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Prenuptial Agreements: Necessary or Not?
271 Plays10 months ago
👫 Whether you're a man or a woman, understanding prenuptial agreements is crucial in today's world.
Mindy, David, and Dusti explore the reasons why individuals may want to consider a prenup before tying the knot, and even delve into the concept of postnuptial agreements.
In this episode:
*Pros and Cons**: Weighing the benefits and drawbacks of prenuptial agreements.
**Inclusivity**: What can and cannot be included in a prenup? Our hosts break it down.
**Gender Perspectives**: Insightful discussions on how prenups affect both men and women.
**Postnuptial Agreements**: Not just prenups - we also explore agreements made after marriage.
**Debate Corner**: Should prenuptial agreements be mandatory for all marriages?
🔔 Subscribe to @ForgetAboutMoneyPodcast for insights into finance, lifestyle, mindset, and more. Join Mindy, David, and Dusti as they unravel the complexities of money matters in an easily digestible format. 📲
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Transcript
00:00:00
Speaker
Adored
Introduction to Prenuptial Agreements
00:00:00
Speaker
by some and bored by others, today we talk about the sensitive topic of prenuptial agreements. Here we go. Okay, ready, set, go. Today on the Forget About Many podcast, we are going to talk about prenups.
00:00:19
Speaker
led in part by Aaron Thomas's amazing book called The Prenup Prescription.
What are Prenups and Postnups?
00:00:24
Speaker
So I have had the distinct pleasure of speaking with Aaron Thomas on another podcast about the concept of the prenup or the prenuptial agreement, which is a legal
00:00:36
Speaker
legally binding agreement that two people sign before they get married. There's also a concept called the post nuptial agreement, which is something that you sign after getting married. It's kind of the same thing. We're talking about prenups, talking about before you get married. My name is Mindy Jensen.
Hosts' Perspectives on Prenups
00:00:55
Speaker
I have been married for 21 years, almost 22 years. With me today is Dusty and David. Dusty, tell me about you.
00:01:06
Speaker
My name is Dusty Young and I am not married. However, I did have a very interesting conversation about prenups on a hike this weekend. So I'm looking forward to diving into this topic. What about you, David? I'm also not married. I have been married in the past and I do have some experience with a prenup and speaking with other people about prenups.
00:01:29
Speaker
That is very interesting because while I have been married since God was a boy, I actually do not have a prenup. So when my husband and I got married, we weren't young, we were like 29 or something, but we didn't have anything. We didn't have anything to protect. So when he brought up the concept of prenup, I was like,
00:01:49
Speaker
If you talk to me about that again, we're not getting married. I was really offended that he said that because we didn't have anything to protect. And I was like, you're just planning for a divorce. And I think that's the big misconception with a lot of people with regards to the prenup.
Misconceptions and Realities of Prenups
00:02:04
Speaker
Dusty, I'm really interested to hear your thoughts about the concept of prenup.
00:02:12
Speaker
That was part of our conversation this weekend where my friend asked if I would sign a prenup and I said, yeah, of course. Because to me, I have built my own financial situation. I have real estate. I have real estate that I would want to protect, that I would want to make sure everything if we split up was still very easy to manage, was very clear cut, that there wasn't going to be a big argument about things.
00:02:41
Speaker
So for me, the idea of a prenup is actually a great idea. And it's a great idea to know what's going to happen if things go awry. And maybe it's because I'm older, maybe it's because I've had a relationship or a few that haven't worked out. And so you know that the likelihood that it's going to end in success might be on the lower side. But I would have no problem signing a prenup.
00:03:06
Speaker
I don't think that whether or not someone loves you is shown on paper. To me, it's just having this idea and figuring things out before things might go awry and figuring things out when you have a clear state of mind, which is also really important.
Prenups as Financial Management Tools
00:03:24
Speaker
I really like that you are going into this idea with a clear head and I was very emotional about it. I also didn't have anything to protect. I owned a $50,000 condo that was like 97% financed. Like I didn't own squat. I had a car that was worth, you know, $100. Like what I had wasn't really,
00:03:51
Speaker
Nobody was coming after my my big windfall, you know if we had gotten divorced and the same with Carl He didn't have anything like all of his assets on this side were eaten up by all of his debts So there was nothing to go after but one of the things that Aaron talks about in his book is the the idea that the prenup isn't just about how to split things up if you get a divorce it's about
00:04:18
Speaker
how things can go during the marriage.
Prenups for High Net-Worth Individuals
00:04:22
Speaker
He gave an example of, he works with some high net worth individuals like sports, sports players.
00:04:33
Speaker
athletes. That's a way better way to say it than sports players. Professional athletes who have a giant income right now. So some of the things that have been in those kinds of prenups are
00:04:50
Speaker
the woman can, the wife can spend X number of dollars without having a conversation. If she's going to spend more than that, then they need to discuss it first. So she's not going out and buying a brand new Maybach for $200,000 and he's like, whoa, what is this? Or maybe she is because that's their amount. And that's like a point of negotiation.
