Let’s Talk Prenups

Speaker 1 – 00:00
Welcome to EWA’s FinLit podcast. EWA is a fee only RIA based out of Pittsburgh, Pennsylvania. We hope all listeners
of this podcast will benefit as we deep dive into complex financial topics that we will make simplified for you. And
we hope that this really serves as a catalyst so that you can make the best financial planning decisions for your
family and also save time. Welcome everyone. Today I’m joined by Jameson Smith. We’re talking about the
somewhat taboo topic but prenups. So first I figured, you know, fortunately we’ve had the opportunity to serve a lot
of clients, a lot of high net worth clients, a lot of amazing individuals, doctors, executives, retirees, a lot of business
owners. And unfortunately through life, as we know, you know, not all marriages work out.
Speaker 1 – 00:52
Some of them end in divorce and there’s a lot of financial ramifications that occur after that. So I myself have been
through a divorce and so have the firsthand, you know, experience and knowledge of, you know, what having a
prenup versus not having a prenup and what to expect. So first I figured we would break this down, you know, what
happens if you don’t have a prenup and then we’ll get into if you do a prenup, what have we seen, how do we
recommend to navigate the conversation, etc.
Speaker 2 – 01:20
I want to say if you don’t have a prenup, you by default do have a prenup. It just the government’s telling you what
happens.
Speaker 1 – 01:28
No, you’re exactly right.
Speaker 2 – 01:29
Even if you don’t have a prenup, you have a prenup. It’s state by state pacific. And I like the analogy. Go walk into the
DMV to get your driver’s license renewed or whatever you have to do there. Would you want anybody in there making
a decision on your finances and life for you? No, absolutely not. So all the more reason to figure it out on your terms
and not leave it up to the government.
Speaker 1 – 01:54
Yeah, this is a very top tough topic because I think a lot of males, you know, and females are the same. They could
have different assumptions in their mind. Is this person with me because of the money I make? That could be male
or females. This person have the right intentions. Is this person that it’s not the breadwinner, are they going to
provide for me there? It’s a second marriage. They just care about their kids, they actually care about me. So there’s
a lot of, you know, therapy, the type stuff that goes into this. It’s not just about the finances. So we’re going to talk
about both because we’re fortunately, you know, close enough with our clients. We’re not therapists, we’re not
attorneys. We’ll just put that off the get go.
Speaker 2 – 02:29
But we do, we’ve seen this enough.
Speaker 1 – 02:31
Yeah, we’ve analyzed it, we’ve helped people navigate it. We see how certain professionals could take advantage of
situations as well and drag this out. So. All right, should we get started?
Speaker 2 – 02:40
Yeah. So let’s talk about it state by state specific. But you know the Pennsylvania law in Pennsylvania, if you have no
prenup and you get divorced, what happens?
Speaker 1 – 02:52
Yeah, and so this is just generalities again, not attorneys in generalities. We’ve seen it’s going to be a minimum of 50
of asset splits. So if you have a million bucks, each spouse keeps half a million bucks. That’s number one. Now
where that can get really difficult is if there’s a breadwinner that also owns a business because that business may be
worth $10 million, maybe spitting out profits of a million dollars and that gets part of the divorce. Well, that’s five
million bucks right there.
Speaker 2 – 03:22
It’s not liquid.
Speaker 1 – 03:23
Well, a million dollars after taxes is maybe, you know, 580. So let’s just call it 600,000. Well that would take like over
10 years to take. Now we’re taking to buy out your ex. You’re taking 10 years of profits and giving them right to your
just to buy out half of your business. That’s going to stunt anything you want to do in your business. That’s going to
stunt any growth, any ideas, any downturn, like talk about tariffs or market downturns. You have no wiggle room
whatsoever. And so when we’ve seen this get really nasty, we’ve seen forensic accountants get involved value
business and now it’s like, and this can lead to just absolute disasters.
Speaker 2 – 04:02
Paying hundreds of thousands of dollars in.
Speaker 1 – 04:04
Fees to figure this all out and then ultimately yeah, so that’s the kind of catastrophic scenario sometimes if you’re
the breadwinner, you could give up this like 60% of your assets depending on state by state. And again the really
dangerous part of that is if you have non liquid assets. So typically what we see is that there is a balance sheet will
get created. You’ll, those will be adjusted. Most attorneys or courtrooms will take 25% off for IRA balances that are
pre tax. So they’ll adjust the tax values and then they’ll look at, you know, who’s going to stay in the House or maybe
sell the house and split those proceeds. And from there it’s a really negotiation between two attorneys. If you go
down that route.
