Susan Beacham, founder of the Money-Savvy Generation and author of The Millionaire Kid$ Club created a program to help parents and educators teach...
In her recent book, Love & Money: Protecting Yourself from Angry Exes, Wacky Relatives, Con Artists, and Inner Demon, estate management attorney Ann-Margaret Carrozza offers advice for protecting yourself from having a financially devastating battle with a former loved one.
“It comes as a surprise to many that we are more likely to do legal battle with someone we once shared Thanksgiving dinner (or a pillow) with,” she says.
Below are some FAQs Carrozza says will point you in the right direction:
Q. Isn’t a pre-nup unromantic? Why would I want to think about a breakup before I get married?
A. With a 45% divorce rate, going into a marriage without legal protections is insane. A pre-nup can and should cover far more than simply ‘who gets what in the event of a breakup.’ By using some creative ‘lifestyle provisions’ this document can be transformed into a framework for joint goal setting or a mission statement for the couple. This is why I call Pre-nups, Post-nups and Co-habs “Love Contracts”.
Q. What are the weirdest clauses clients have asked to include in their Love Contracts?
A. Weight requirements, infidelity penalties and household budgeting limits
are quite commonplace. Some clients push the envelope with sexual bucket list items, which, as we see in chapter 2 of Love & Money, can have some very unintended consequences.
Q. My fiancé has a lot of assets. I only have debt. Why would I want to have a pre-nup?
A. The pre-nup can ensure that no matter what happens in the relationship, that you have a certain level of financial security. If you are living in a house owned by the other party, do you really want to be worried about homelessness every time you have an argument?
Q. Perhaps one can argue that having a pre-nup is a necessary evil. But doesn’t it seem far-fetched to say that it can lead to a stronger and happier relationship?
A. The contract process should cause a couple to deal with some common issues before they have a chance to snowball into big problems. There isn’t much that bothers folks in the early days of a romance. The contract process requires the couple to learn about things that would otherwise remain unspoken until the time of a crisis. Moreover, by dealing with the financial issues and legally ensuring the future financial security of both partners, we can eliminate a great deal of conscious and subconscious anxiety.
Q. In the book, you say that even happily married couples should create post-nups. Why would they need one?
A. Even happy marriages will end one day. Ask yourself what would happen to all of your assets if your spouse survives you and then remarries? Will his new spouse provide for your adult children? Don’t count on it! I encourage all of my estate planning clients to create a limited post-nup which ensures that the surviving spouse create a pre-nup before taking the plunge again.
Q. I am totally broke. I have no need for a will or trust- right?
A. That depends. Do you have pets and/ or children? If so, we need to have legal documents in place to name legal guardians who would raise our minor children in the event of tragedy. Proper estate planning should also include a care plan for our furry loved ones.
Q. How can I prevent a custody battle over my pet?
A. Without a written plan in place for Fido and Fluffy, a judge will award custody in the same manner that he or she apportions the home theater equipment, elliptical trainer and Ninja blender. A “Pet-nup” can set forth parameters to determine optimal custody in the event of a breakup. These will include who has greater financial resources with which to ensure that the pet is taken care of. Who has more leisure time with which to ensure that pets receive affection and exercise? It is also critically important to deal with who will get your pets upon your passing. A will or trust can provide orphaned pets with as smooth a transition as possible.
Q. Do verbal promises hold up in court?
A. Relying on a verbal promise is like relying on the lottery as your financial retirement plan. The problem with verbal promises is that expectations and recollections will differ wildly in the years following the discussion. Trying to prove the existence and specifics of a years-old conversation when the other party thereto (claims he) doesn’t remember a thing, is an uphill battle. Consider the fact that you are far more likely to do legal battle with a relative or love interest than you are with a stranger. If something is important, put it in writing!
Q. What is a Social Media clause in a Love Contract?
A. This provides a financial penalty for either party intentionally or recklessly sharing or posting embarrassing or lewd content or images of the other. We also use a social media clause to limit the amount of cyber time. Mark Zuckerberg and Priscilla Chan are reported to have such a clause within their pre-nup.
Q. How can a pre-nup actually prevent fights over money?
A. When couples address spending expectations and goals proactively, they can avoid unspoken and simmering tensions that will most certainly erupt into full frontal money warfare.
Q. I am having a baby with my partner, but we are not married, what can I do to protect myself in the event of a breakup?
A. It is critically important that both parents provide for the baby within their estate plans. This will prevent a drawn out court battle wherein the surviving parent may be forced to prove paternity in order for the child to inherit the assets of the deceased parent.
Q. Why is it especially important to have a Pre-nup in a second marriage?
A. The breakup rate for second marriages is more than 60%. Factor in adult children on each side, and we can expect ‘blended family warfare’. Moreover, older adults will have fewer working years ahead to be able to recoup the financial devastation of a legally unprotected breakup.
For more information, visit: mylawyerann.com.