00:05:17
Speaker
um, everything is a point of negotiation. And that's something that he pointed out as well. Like this is just, it's a conversation that you're having and you're setting up, um, parameters for con for your, you know, your marriage. And it just, it, the way that he described it just made it seem like it doesn't have to be this contentious document. It doesn't have to be a plan for a divorce. It's just how things are going to be handled.
00:05:46
Speaker
Um, and Aaron Lowry, same sounding name. Um, what's it called when the word sounds the same, but it's different homonym.
00:05:55
Speaker
I can't remember. Anyway, Erin Thomas is the author of this book. My friend Erin Lowry, woman for The Brook Millennial, had a really great comment. She said, if you're married, you already have a prenup. It's the divorce laws of your state. So even if you think you don't have a prenup, you do. If you don't want to follow whatever random divorce laws
00:06:18
Speaker
are in your state, then you need a legal document that describes exactly what's going on.
Legal Boundaries of Prenups
00:06:23
Speaker
Dusty, let's say that you have a $3 million nest egg and you don't get a prenup that you have written, and the state that you live in when you get married and then subsequently get divorced says, everything's 50-50 no matter what.
00:06:41
Speaker
Perhaps you married somebody who has nothing to bring to the table. Now your $3 million nest egg that you grew and you worked so hard for is split in half with some bum who had nothing to do with it. So there are real reasons to have a prenup.
00:07:02
Speaker
to split what you've got. It's to, you know, it's to protect what you're, you know, protect what you've worked for. So David, what are your thoughts on, on prenups?
00:07:13
Speaker
you bring up that if you don't have a prenup, then it's default to whatever the state laws are. So if you get married in one state and you don't have a prenup, and then you end up moving to a different state, and then you decide to get a divorce, now you're a resident of a different state, and you can get divorced in that state, then it might be different. So I do know that if you do have a prenup, most states, regardless of where you go through your divorce, will honor that prenup.
00:07:40
Speaker
even if your prenup was drafted by a lawyer in California, if you both live in Arizona or New York, and then you go through a divorce, lawyers there and the courts, if it gets that far, will recognize and dissolve that relationship formally through the filter of that prenup versus their state's laws. Another misconception in some of my conversations with other people about prenuptial agreements is that
00:08:10
Speaker
where kids are involved. Early in our conversations, they say, well, can we agree that he has 50% custody and I've got 50% custody or joint custody? And this is how much child support is going to be. And the answer to that question is, I believe no. You cannot talk about children and the care of children.
00:08:32
Speaker
of after the divorce in a prenup. That does go by the state's laws regarding children in a divorce. That's interesting. I do think across the board, most states, their default is now 50-50 joint custody, unless there's a reason for it not to be practical, or if one of the two parents don't want that.
00:08:56
Speaker
So I think that's a good thing as far as you look like traditional. There's this preconception, maybe probably based in some truth over the past where the courts recognize the mom to be the primary parent. However, that is a significant change over current history. And I believe most states now currently default to the ideal as joint custody unless there's a reason not to do it. But you cannot include that or the amount of child support in your prenup because
00:09:25
Speaker
There's factors that will impact that that are unknown at marriage. You might not have kids at that point. You might not have kids at the time of divorce. Financials might change. And when it comes into, well, then when it comes
Prenups and Financial Conversations in Relationships
00:09:40
Speaker
into financials, there's really two clear lines. One's alimony and one's the child support.
00:09:46
Speaker
And in many of the conversations, but they'll be like, well, can it just get more child support? No. The courts won't look at it like that. They'll say it's either alimony or it's child support. And if it's child support, it's based on a math problem by the state. It's not, well, at least the minimum amount is decided by a math problem, by an equation, by the state. Alimony is totally different. So in a prenup, you can focus on the alimony piece, and that's a good conversation to have. But child support and alimony,
00:10:17
Speaker
they're the two shall meet or cross or whatever it is, they're separate, right? So that's something I have to remind people of when we start talking about prenups. That's a really good point and it makes sense, but I didn't realize that that was part of it. That's good to know. I think that easing into the conversation of a prenup is better than just
00:10:42
Speaker
wham, we should get a prenup, especially if you've never had a money conversation. So as much as I talk about money, as much as my husband talks about money, we didn't talk about money together. We both knew we were on the same page. So I think that's why we didn't talk about money together, because we knew that we both felt the same way, except about that prenup.
00:11:06
Speaker
But I think that having a money date with your partner as it becomes more apparent that you are getting more serious and you want to spend your life together or you're thinking about cohabiting or whatever, starting to have money dates and having conversations about money, how you think about money, how you spend money, how you save money, your ideas about the way that you use the tool that money is.