Speaker 1 – 04:47
Now, we’d recommend go down a peaceful route, work with an advisor, come up with a balance sheet, have
amicable conversations. If you have kids, just make what’s the best interest of my kids. It’s a really centering
question how to make it through this without a lot of side rails that could occur. So you do that balance sheet
analysis. Let’s just say things get split 50. That’s step number one. Step number two is figuring out what alimony is
going to be. Now alimony is. There’s some formulas for it, but that’s highly negotiable as well. You could put it as
part of a higher asset split. You could do it over a couple years, I believe. Nope. So mine we did without any
courtroom. We’ve never been in the courtroom. Me and my ex wife are very amicable.
Speaker 1 – 05:29
We have a goal of, you know, co parenting. Our daughter is now six and a half as possible. And so not to say there
was lots of disagreements and assumptions that were made, but I’ve seen friends or clients go through the process
in courtroom and have things dictated them. And you know, me just give myself example, you know, putting my ego
completely aside and just what’s best for my daughter, best interest for her AB’s having a relationship with her dad,
with her mom and having, you know, two loving households. Right. So if you keep that in the forefront and just say,
well, this is what’s going to happen anyways, just, you know, figure it out as adults. So alimony is often negotiable
and then what’s not? The only thing that can always change is child custody.
Speaker 1 – 06:10
So you know, most like Pennsylvania will revert to 50. Now if one parent is like unfit, it could go to more and then the
child support. So if there’s one breadwinner, it’s a formula and you can just google this. But it can be a monthly
payment until the child is age 18. And that can be revisited, you know, based upon tax returns or you know, based
upon a courtroom. And that can get really nasty real quick. So we have seen it work out where there’s just a general
agreement of like, hey, I’m the breadwinner, I’m going to pay for. And this is not something you have to do.
Speaker 1 – 06:47
But if you have an amicable situation, I’m going to pay for college, I’m going to pay for like the private school or
whatever I’M going to give you X amount per month until 18 and just try to have an understanding if things come up.
That’s the best case scenario. The worst case scenario, I would say, is, you know, up in a courtroom.
Speaker 2 – 07:01
Lose half your assets, your incomes, going.
Speaker 1 – 07:05
A couple times a year. You’re ending up in a courtroom and the courtroom’s dictating exact dates of when you get
each other, exact amounts. You’re handing in your tax returns like to like a. Feels like an audit, like a IRS audit. And
then it just gets really nasty. And the only people that really win in that case are your attorneys, because then they’re
more fights, more hours, more bills versus you could probably end up in a much smarter position if you just are able
to communicate. I’m going to say this firsthand as well. I’m not saying, you know, I’ve done anything perfectly, I
mean, messed up many ways along the way.
Speaker 1 – 07:37
But I think the nice thing about arrangement, if you can do it amicably, is you can just, instead of having a courtroom
say, schedule and say, hey, I plan on taking vacation X, can I make up these days on X. And having a clean
communication system that’s in the benefit of your kid, you can end up in a A plus result versus like a F result.
Speaker 2 – 07:55
Because one of the big variables it impacts the pay is if once, if it’s 50 again, you can do basically what you just said,
split the assets. If one parent proves that they have more than 50% custody, they can be obligated to receive more
money from the other spouse if they’re the breadwinner.
Speaker 1 – 08:17
And here’s the dangerous part about that. Then you’re basically are playing detective. What did your spouse do?
Their whatever, you know, common thing will be like drugs, alcohol. Now you’re playing detective. And now it’s like
your kid is going to see the parents in a courtroom fighting all the time. And then you think about what’s the result
going to be for the kid when they’re outside of the house. And it’s just not a good situation. Forget the money, you
know, forget the attorneys, forget the courtroom, think, okay, what is the best situation for my kid? And like, that ain’t
it.
Speaker 2 – 08:45
Yeah, I’m a child of divorced parents, so I grew up living that. And yeah, I saw it.
Speaker 1 – 08:50
And it’s not, I mean, how did that experience affect you today?
Speaker 2 – 08:55
Well, a lot of ways, but we.
