Long-time couple finally getting married, and we think we might want a prenuptial agreement. What should we know about the practical aspects of creating and adhering to a premarital agreement? Same-sex couple in Massachusetts, more snowflakes inside.
posted by anonymous to Work & Money (14 answers total) 4 users marked this as a favorite
My partner and I plan to get married in October, we’ve been together for eight years. We have never had any significant disagreements about money and communicate well. Our finances are semi-shared (we have a joint checking account for rent and shared expenses but keep everything else separate) and we have no clear ‘policies’ on how our shared finances should work. Our differing assets/debts and incomes are a source of some discomfort and we think we might want to create a contract to clarify our desires and possibly customize our legal situation, but are overwhelmed by the options. We’ve read the Nolo Press book but are still confused about whether we should have a prenuptial agreement, or what it might or should contain.
So: if you could write a custom contract to outline finances in your marriage or in the event of divorce, and you were us, what might you want to consider? You are obviously not our lawyer, or our accountant. We do plan to hire such if we can do so inexpensively and have a good idea of what we want beforehand. To be clear: not looking for discussion on whether prenuptial agreements are a “good thing” or what they may imply about trust or marriage. Let’s assume they are just legal contracts that are useful for clarifying a couple’s financial situation in certain circumstances.
Same-sex couple in Massachusetts.
I am 30 years old, income $40,000/year gross. I am naturally frugal and most months I save 40-60% of my net income. Right now I have ~$35,000 in assets, including cash savings of >$15K, a Roth IRA, and principal in a public employees’ retirement plan (defined benefit pension system, I am not yet vested). I am a state employee and my employer will recognize her as my spouse if/when I ever collect a pension. My only debt is $14,000 in federal student loans, 2% fixed rate. I am earning a master’s degree in something similar to/related to public administration, it will never get me lucrative positions but I could expect to earn $50-65,000 eventually if I leverage it correctly or have good luck with jobs. I am an only child; my parents are poor and may someday need my help.
My partner is 28 and has less than $1,000 in assets. She has huge private student loans--$80,000 at an average of 4.5% (variable rates), some of this is capitalized interest. Her income is less than mine, I think around $28,000/year. She has a liberal arts bachelor’s degree, works a retail job, and because of her debt is reluctant to pursue any further education that would increase her income. She is sensible about money IMO but because of her student loans, she has trouble making ends meet on her own. Her family is comfortably middle class but don’t support her, although we think there may be some small inheritance or trust from her father eventually (details unknown to us). She has siblings who will probably help care for her parents as they age.
We don’t own any property together or separately but we might like to buy a house someday. Neither of us has consumer debt. We split rent and utilities 50/50 and I pay for most additional expenses, including groceries, any travel, etc. Our wedding and honeymoon will cost about $10,000 and I am paying for the majority of it with some contributions from her family (after the wedding is paid off I expect my savings to grow much faster).
Reasons why we are considering an agreement:
-I am mostly okay with paying “extra” for things but occasionally I feel resentful that her debt keeps me from accumulating wealth. I know her loans are not mine to pay off, but I have been helping by paying for the larger share of our expenses, and this makes us both uncomfortable. I’d like a more formal agreement on how separate or shared our finances should be. She knows how I feel and agrees that this is a good idea but we’re fuzzy on how this might work.
-Her debt is significant enough that if bankruptcy was an option, it would be a real possibility. If her situation gets worse, we would both be better off if my finances were protected.
-Given our different educational levels and incomes at this point, I think there is a possibility our financial situations may diverge further, although who knows what the future may bring.
-We are lucky to live in Massachusetts where our marriage is legal, but are unsure of what the financial ramifications of such. Assuming DOMA will be around for awhile, are there ways we can mitigate the financial impact of it via our agreement, and is that something we might actually want to do?
Any ideas appreciated, thanks for reading.