What are your thoughts about Prenuptial agreements?

7 Reply

Marcus R.

Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes

1y

Scott beat me to it by 1 min.

No decision is a decision so my wife and I decided we'd like to come up with our own plan instead of letting the state decide.

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JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

1y

What I would probably do is just set up an LLC or Trust involving your kids such that the property and benefits were owned and distributed by the laws/rules governing the LLC or Trust. That's almost by definition going to exclude most/all claims by a spouse.

I get what your aim is and I don't think it's unreasonable. A lot of people are not good with money, plain and simple, and a lot of times those people are our children, siblings, or parents. I think it's not only reasonable to take those issues into consideration, it is both kind and loving with regards to your children. I think the *unreasonable* position is to expect that everyone is/can be equally good with money and financial issues, and those that aren't well that's tough **** for them. I know people, both friends and family, who are married to ne'er-do-wells, and the idea of just sticking out a marriage is fantasy land because anyone can file for a one-way divorce, ie the other person doesn't have to want to get divorced for it to be granted. So you can be the most devoted husband or wife there is and still get dumped, and get winded from your fortune, however much it may be.

If everyone recognized that marriage in the US is first and foremost a financial contract they would be a lot better off.

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James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

1y

@Joe S. I argue that a Prenup is FANTASTIC for 2 reasons I never hear mentioned about them:

(A) It forces the very adult, and realistic consideration of a reality that things may not go as planned. That nearly 100% of divorces started with certainty that it will NOT end in divorce. The future is not known, and yes, it very well could end badly, it's a real potential.

(B) Setting a "code of conduct" for the "if". So many ignore so much as they "rush in" and a Prenup forces conversation on conduct, how things would go "if" which to have such conversation forces THOUGHT on these various potentials, and conduct "if". And just having thought it out before greatly reduces potential of later hostilities "if".

For me, those 2 reasons alone make it worth it's weight in gold.

Personally I think it should be a legal requirement for the reasons detailed above, showing comprehension for the legal contract there entering by proving consideration and thought has been made for potential exit and dissolution of said contract.

Marriage is literally the ONLY contract where nobody cares about rampant dissolution and breach of it. Imagine if 50% of real estate contracts ended in dissolution or breach. I guarantee it would be a big issue and there would be talk of how things can be corrected or prevented from such a rate of such.

Matthew Paul

Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes

1y

A friend of mine had an earth moving business , worth about 10 million . He went thru a divorce both had lawyers . At the table her lawyer wanted half of the business , 5 million dollars . His lawyer said no , but he said that 5 million was a good number . he tossed the keys across the table , told her to open the gates at 5 am and warm up the trucks , and a whole list of things , and to cut him a check for 5 million .

They agreed for much less

6 Reply

Joe S.Pro Member

OP

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @Don Konipol:

Quote from @Joe S.:

A prenuptial agreement, or prenup, is a legal contract between two people who are about to get married. It outlines how the couple will handle their finances during and after the marriage, including:

Property and assets: How to divide property and assets in the event of a divorce or death
Debts: How to allocate debts
Spousal support: Whether and how to provide alimony
Inheritance rights: How to handle inheritance rights

A prenup can help protect both parties' interests, and can be an effective way to avoid court proceedings and minimize the emotional and financial toll of a divorce. It can also be used to preserve assets acquired before marriage or planned for separate personal goals. A prenup is valid if it's entered into with full and fair disclosure of all assets by both parties, and if it protects both parties. It must also be executed and acknowledged with the same formality as a property deed.

So what got me to thinking about starting this thread is that all of my children are single, but I am thinking about helping them get started in their own business prior to them getting married.

What I don’t want to see happen is someone marry them and then kick them to the curb and then want half of everything they worked for or I help them with.
Now I understand that one of the arguments against prenups is that a person is making provisions for a failed marriage. However, an argument can be made that you’re making provisions to discourage someone from jumping ship and still getting an undeserved income so from that standpoint, you might be discouraging a break up.

As investors there could be potential targets on some love struck individual that has higher net worth from a gold digging opportunist partner.

What are your thoughts?

1. While state marital property laws differ, there are 2 basic categories. Nine states are COMMUNITY PROPERTY STATES, where all property accumulated during the marriage, OR the INCREASE in value of existing separate property (property accumulated prior to the marriage), is considered community property which can only be divided 50/50, UNLESS the division is made to offset some other imbalance . Prenuptial agreements in these states can not OVER RIDE community property laws. So. In community property states, what’s needed to ensure that the INCREASED VALUE OF AN ASSET, LIKE A BUSINESS, DURING THE TIME OF THE MARRIAGE is separate property is a POST NUPTIAL AGREEMENT. Which would be signed AFTER the marriage takes place. What make it hard to enforce is that the ‘Post Nup” must have both sides receive “fair” value - so what exactly is the spouse without the asset gaining? All this can render a pre nup irrelevant in community property states. Often, an acknowledgment of a division of property is used, instead. However, separate property must be KEPT separate, so as the years roll by there’s less likely that separate property remains separate.
Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are the community property states.