Speaker 1 – 08:57
Don’T need to get deep into it.
Speaker 2 – 08:57
But it’s not what you want.
Speaker 1 – 09:00
Not what you want. Okay. But I mean, obviously you’ve turned that into superpower. And you’re. Yeah, but highly
independent, autonomous. But the reality is a prenup can help you avoid all of this, except the child custody and the
child support. If you have a prenup and you have kids together and they’re below the age of 18, you could still end up
in a courtroom. But the nice thing is all the asset splits are already done in the prenup. All of the, you know, alimony
arrangements are done prenup or postnup. A prenup would be you sign the agreement before you decide to get
married. A postnup. I ended up doing it. You sign the agreement after you’re married. You pretty much said, hey, if we
end up in divorce, once you say it inevitably, probably you will. But.
Speaker 1 – 09:41
And that’s, you know, hopefully that’s for the best. And you know, we wish each other peace in your next chapters.
But the reality is if you don’t have these agreements in place, it can be highly. The unknowns can be astronomical.
And if you’re a breadwinner or not, I mean, if you’re not a breadwinner, you’re wondering, am I going to be okay?
Speaker 2 – 09:59
Oh, yeah.
Speaker 1 – 10:00
And you’re fighting for your life because it’s like, I was used to this lifestyle now. Am I going to have to go down
dramatically, go back to work or. Yeah, yeah. And so like, that’s something I worry about with my daughter is like, I
was a breadwinner and it’s like, okay, I would, I don’t want her to have this huge lifestyle differences before that. So
we’ve made some arrangements to make sure she has like, consistency. She’s in good neighborhood, she’s in a good
situation regardless. And if you’re the high income, it’s like, am I gonna have to work harder? Because now I have to
pay my bills and pay them and like, so there’s just a lot of financial, but also psychological and assumptions. Suicide,
I call it, where you make assumptions. It’s basically a suicide.
Speaker 1 – 10:38
Like we suffer more in imagination than ever in reality. And during this process, you’re going to suffer in a man, your
imagination dramatically. And you add a contentious, like attorneys that are fighting for you. It’s going to go up 10x.
Speaker 2 – 10:50
Yeah.
Speaker 1 – 10:50
So.
Speaker 2 – 10:51
So let’s talk about what a prenup is then. So it’s essentially, you know, prior to getting married, you’re saying okay, if
we get divorced, here’s how we’re going to decide what happens so that the government doesn’t tell us what
happens when things are really emotional and we don’t like each other anymore and things can get, you know, can
get really crazy. So, yeah, anything. I mean, what we can talk ways to structure, but anything else to add on why this
is important?
Speaker 1 – 11:17
Yeah, I think, you know, the how you’re bringing up is super important. Some people don’t believe in them, and I think
that’s. And a lot of we time, oh, my kids will never like. It’s just a statistic.
Speaker 2 – 11:28
Divorce rate is 58% in America.
Speaker 1 – 11:30
Yeah. And I’ve heard some statistics. Oh, that’s going down and that’s off. But I mean, the reality is like more than
50%, we’ve seen probably 30 or I mean, we work with like, what, just under 400 households and we’ve probably seen,
you know, 40 divorces in the last. I’ve done this 15 years. But you’ve been here how many years? Five years. I know
you’ve seen probably 20 of them at this point. So it happens and it does happen to the unexpected, completely
unexpected. So a lot of variables that can go into this, but we recommend, you know, in general follow your. If you
have religious beliefs or whatever. But we recommend having a plan in place. And having a plan in place means a
prenup. And that prenup could be extra fair.
Speaker 1 – 12:14
I mean, it could be more generous than it was before, but then it kind of alleviates. Hey, if we have disagreements or
if we decide this relationship work, we’re not going to let money be the deciding factor of this.
Speaker 2 – 12:25
Yeah, I think how you frame it, like you said, is really important. But the point, the purpose of it is, should my opinion,
how do you protect both parties? How do you make sure both people are taken care of on your terms so that the
government doesn’t tell you how? And there’s different ways to do that and there’s a lot of variables and a lot of. It’s
not an easy conversation. It’s not a quick conversation. It takes time. So there’s some negotiations. But I would say
in general, like, I’ve helped clients structure these and got attorneys opinions on how to do this. And so I would say in
general, here’s a good starting point, and then you negotiate from here is, number one, whatever assets you bring
into the marriage, the time you’re married, hypothetically, say, Matt, me and you’re getting Married, you come.
