The guiding principles that lawyers offer for prenups are less than obvious, starting with geography. If you own property or reside in multiple states, your prenup should note which state’s laws you would like to prevail in any separation proceedings.
Keep it safe with a postnup.
Postnuptial agreements — contracts you enter into after you’re married — provide a formal way of articulating who owns what in a marriage.
Experts recommend revisiting postnups every time you significantly shift assets, explicitly noting ownership. For example, when taking out a loan, you should ask the lender for a letter stating that the funds are for your separate, non-marital property and that your separate, non-marital property was used as collateral.
While not foolproof, this strategy creates an ongoing paper trail of your intentions and confirmation of your spouse’s ongoing agreement.
Do not pay for most or all of your shared home.
Many couples buy a home. But generosity from a partner in a down payment is sometimes synonymous with handing over half the home’s value down the road.
Nancy Chemtob, an attorney at Chemtob Moss Forman and Beyda in Manhattan, has handled the divorces of celebrities including Bobby Flay, Star Jones and Mary-Kate Olsen. She says the most common mistake couples make with housing is using pre-marital money to purchase a primary residence. Suddenly, the funds become comingled, blurring ownership.
“If you must, my advice is to draft a postnuptial agreement that says, ‘I own two-thirds of this property outright, and the remainder is marital,’” Chemtob said. Also state the ownership split on the deed. If feasible, you could split the down payment evenly and sign a post-nuptial agreement stating that the property will be evenly divided in the event of a divorce.
Understand the ramifications of big gaps in incomes or assets.
Main breadwinners and non-working spouses typically feel most financially violated by divorce, said financial planner Dana Levit of Paragon Financial Advisors in Newton, Massachusetts. If assets or incomes begin to diverge, a trip to the lawyer’s office is essential. Generally speaking, if your incomes and assets are roughly even, a brutal asset split or alimony scenario is less likely.
Not all of these suggestions are easy. But they can help prevent a divorce from becoming a litigious trash fire.
Take the (relatively) smooth divorce of Jordin Wiggins, a 32-year-old naturopath from Toronto. She recently split with her partner of nine years.
“Our contract said that we’d leave with whatever we came in with, and no spousal support. So we divided the profits on our home and went our separate ways,” she said.
Her legal fees cost $2,000. Wiggins was keen to have a prenup because she owns a Toronto women’s health clinic called Health Over All, and wanted to keep 100% ownership.
“I know so many people who stay in relationships because they fear how divorce will affect their business,” she said. “We all think we won’t be the statistic. But we are.”
You can do this. Good luck out there.
This article was provided by Bloomberg News.