The other 41 states are known as “equitable distribution” states, though their individual laws often differ considerably. While prenuptial agreements hold up better in these states, judges have wide latitude to correct “inequitable distribution”. Further, each party to the agreement must be gaining some benefit. So, successful agreements (those that “stand up” when tested in court) have the spouse without the assets receiving a significant lump sum in event of divorce,

For smaller sums of money/assets alternatives to prenuptial agreements may serve the purpose best. For example if you wanted to gift $100k to your child to purchase a business, it may be best to make your child manager, with say a 20% interest, while you and or your spouse maintain a 80% interest. 100% of any net income can still be received by your child as manger, or even for just his 20% interest, as profit allocation need not align with ownership percentage in an LLC. The same can be done with C corporations through distribution of different classes of stock, but this is much more complicated.

Wow, Don looks like you know a lot about everything. Lol.

Since we live in Texas it doesn’t sound like a prenup is as strong as I originally thought. What spouse would sign documents after they got married that’s not in their favor?
I need to investigate more about how to control a LLC or trust like you mentioned.

Alan F.

Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes

1y

Everyone should read Scott's answe a few times.

Would you all enter a REI agreement with out a contract?

I'm pro prenup

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

1y

May be a good question for Bill Belichick.

2 Reply

Joe S.Pro Member

OP

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @Mike Dymski:

May be a good question for Bill Belichick.

How would we ask him?

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

1y

my thoughts??? GET 1!!

Bud Gaffney

Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes

1y

: )

Joe S.Pro Member

OP

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @JD Martin:

What I would probably do is just set up an LLC or Trust involving your kids such that the property and benefits were owned and distributed by the laws/rules governing the LLC or Trust. That's almost by definition going to exclude most/all claims by a spouse.

I get what your aim is and I don't think it's unreasonable. A lot of people are not good with money, plain and simple, and a lot of times those people are our children, siblings, or parents. I think it's not only reasonable to take those issues into consideration, it is both kind and loving with regards to your children. I think the *unreasonable* position is to expect that everyone is/can be equally good with money and financial issues, and those that aren't well that's tough **** for them. I know people, both friends and family, who are married to ne'er-do-wells, and the idea of just sticking out a marriage is fantasy land because anyone can file for a one-way divorce, ie the other person doesn't have to want to get divorced for it to be granted. So you can be the most devoted husband or wife there is and still get dumped, and get winded from your fortune, however much it may be.

If everyone recognized that marriage in the US is first and foremost a financial contract they would be a lot better off.

I'm still trying to wrap my head around the LLC and trust thing. How would that work out on taxes if I'm the one that owns it, but they're the ones they get the benefit from it? Also, I have helped build my oldest son‘s credit where he can get a loan so the loan would be in his name.

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JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

1y

Quote from @Joe S.:

Quote from @JD Martin:

What I would probably do is just set up an LLC or Trust involving your kids such that the property and benefits were owned and distributed by the laws/rules governing the LLC or Trust. That's almost by definition going to exclude most/all claims by a spouse.

I get what your aim is and I don't think it's unreasonable. A lot of people are not good with money, plain and simple, and a lot of times those people are our children, siblings, or parents. I think it's not only reasonable to take those issues into consideration, it is both kind and loving with regards to your children. I think the *unreasonable* position is to expect that everyone is/can be equally good with money and financial issues, and those that aren't well that's tough **** for them. I know people, both friends and family, who are married to ne'er-do-wells, and the idea of just sticking out a marriage is fantasy land because anyone can file for a one-way divorce, ie the other person doesn't have to want to get divorced for it to be granted. So you can be the most devoted husband or wife there is and still get dumped, and get winded from your fortune, however much it may be.

If everyone recognized that marriage in the US is first and foremost a financial contract they would be a lot better off.

I'm still trying to wrap my head around the LLC and trust thing. How would that work out on taxes if I'm the one that owns it, but they're the ones they get the benefit from it? Also, I have helped build my oldest son‘s credit where he can get a loan.

Good questions and not my area of expertise so I'm not going to pretend I have good answers there other than suggest talking to a good estate planning attorney and tax professional, because that's their area of expertise. I guarantee they're going to have good answers for you on minimizing the impact of taxes and exposure without breaking the law.

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2 Reply

Anil Dham

Member since 2022 · 23 posts · 29 votes

1y

@Joe S.

