assets being hidden/laundered through some scheme one party is not privy to. What you're describing is laundering the son's assets through a rental agreement with the parent. And the home is mortgaged, not fully owned by the Dad? Well that will complicate things when its time to gift it to the son.

And guess who's paying for all that investigation during divorce? You are. Let's say that the home is $240,000, with a 30 year mortgage at 4.5% and 20% down. Your marriage lasts 5 years. Typical rent on a property like that is about $2k/month. That's $120k you paid to Dad in rent. In that 5 years, Dad paid $20k in principal and ~$46k in interest. The other $54k is Dad's income. How much of that are you expecting back? If Dad doesn't charge you fair market value rent, or puts that profit back into the house equity in an unusual way, that's going to raise a whole new set of questions for your ex's legal investigators. By trying to pull this stunt you could very well cost yourself $90k in legal/accounting fees during your divorce as they try to unspool any scheme you've put together. That's whether what you did was ultimately legal or not. That's during the divorce. 3 years later when Dad tries to transfer the home to son, and new legal troubles could arise. Especially if deposition testimony denied any such plans.

Look. You're looking for silver bullets that just aren't there. Prenups, and postnups with full disclosure are your best tools for avoiding a long litigious divorce.

 

[DownButNotOut]

Dad can ignore and not even show up as he has not given anything to son till divorce. The couple (including wife) benefited by living in the house during Marriage. There is really no case here, except paying rent using marital assets (legal)

Dad can't dodge the deposition. Not without facing contempt himself.

 

[DownButNotOut]

I don't understand your logic here, the son is getting full and sole benefit of home price appreciation + equity AND he is removing $120K from marital property. The argument about deposition is not valid, you don't need to answer hypothetical questions like future gifts to children, nor do you need to abide by any disclosure you made years ago. There is really no case 3 years later. Its not a silver bullet, the law has vested full authority to either partner in the marriage to use marital assets as they see fit during a marriage

No. The son is a renter. The Dad is getting the full benefit of rental income, appreciation, and equity. The son is paying $120k in rent. To say that that is removing it from marital property isn't exactly true. Why? Because the full $120k no longer exists. $46k of it is lost to mortgage interest. $10k(ish) to property taxes. $4k to insurance. That's $60k right there, or half. Is your intent to safeguard your money, or is it just to spite your spouse? Of the remaining $60k, only $20k will be coming back to the son with the house in the form of the equity portion of the mortgage payments. The other $40k is either still part of Dad's estate, or lost to the IRS in Dad's income tax from rental income. So you're paying $120k to get back $20k, plus <$40k in some separate future transfer. Say 3 more years of gifts under $15k to stay under the tax exempt gift level. Is that better than the son having bought the house initially?

Now the gift transfer. Dad may have tax liability on that gift. Depending on the size of Dad's estate, it could affect future gift ability, or estate taxes upon Dad's death. As far as the equity, in general on a gift of this type the basis on home price for the son will be the price Dad paid and not the FMV of the property at the time of gift while the gift amount deducted from Dad's estate will be the current FMV of the property. Which means that that equity may cause the son to pay higher capital gains tax on its future sale.

So in the end you are left with less than half of what you were shuffling off to Dad. Dad has probably lost money on the deal if he's returning the rental income. Son is probably on the hook for higher capital gains on the house.

And of course all of that is without taking into account the effect this type of move on the divorce itself. A contested divorce can be amazingly expensive. For a move like this to make any sense at all, your financial benefit has to outweigh the additional cost to litigate it in the divorce. You could very easily see yourself facing an $80k legal bill after the lawyers and accountants get done, all to "save" $60k. Is it still worth it? When instead of this scheme, you could have had a clear prenup and a less contentious and less expensive divorce?

 

[DownButNotOut]

This transaction is in addition to a prenup and postnup. Its a CLEAN, LEGAL way to remove marital assets in case of future dispute. The wife is aware of the rental agreement, who owns the property and is consenting to pay at market rate with marital assets for joint use. I would love to see the other side waste money on legal fees here.

The rest of your financial numbers are really investment in rental market calculations and gift/estate tax issues. These will be there no matter who rents the property

The point is you aren't saving anything. The money is just gone. You're better off just buying the house in the first place, and including a clause about the house in the prenup. It is CLEANER, and cheaper in the divorce.

If you are somehow saving money then you run afoul of hiding assets with a third party. Which is no-no in almost all jurisdictions. Whether you win on the issue or not isn't really important. It's the legal bills that pile up as you defend it.

I don't think you would really "love to see the other side waste money on legal fees" here. Why? Because you'll have legal bill piling up defending it. Also as the wealthier party, you're on the hook for paying those fees. Or they come out of the marital estate so at best you're only paying half of those fees. Contested divorces where one party suspects the other of hiding assets can grow into six figure bills.

So again I ask, is your goal to have the best financial outcome in your divorce? Or is it to spite the other party? Because running the numbers, it seems like you're more keen on cutting off your nose to spite your face on this one.

 

[DownButNotOut]

Two people marry and share their bodies...the most intimate sharing that exists. But then you don't want to share your bank accounts. So your money is more important to you than your body.

It's like the unmarried couple with kids when they're asked why they don't get married. The response is often, "He's not ready for commitment." SMH

Two people dating are sharing their bodies before they're sharing the dinner check.

 

[DownButNotOut]

Which is why I said, "So your money is more important to you than your body."

Bodies have such little worth these days they are given freely to 2am "dtf" dm's in snapchat.

Family is more important than either. Money is valuable only insofar as it provides a stable home with all of the necessities for that family to grow and prosper. Money is also a legacy to the next generation. My body is only valuable in its ability to labor for the resources the family needs, to protect that family from the dangers in the world, and to sacrifice it if necessary for the family's future.

Family is above all. Money and Body are more important than those who would seek to break the family apart, and both should be protected for the family's sake from such an occurrence.