00:11:34
Speaker
is very important for marital bliss because what is the number one things people fight about in money or in marriage? It's money. And like number two is sex and they flip back and forth over and over again. But for the most part, those are the two things. And we're not going to talk about sex on this episode. We're going to talk about money. So you need to be talking about money with your partner. Dusty, you are in the dating world. When do you bring up money?
00:12:03
Speaker
during dates.
Introducing Prenups in Relationships
00:12:06
Speaker
At the end of the first date when somebody's got to pay the check. Oh, I guess you're both in the dating world. Yeah, so when do you bring up money? What do you think, David? A hundred years since I've been on a date. It's usually before our first date. I just say, you know you're paying for me, right? And if she says yes, then we're good. And if she says no, then I got to, you know, unmatch.
00:12:32
Speaker
Wow, unemployed and you want them to pay for the first date. What a catch. Why are you single, David? That's for a different podcast. Yeah, seriously. When do you bring up money? I don't do it on the first date. I really don't. I don't think that a first date is the time to start bringing up money issues. I think chemistry is number one. And then because without chemistry, there's really no reason to have a second date or a third date.
00:13:00
Speaker
And Maya comes later. What about you, Dusty?
00:13:02
Speaker
Yeah, I think it depends on the person and the situation. All of those things come into play. I also think that with a prenup, the conversation might not be about money. It might be about what you're bringing in to the relationship and what you're hoping to leave out of the relationship. And maybe pulling up a template is a really good idea to guide the conversation. You know, because I think a lot of people don't know, oh, what is a prenup even?
00:13:32
Speaker
What's
Mandatory Prenups: A Case for Financial Transparency
00:13:32
Speaker
included in a prenup? What's not? So being able to say, hey, how are we going to divide our property? Where are we going to live? Who's going to continue to live here if we split up? Who's going to be paying rent? What makes sense? What doesn't? Because then it's just a nice conversation. And at the beginning of the relationship, to me, that's really fun. You're getting to know someone. You're having these great conversations. You're seeing how they feel about things. So just bringing up that template and saying, let's talk through this.
00:14:01
Speaker
I didn't really answer your question because I think it has depended on the people I've gone on dates with. It has come up in different ways at different times. The most current person that I've been seeing just kind of came up on a hike. So he just randomly asked about prenups. And if I would sign a prenup, and we talked in like very broad strokes about prenups,
00:14:29
Speaker
but not us specifically because we're pretty new.
00:14:33
Speaker
I genuinely think that prenups should be a requirement for every marriage. Every marriage. I wish that would be a law that would be passed. And if somebody hears this, immediately they're going to feel one way or the other about it. And usually it's probably the majority of people who would hear this think probably not in a positive way with a comment like that. But this is why. It makes you have the conversation. People can get married and not know a damn thing about the other person's finances.
00:15:00
Speaker
They don't know that they're signing on by signing that marriage decree that now it's possibly on the hook for debts they don't know anything about. Or worst case, like even on the back end, none of that's taken care of. You have no clue.
00:15:14
Speaker
But there's no requirement of having a money conversation before you tie the knot with someone. And it should be because it's the number one thing they talk about. But if you go through the process of a prenup, which a lot of people don't know this either, each person has to get their own lawyer to be valid. So yes, if say you're at different educational levels or different give a shit levels, like, I don't care about all this legal ease or this money talk.
00:15:38
Speaker
Well, that's why you have a lawyer there. Each person has their lawyer. Their lawyer is negotiating with the other lawyer to come to a final document that makes everybody okay with it. And through that process, you answer all the questions. You have to list your assets and debts legally.
00:15:58
Speaker
And that becomes common knowledge to all parties. But if you don't go through this conversation and it's not documented, even if we do have money talks, what if that person decides not to talk about the $100,000 credit card that they have?
00:16:12
Speaker
or their $1.2 million inheritance that they got last summer, or whatever it is. And it's just an unknown going into one of the most serious relationships you can have, and one of the most detrimental things financially you can enter into if you don't know those things and you don't mitigate the downside risks. So I think it should be requirement across the board.
Negotiating Prenups Effectively
00:16:36
Speaker
In the past, I'm not particularly religious, but I know in the Catholic Church, at least traditionally, you would have to go through pre-marriage counseling, and money was a part of that. So I would imagine, again, I'm a little out of the religious loop, but perhaps Catholicism and other religions are maybe not doing that as much, or as to what quality. It's just like saying we get financial talks in high school, which even if we do, it's varying degrees of effectiveness, I'm sure.
00:17:07
Speaker
but going through the process of getting a prenuptial agreement.
