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Dear Quentin,
My boyfriend and I have recently begun to talk about marriage. We both own our own homes and we both have roughly the same, assets-wise. We’re also past the age of children, though he does have a child from his previous marriage.
Right now, our plan is to live in his home while I rent out mine. I give him a set amount every month towards bills, and we both maintain separate bank and savings accounts and plan to continue that even if we marry.
Would a prenup be enough to protect both of us in case the marriage was to go south? We’ve both come out of messy divorces and lost more than we care to admit in the process, so we’re both a bit gun-shy.
Is there anything else that we can do to protect ourselves?
The Soon-to-Be Fiancée
You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.
Dear Soon-to-Be,
Falling in love can be the most wonderful and unexpected experience, and should be enjoyed with the happiness that comes with living in the moment. Getting married is a serious long-term financial commitment, and should be done with a puritanical heart and in a practical state of mind.
You’ve already decided to keep your homes separate — if not your living arrangements. You are thinking and planning for the future, and that is a good start. You can always decide to change that at a later date, but given that your partner has a child from a previous marriage it makes sense.
In the meantime, use non-marital funds to maintain your respective residences, and obtain records of your bank accounts and the value of any businesses at the time of your marriage. Without a prenuptial agreement, it’s also prudent to keep one or more separate bank accounts.
As you suggest, divorce can get complicated without a prenuptial agreement, and the appreciation in the value of your separate assets — your homes — would likely be considered community property if you decided to go your separate ways after a number of years.
Another option would be to put certain assets in a revocable trust before you marry, which would require appointing a trustee and can be expensive to create and maintain. A prenup seems ideal for both of you and, in some states, can also protect your retirement accounts.
Without one, “the portion of a retirement plan owned before marriage is separate if it can be proven by clear and convincing evidence,” according to the McNamara Law Office. “Contributions to the plan and other benefits accrued during marriage are community property.”
The best thing about prenups: They set the expectations for marriage and divorce, and can be tailor-made for your own unique set of circumstances. They are also ideal for couples who have been burned once by divorce. There’s no reason why a split can’t be as civil as the proposal.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
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More from Quentin Fottrell:
• My married sister is helping herself to our parents’ most treasured possessions. How do I stop her from plundering their home?
• My mom had my grandfather sign a trust leaving millions of dollars to two grandkids, shunning everyone else
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• ‘Grandma recently passed away, leaving behind a 7-figure estate. Needless to say, things are getting messy’