Speaker 1 – 13:11
Please not use that as a hypothetical.
Speaker 2 – 13:13
All right, Hypothetical.
Speaker 1 – 13:15
I’d say you and your girlfriend are getting married.
Speaker 2 – 13:16
Are getting married. Okay. What assets I bring in at the.
Speaker 1 – 13:20
Time, Hey, I love you, I’m never gonna marry you.
Speaker 2 – 13:22
Are mine. And what assets she brings in at the time are hers. If we get divorced, those assets are mine. Those
assets are hers. Anything that’s accumulated jointly after marriage gets split 50 from there. Wipe out alimony
completely. Or that’s where you can negotiate. You know, if one. If a spouse is going to stop working, how do we take
care of them? The one thing you cannot avoid, like you said, is child support. So there’s a. You could theoretically
structure the prenup where you have the assets split. You’re avoiding alimony, and maybe they’re getting taken care
of with the assets they’re getting that, you know, if one. One spouse is higher income earning, they’re working, the
other spouse is not. You’re giving them part of your assets which you generated the income to earn. But you can’t
avoid child support. So there’s a.
Speaker 2 – 14:08
There’s a child involved. The child support is going to be whatever the state says it’s going to be.
Speaker 1 – 14:12
Yep. And so the further thing. I mean, I’ve heard that and I’ve heard, you know, you. I. And I’ve seen. And I would
recommend. Now there’s. There’s pros and cons to all of this. So I think the more simple one arrangement would be
anything in your name, whether it was accumulated before or after the marriage stays as yours. Anything in her
name before, after the marriage stays as hers. Anything put in joint name is split 50. So this one’s clean because,
like, you could hit a huge biz or she could hit a huge business during the marriage. You could decide to do that
business together. The pro of that is it’s clean. If you see your marriage is kind of going south.
Speaker 2 – 14:57
Keep it in your.
Speaker 1 – 14:58
Yeah, you can keep. You could keep in your name. And that could be a definite pro. It could definitely be a con,
because if instead of working, you’re out, you’re kind of like using that as a scapegoat. So again, there’s no perfect
arrangement.
Speaker 2 – 15:07
No, there’s no perfect.
Speaker 1 – 15:08
But this does give more flexibility. And then, you know, you try to. Basically, the arrangement there was like, you’d
keep all your stuff in your name. She’d keep all the stuff in her name before marriage.
Speaker 2 – 15:17
And.
Speaker 1 – 15:17
And then the kind of understanding would be, is relationships going well. You try to do everything jointly from there.
Like you stuff money into a joint account, you own your house joint, maybe business joint. But you know, if you have
a business that’s already. Because the business is really a dangerous one. It can be so volatile. You got to keep that
out of the equation. But, but that’s one other way. The other way I’ve seen it is like if we stay married a certain
number of years, I personally, I don’t like this because then I feel like. Yeah. Cause then I feel like, you know, is
someone going to stay in it for the wrong reason?
Speaker 2 – 15:44
So it’d be like you could say like zero to five years. There’s nothing. I’m just making this up. You can stretch this if you
want. But zero to five years, there’s nothing five to 10 years, they get, you know, 25%, 10 years on 50%, something of
that metric of the longer you stay married, the more the other person.
Speaker 1 – 16:03
Yeah. So let’s just say so in Pittsburgh, I think a common would be, let’s just say like a doctor marrying like a. So
someone like, let’s say so the woman is making, and this is actually, this is a real life example is making like half a
million dollars. And then the, the husband was making like $100,000. And so this case, it was a 60, 40 asset split.
And then she had to pay. It’s a pretty high number. It was like five or six thousand a month between alimony and then
child support that was with no prenup. And that was like she was trying to pay off school loans. And that one was
pretty tough. We started working with them obviously well after they were married. But navigating that one was.
Ended up being fine. But it was, you know, drawn out attorneys, contentious.
Speaker 1 – 16:50
And we had laid out a plan initially of like, hey, here’s probably what’s going to happen. Just do this and let’s not. And
exactly that happened within like 99%. But then they drew it out for two years. The attorneys like walked away with
like quarter million dollars and said, but anyways, I think the other consideration too is you have to realize like let’s
say you have a, that example, 500, 100. And then let’s say you start having kids and the person making a hundred
thousand decides to stay at home. And if that person stays at home, they’re kind of like pausing their career. And
then let’s say you get divorced and you have a really strong prenup that protects that $500,000 income earner what
out of that person, if all they get is child support, will they be able to live?