00:17:10
Speaker
forces each person to have a no shit conversation, what's real, and what, at least a 90% solution to what we can handle and do on the back end, or it might even prevent you from getting married. You might be like, thank you, that's the best, that $4,000 in lawyer fees is the best money I ever spent, dodge that bullet. Dusty, I know you want to say something, your face says you don't want to say something. It just keeps making me think that money is emotional. And when we talk about
00:17:39
Speaker
forget about money and that that is the purpose of this podcast is so that people can optimize for joy and not have to think about the financial aspect. I think a lot of times people equate a prenup to this idea that, oh, they don't love me.
00:17:54
Speaker
And like you said, Mindy, it's emotional and it means something more than what it potentially is. And I really do think at the end of the day, we all want what's best for the people that we care about. And if you care about someone enough to be in a relationship with them,
00:18:12
Speaker
then if it doesn't work out, hopefully you still care about their general wellbeing at the end. And having a prenup is not a way of saying, oh, this person doesn't love me. That's what this means. And I really hope we can encourage people to separate the two and just look at things from a different angle. Instead of looking at it as, oh, prenup means you don't love me.
00:18:38
Speaker
No, that's not the case at all. And having a conversation doesn't mean that you're planning for a divorce or you're planning for things to end. None of that is true. And I think sometimes it can be hard to hear that when you have an idea of what a prenup is, what it means, what it means for you. And I would just love for people to step back and look at things from a different angle. Yeah, I like
00:19:05
Speaker
Yeah, I like what David had to say that he thinks it should be a law because that gets the money conversation started. There's so many people who don't think about money, don't talk while they think about it. And they're like, oh, no, there's there's a lot of shame involved in money when it comes to like, oh, I have debt.
00:19:28
Speaker
I am embarrassed about it, so I'm just not going to share that with them. I'll pay it off eventually, like it'll be fine. Well, if I have $100,000 in debt and I get married, like David said, now that's our debt, not just my debt. And he needs to know before he marries me that he's about to take on a giant wad of debt. And it's not fair to your romantic partner
00:19:56
Speaker
to saddle them with something they are unaware of. So would they still marry you? They might not. If they had known, that could be heartbreaking, but give them the courtesy of making that decision themselves.
00:20:14
Speaker
I
Adapting with Post-Nuptial Agreements
00:20:15
Speaker
did a quick look on are there prenup templates online cuz i'm not looking for prenups right now so i don't know i found an article called the top five mistakes that you make with a prenup.
00:20:30
Speaker
or prenup agreement sample form and five mistakes to avoid. Number one, you don't talk about it because it's not romantic. Number two, you have the same lawyer. Number three, you let your emotions get in the way of negotiating. This is
00:20:45
Speaker
an emotional topic, but it shouldn't be an emotional conversation. Number four, you reach an agreement quickly just to end the discussion. That's got to be the number one mistake. I can see people doing that. Oh, fine, whatever. I just don't want to have this conversation anymore. Don't do this. This is your
00:21:05
Speaker
marriage this is your future take that you shouldn't do a pre nap in five minutes you should sit there and really think about all the things that you have and all the things that you want and. Come to an agreement mistake number five i think this is really important you continue to think about the pre nap after it signed.
00:21:26
Speaker
Once it's done, it's done. Don't sign it until you really approve everything in it and then sign it, put it to the side. There's no need to continue to think about it all the time.
00:21:37
Speaker
I think it's okay to also think about a post-nup. And if you sign that pre-nup and your situation changes wildly and maybe the people that you would leave certain assets to are no longer there and you want to change things, I think it's okay to go back and say, hey, let's revisit this. Let's continue to have the conversation. I think about my situation. I don't have kids. I'm not planning to have children.
00:22:04
Speaker
And let's say that the people I want to leave things to, that changes. And I end up married for 10 years. And in the prenup, I'm saying, I really want to leave my properties to you. And now I have them paid off. And I do want to leave them to my spouse. Or I do want my spouse to have the life that we've created. Well, I might go back and change things.
00:22:27
Speaker
And I know that that's not necessarily that's upon my death, but I'm just thinking in the prenup where things are very separate, even if we divorce, I might think that he's better at handling money than the people I'm going to leave my money to. So maybe I want him to have certain things in the divorce. Yeah. And that is just renegotiating the prenup after the fact. There are people in the news right now who are continuing to renegotiate their prenup. You can just go ahead and Google that yourself.
00:22:56
Speaker
All right, I think this was a super fun conversation. The book is called The Prene Prescription. It is by Aaron Thomas. It is found wherever you find books for sale. My
Closing Remarks and Book Promotion
00:23:06
Speaker
name is Mindy Jensen. That is David. Well, okay, edit that part out, David. My name is Mindy Jensen. And that is Dusty. Oh, edit that part out. You can leave it in. And I'm Dusty Young. And I am David Boyer. Thanks for listening to Forget About Money.