Love is Grand...divorce is 200 grand

5 Reply

Jack Seiden

Real Estate Agent · Washington DC · Member since 2016 · 847 posts · 654 votes

1y

Quote from @Joe S.:

A prenuptial agreement, or prenup, is a legal contract between two people who are about to get married. It outlines how the couple will handle their finances during and after the marriage, including:

Property and assets: How to divide property and assets in the event of a divorce or death
Debts: How to allocate debts
Spousal support: Whether and how to provide alimony
Inheritance rights: How to handle inheritance rights

A prenup can help protect both parties' interests, and can be an effective way to avoid court proceedings and minimize the emotional and financial toll of a divorce. It can also be used to preserve assets acquired before marriage or planned for separate personal goals. A prenup is valid if it's entered into with full and fair disclosure of all assets by both parties, and if it protects both parties. It must also be executed and acknowledged with the same formality as a property deed.

So what got me to thinking about starting this thread is that all of my children are single, but I am thinking about helping them get started in their own business prior to them getting married.

What I don’t want to see happen is someone marry them and then kick them to the curb and then want half of everything they worked for or I help them with.
Now I understand that one of the arguments against prenups is that a person is making provisions for a failed marriage. However, an argument can be made that you’re making provisions to discourage someone from jumping ship and still getting an undeserved income so from that standpoint, you might be discouraging a break up.

As investors there could be potential targets on some love struck individual that has higher net worth from a gold digging opportunist partner.

What are your thoughts?

I think so many of these responses are based on made up hypothetical’s and not real life, I don’t think the vast majority of people are out to marry someone only for money & I certainly don’t think you want to get married assuming divorce but in the real world life is long people can be married for decades and something can change people can grow apart, you can even have a contentious divorce where getting the money becomes as much about hurting the other person as getting the money itself, I don’t think there should be any shame in making that even in a good marriage that if you grow apart you don’t put yourself in financial jeopardy.

3 Reply

Joe S.Pro Member

OP

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

1y

Quote from @Jack Seiden:

Quote from @Joe S.:

A prenuptial agreement, or prenup, is a legal contract between two people who are about to get married. It outlines how the couple will handle their finances during and after the marriage, including:

Property and assets: How to divide property and assets in the event of a divorce or death
Debts: How to allocate debts
Spousal support: Whether and how to provide alimony
Inheritance rights: How to handle inheritance rights

A prenup can help protect both parties' interests, and can be an effective way to avoid court proceedings and minimize the emotional and financial toll of a divorce. It can also be used to preserve assets acquired before marriage or planned for separate personal goals. A prenup is valid if it's entered into with full and fair disclosure of all assets by both parties, and if it protects both parties. It must also be executed and acknowledged with the same formality as a property deed.

So what got me to thinking about starting this thread is that all of my children are single, but I am thinking about helping them get started in their own business prior to them getting married.

What I don’t want to see happen is someone marry them and then kick them to the curb and then want half of everything they worked for or I help them with.
Now I understand that one of the arguments against prenups is that a person is making provisions for a failed marriage. However, an argument can be made that you’re making provisions to discourage someone from jumping ship and still getting an undeserved income so from that standpoint, you might be discouraging a break up.

As investors there could be potential targets on some love struck individual that has higher net worth from a gold digging opportunist partner.

What are your thoughts?

I think so many of these responses are based on made up hypothetical’s and not real life, I don’t think the vast majority of people are out to marry someone only for money & I certainly don’t think you want to get married assuming divorce but in the real world life is long people can be married for decades and something can change people can grow apart, you can even have a contentious divorce where getting the money becomes as much about hurting the other person as getting the money itself, I don’t think there should be any shame in making that even in a good marriage that if you grow apart you don’t put yourself in financial jeopardy.

Well, their mom and I sure pray that they find a good godly spouse. I’m sure a lot of parents have prayed that for their children as well. Hopefully they’ll get married and stay with their spouse the rest of their life and have a blessed marriage.

Hopefully, all my thinking about prenups, etc., is simply a waste of my time.

Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

1y

Our son is a partner in our business. He recently married. All of our properties are held in LLC's where the operating agreements allow non-members to inherit a financial interest in the company but non-members are not allowed voting or decision making rights unless they are unanimously admitted as a member. Our son's financial decisions regarding his assets as they relate to his marriage are his alone to make. Should he and his wife ever divorce, they will have to figure out for themselves how to divide their marital assets. I feel good about how our company leadership is protected and our son's ability to provide for his wife should he pass before her.