Speaker 1 – 17:32
I mean, hopefully they’ll be able to get another job.
Speaker 2 – 17:34
You know, however many years of their career.
Speaker 1 – 17:37
Years of their career. Now it’s like they’re not able to replicate that lifestyle. Their kids are used to the lifestyle, so
now their kids even want to be at the house. There’s all these variations. I think a good prenup has to figure out, you
know, asset. You’re getting married because of you want to be, you know, to become one. You want to become a unit
and you know, a partnership. And so you want to make sure you maintain that feeling, but you also want to make
sure you protect if that partnership fails. So both parties are protected. So I think a good prenup should focus on the
relationship, assuming it’s going to work, but then having kind of the backup plan if it doesn’t work, but making sure
that both spouses feel safe while they’re in it and safe if they exit it.
Speaker 1 – 18:17
Now, if they exit it. In that example, I would say there should be a lifestyle plan. Not like the prenup shouldn’t like
attack like, I need half your business. It should be like, okay, no, I’m gonna make sure that we have kids together, that
you’re able to live a similar lifestyle that you were used to. It doesn’t have to be like that hot, like. Yeah, does that. So
there has to be these really detailed, tough conversations.
Speaker 2 – 18:38
And there’s like we said, there’s no perfect solution. I, you know, I haven’t got to the point where I have to structure a
prenup quite yet. But you’re already talking about it, I think. Oh, yeah. I think it’s a good thing to, you know, understand
and not don’t try make a big mistake. But I think one idea I’ve heard from an attorney that might, to me right now
makes a lot of sense is like a one time percentage of net worth at the time of divorce. So, you know, let’s say
someone has 5 million bucks and you’re gonna, you know, give them 25% of that. So that’s what, 1.25? Yeah, 1.25.
One time. Obviously, if there’s a kid involved, you’re paying child support and then you’re done with it, ideally, you
know, whatever. And again, I just made that number of 25%.
Speaker 2 – 19:27
Whatever the percentage is enough that person is good and you’ and both people are okay. But that’s one solution I
think that could make a lot of sense. And yeah, there’s no, it’s very case by case. There’s no, there’s no right answer
at all.
Speaker 1 – 19:42
Yeah, absolutely. So I think we talked about a lot about. So the other important aspect too of you know, a prenup is,
could be generational wealth. So if one spouse is going to be inheriting a business or real estate or other valuable
assets, if those assets go straight to you, let’s just say, hypothetically, let’s say you inherited a couple million dollars
and then it just goes straight to your name and you don’t have a prenup and then you get divorced after the fact.
Those are now marital assets. And so your wife, if you get divorced would be eligible for at least half of that.
Speaker 2 – 20:16
That’s a good point. I’ve heard this a number of times from high net worth clients that are older with kids. Is when
we’re doing their estate planning, they, you know, obviously we’re doing trust planning to try to protect this, but
they’re adamant about, we’re like, you know, we’re having conversations with our children that like you have to get a
prenup if you want to inherit this money.
Speaker 1 – 20:37
And the, the interesting thing about that too is you kind of get a feeling when you’re doing those conversations of
how those parents feel about their kids marriages at the time. But it’s like, no, that one’s fine. Well that one we need
to try. And so there’s like, we call them backdoor prenups where like if you’re a parent passing on millions of dollars
to your kid, you can put it in a trust and irrevocable trust. So if your kid doesn’t have a prenup, then it stays in the
bloodline. Now that kid could decide to take it out of the trust or you could say, you know, interest only out of the
trust. So there are ways to protect. But again, I think very conversation full of paradoxes because it’s like money
should be supporting life by design, not like dictating other people’s decisions.
Speaker 1 – 21:18
So these are very artful conversations.
Speaker 2 – 21:21
So do you think generalities here? What do you think everybody should have a prenup?
Speaker 1 – 21:29
I think just the people that get divorced should have a prenup. Just like just the people that die should have life
insurance. I’m just kidding. You know, that’s tough. I don’t want to, I don’t want to make a generality. I would say as
long as it doesn’t get in the way of your personal values or belief or religious beliefs, then I would have a prenup. I
would have it very well thought out. I’d make sure that both parties walk away, feel. Feeling good about it, feeling
unified in the marriage they’re about to go into. And if it’s a. If it. If it turns into a contentious conversation or one
spouse, like, I’m not getting married, it’s probably a good thing.
