When I think prenup, I think Donald Trump protecting his vast fortune from gold-digging spouses. But this is an outdated point of view. Getting a prenuptial agreement is actually a very savvy move for a pragmatic couple. Prenups are an example of one of the important financial choices women can make from the outset of a marriage to minimize the financial upheaval in the worst-case scenario: divorce. Though few of us see ourselves as future-divorcees, I’ve come up with a few recommendations for preemptive, defensive financial management, just in case. Divorce still typically incurs much more financial harm to women than men. These four tips offer basic, fundamental financial safeguards that are only logical in an age of high divorce rates.
1. Be cooperative in financial management. A big financial risk women take in marriage is letting their partner handle the finances. Once you marry, you are part of a new legal unit that accrues “marital property.” This property is the money and assets you and your partner create or receive during marriage. You and your spouse are co-owners of this property, and often are jointly liable. You’re responsible, so you’d better know what’s going on! Prioritize equality in your family’s financial management. You should be aware of and named in all your family’s assets. You should play an equal role in decision-making about the assets, even if he’s an analyst at Goldman Sachs. There is no way to underscore how critical it is to understand and approve of what happens to money that is half yours.
2. Embrace prenups. As noted above, prenups are a good idea — unless, of course, one spouse really is a gold-digger, in which case that spouse won’t want one. A prenup is like a marriage will; it is a contract that plans for what happens to assets in the event of the “death” of a marriage. A prenup answers the questions that may otherwise be decided in divorce proceedings, but ahead of time, when heads are cooler and everyone is still in love. Prenups may even trump a state’s divorce laws, so they’re powerful tools.
Prenups are also a convenient window into your partner’s financial state before you commit, as both parties must fully disclose their finances. In order to have an enforceable prenup, each of you must have an attorney and the document must be signed well in advance of the wedding itself, so plan ahead. Anyone who has endured a horrible divorce can attest that a prenup is worth the awkwardness of talking about a theoretical breakup. While prenups do not solve all the problems that result from divorce, they do minimize stress and uncertainty, making the divorce process less terrible.
3. All joint accounts should have both your names on them with equal powers. If your name is not on an account, you may not be able to access it without the permission of the account holder. This includes everything from savings accounts, to credit cards, to utilities. There are few experiences like having your partner leave and not being able to even pay the electricity bill because their name is on it, not yours. Remember, many divorces are, at least at first, very thorny. If your ex isn’t returning your calls and you are not named on accounts, you can get stuck. Be sure that the powers to act on accounts are also equal; don’t just be authorized for access only. If it’s marital property, share it fully.
4. Keep a couple accounts separate, just in case. Even though marriage may have unified your souls, it’s important to maintain a separate financial life from the marital property. It’s not uncommon for one spouse to clean the other out in a bitter divorce. Jon Gosselin did this; while he was later forced to return the money he emptied from the joint accounts, it left Kate stranded without money to live on. Individual accounts established after marriage are still marital property – you’ll have to split them up — but having a rainy day fund and credit cards both maintains your personal credit history, and provides a “plan B” for the crazy situations you can’t predict right now. You can tell your significant other about these funds or not; only you can judge your relationship like that, but hedging your bet with supplemental savings will literally pay off in the future. And hey, if you are together 100 years, you can use the money to pay for a vacation to celebrate such a historic anniversary.
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