3 Reply

Scott TitusPro Member

Rental Property Investor · Lake Ozark, MO · Member since 2017 · 102 posts · 86 votes

1y

I have a unique experience, my wife and I agreed to get a prenuptial without any fuss. We also agreed to get a postnuptial, which we learned was far more important in our state. I have seen several say silly things like "don't marry them if…" but that's not the case, it's just smart business sense. My wife is successful on her own, she's built her own business and overcome her own obstacles. Yes, I have supported her emotionally, financially, and mentally, but that's doesn't entitle me to 50% of what she's built. Just as I bought our first SFR in 2016 and grew that business to 167 units as of today. We have a great few businesses that we share, and the operating agreements lay out our shares of those companies. I also have a few that I run/own on my own and those have nothing to do with her…so yes, I strongly support it.

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1y

This really boils down to each individual situation. I am on marriage #2 and never had a prenup. My first divorce we worked it out amicably and in my current marriage we do not have one and would not engage in one as we built what we built together. We both also have finance degrees and are savvy with finances and from an income perspective we are inline with each other

Similar to what JD stated - We have a living trust where everything eventually goes to the kids and if something were to ever happen we would sit down like adults and resolve it without being vindictive.

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Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

1y

Who you marry is probably the single most consequential decision in your life, financially and otherwise. You don't realize the full gravity when you are 20..

But it would be less awkward for young people if it were a legal requirement to sign a prenup, just check the boxes you want, maybe even go through some education before.

My second suggestion is to change how divorce attorneys get compensated, which would be for the results and not how many billable hours they can rack up by making things more complicated and hostile than they need to be.

That's all I had in terms of unrealistic ideas for today..

5 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

1y

Quote from @Chris Seveney:

This really boils down to each individual situation. I am on marriage #2 and never had a prenup. My first divorce we worked it out amicably and in my current marriage we do not have one and would not engage in one as we built what we built together. We both also have finance degrees and are savvy with finances and from an income perspective we are inline with each other

Similar to what JD stated - We have a living trust where everything eventually goes to the kids and if something were to ever happen we would sit down like adults and resolve it without being vindictive.

If only everyone was as reasonable as Chris. My sister in law and brother in law spent a combined $468,000 on attorney fees over 5 years to get divorced - their total net assets at the time they decided to divorce was just over $1 million. so it ended up as $250k for her, $250k for him and $500k for the attorneys.

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3 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

1y

Quote from @Don Konipol:

Quote from @Chris Seveney:

This really boils down to each individual situation. I am on marriage #2 and never had a prenup. My first divorce we worked it out amicably and in my current marriage we do not have one and would not engage in one as we built what we built together. We both also have finance degrees and are savvy with finances and from an income perspective we are inline with each other

Similar to what JD stated - We have a living trust where everything eventually goes to the kids and if something were to ever happen we would sit down like adults and resolve it without being vindictive.

If only everyone was as reasonable as Chris. My sister in law and brother in law spent a combined $468,000 on attorney fees over 5 years to get divorced - their total net assets at the time they decided to divorce was just over $1 million. so it ended up as $250k for her, $250k for him and $500k for the attorneys.

I know someone who is going on 5+ years and I can only imagine how much they also spent. I know I am probably not the norm but its sad when you see what you wrote Don, as you infer, the only ones who win are the attorneys.

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Rick Albert

Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes

1y

I think it depends on your state.

When I was getting married, I spoke with an attorney that worked in family law. I asked him about a prenup and said, "All I will say is this, when my Aunt got divorced and they presented the prenup to the judge, the judge basically threw it out." In other words, it may not really matter.

I think it is also a fine line because even if I owned multiple properties prior to getting married, if my wife did ANYTHING to help with them, property management, sweat equity improvements, etc. then it can play a role. An argument can be made that because of her involvement in those properties, we were able to grow our main portfolio. But that never would have happened without her involvement.

It's really tricky. I'm not an attorney but I feel like it is more symbolic than anything so that everyone understands what were to happen should there be a break up.

Lorraine Hadden

Real Estate Broker · CA · Member since 2024 · 60 posts · 42 votes

1y

Every married couple in California has a prenuptial agreement, even if they didn't create one! Yep --- It's called CA Community Property Law --- The California Family Code governs all aspects of marriage and divorce, including how assets are divided. Without a prenup, California's community property law dictates that any property acquired during the marriage is considered community property and is divided equally in a divorce. Property owned before marriage, or acquired by gift or inheritance, is considered separate property and belongs exclusively to the spouse who acquired it.

WORD TO THE WISE ----- Keep separate property separate and DO NOT COMINGLE them, if you live in CALIFORNIA or any other community property state - which I believe are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin!

Kevin Hintz

Investor · Tacoma, WA · Member since 2021 · 97 posts · 28 votes

1y

A prenup can be a smart move, especially to protect your kids' hard-earned business. It's not about expecting failure but about being realistic and avoiding future legal issues. It helps keep things clear and fair if things don't work out.