Speaker 1 – 22:04
Is probably, you know, if I wouldn’t have a tough conversation, there’s going to be conversations 10 times harder than
a prenup that happened during your marriage. And so I’d say it’s a pretty good stress test of how well you
communicate and if you communicate well during tough times.
Speaker 2 – 22:19
Yeah. And one other example I just thought of at a client. Divorced. Divorced like five years ago, I think. And he runs a
couple successful businesses. And while he was married, he was reinvesting all of the profits back into the
business. He was living on maybe 300,000 a year when he was. When he was married. So, you know, comfortable
lifestyle, but not. Wasn’t taking out as much money as he could have. And so two years ago, sells his business for a
lot of Money. And the 2020. I guess it was 2024. Beginning of 2024. 2024 tax return shows millions of dollars hitting
as income because he sold his business as capital gain. And so now there’s a fight over, well, your tax return last
year says you made $10 million. We’re entitled to a bunch of money.
Speaker 1 – 23:10
Crazy amount of child support.
Speaker 2 – 23:11
And he’s like, well, a lot of my money went to taxes to put, you know, up from that business sale. He walked away
with, you know, a few million dollars. He’s comfortable. But that. That income wasn’t there at the time of marriage.
And so it’s like if you know, if there’s no prenup in place, those types of things can happen where, you know, you have
to pay some of that back pretty much.
Speaker 1 – 23:30
So they’re going after the child support or they’re going after. Because of the income jumping, or they’re going after
actual.
Speaker 2 – 23:36
Yeah, I think it’s child support. Child support, yeah.
Speaker 1 – 23:38
Yeah. Those formulas are pret. Yeah.
Speaker 2 – 23:41
They’d owe more for child support.
Speaker 1 – 23:43
Yeah. Got three kids. I mean, you could owe.
Speaker 2 – 23:45
Yeah. Like 30 or 30% of your income.
Speaker 1 – 23:47
Right.
Speaker 2 – 23:47
No, child support, I think, is capped at like 24 or something.
Speaker 1 – 23:51
And then Alameda, 24,000amonth. Oh, 24, I think. Yeah. I’m not sure I just know it’s state by state. You’re a seven
figure income earner. It’s insane.
Speaker 2 – 23:58
Yeah, yeah. You could be paying 30 to 40% of your income to the other person. Yeah, that’s gross. Gross income.
Speaker 1 – 24:07
Gotcha. And child support and alimony are not tax deductible either. This is after tax money. So you’re paying
5,000amonth. I mean that’s 100 grand of gross to get to 5,000amonth that you’re paying. So that’s tough. Yeah. But
it’s also tough for the other side because maybe they’re used to this lifestyle, they have three kids and they’re trying
to make ends meet. So you have to look at both sides, you know.
Speaker 2 – 24:27
Yeah. And I want it like, I think a big misconception too about prenups is like the hiring higher income earning
spouse wants to protect themselves and like essentially screw every other person. And that’s not, I’m sure there are
people that do that, but for the most of the time, you know, I want to make that clear. Like that’s not the.
Speaker 1 – 24:48
Yeah.
Speaker 2 – 24:49
Not what we’re recommending or what we think is reasonable. Like make sure both people are taken care of
comfortably.
Speaker 1 – 24:56
Absolutely. The other thing I’m going to say for if you’re not the breadwinner and let’s say you’re married to a
breadwinner and let’s say that breadwinner has school loans, this has happened to a client. Again, we worked with
them after they got married, got divorced. The breadwinner had like $350,000 school loans. And that really helped
the breadwinner because a balance sheet is assets minus liabilities. Right. So then a million dollars in net worth, 350
of school loans that the breadwinner was going to keep. Now your net, your net worth is 650. So now instead of
getting half of a million that’s liquid, he’s getting half of 650, so 325 in that case, so $175,000. So you have to also
watch out in the prenup as far as debt obligations. How does that get factored into?
Speaker 1 – 25:45
Is the debt going to be part of that division? And so again that’s the importance of having a prenup in place is
working this all out and not having a disaster unfold if things don’t work out in the back end.
Speaker 2 – 25:58
Yeah.
Speaker 1 – 25:58
So I think spending 2,500 to 10,000 upfront, if there’s a Complex case. And you want a business and multiple versus,
you know, spending hundreds of thousands of dollars potentially of attorney fees as you go through the system,
especially if you have kids. Now we’re talking about financials, we’re talking about kids, we’re talking about how fitted
you are as a parent, we’re talking about scheduling, we’re talking about all this stuff being dictated on YouTube
versus if you have one. So I love, I think that’s better. Easy decisions, hard life. Hard decisions, easy life. So the easy
decisions. Oh, let’s not talk about this. This is too tough. I don’t want to offend him or her.
Speaker 1 – 26:34
That’s going to lead to a hard life if things don’t work out hard decision is have this conversation now, whether you
sign a prenup or not, like have the conversation that’s going to lead to an easier partnership or marriage later on.
Speaker 2 – 26:47
I would say, you know, I’m definitely not, I’m not saying this in anti marriage type of way. Like I think marriage can be
a great thing. Go ahead and get married. But if you’re going to jump, skydive out of an airplane and there’s a 50%
chance that you died, 58% chance that you died, would you do it?
Speaker 1 – 27:05
No.
Speaker 2 – 27:05
But if you did it, you’d probably make sure you had a really good parachute and how to limit those probabilities. And I
think that’s very similar to marriage without a prenup. There’s 58% chance just statistically that it’s not going to work
and you know, have that parachute on.
Speaker 1 – 27:20
I think there’s several things in society that are crazy that like. And this is one of them, right? It’s like you, this is your.
If you’re a doctor or business owner, if you’re a neurosurgeon, it’s not. Your highest risk is not getting sued. That’s
very low comparatively. You getting divorced and getting wiped out, vice versa. If you’re not, if you’re not a bread and
you’re married to making sure you’re okay. So have this conversation. And the same thing with a common sense of
like, it just, it’s not something that we should do. And then it’s like, think about like this crazy analogy, but how widely
accepted alcohol is used in our society. It’s horrible for you. Yeah, but it’s like there’s some of these common things. I
think like a prenup is one of those. Like you gotta have the conversation.
Speaker 1 – 28:04
You gotta, if the majority is not doing it, means you probably should be.
Speaker 2 – 28:08
Doing the other thing, too. You don’t have to tell anybody you’re getting prenup. Like, you can do it, and it’s.
Speaker 1 – 28:13
Not a public document.
Speaker 2 – 28:14
Consult, you know, your close friends or attorneys or advisors, and, like, you don’t have to make it public to your
friends and family that you’re getting a prenup. You can get it and not talk about it. And nobody knows or judges you
100%.
Speaker 1 – 28:28
So I’m going to say a couple things here. One other benefit of having a prenup, as far as, like, you know, making sure
that the relationship can. Can stand the tough conversation, is to have a prenup executed. You need to disclose your
assets. And so how many times have you seen where people have gotten married and then they find out years later,
oh, my spouse has $60,000 of credit card debt. Wouldn’t that be nice to know up front? Like, wouldn’t that be nice to
know that my spouse is, like, telling me the truth about this?
Speaker 2 – 29:02
Yeah.
Speaker 1 – 29:03
And that’s not a personal example. It’s just, like, we’ve seen that happen. And a prenup forces full transparency into
what is the number one stress in America, which is finances. Financial stress.
Speaker 2 – 29:16
So I think any relationship, whether it’s marriage as anything like transparency and honesty and truthfulness is kind
of the key to vulnerability, is the key to doing that. And so there’s no better way than to have the conversation and
open the books up.
Speaker 1 – 29:30
And 100%, and I think the opening the books up in full transparency is super important. Then also, just the mere fact
of, like, having the conversation, whether you sign a prenup or not, have the conversation before things get stressful,
because once they get stressful, you’re not always operating at the highest level.
Speaker 2 – 29:49
And it’s a weird thing, too, like, love and marriage. Like, you’re the closest you’ve ever been to somebody. They’re your
life partner. They know everything about you.
Speaker 1 – 29:58
Yep.
Speaker 2 – 29:59
All of your secrets, and then all of a sudden, that flips. And like, all of this, I’ve seen. We’ve seen this. All of those
things that were sacred between you and your spouse now are public information in a courtroom that’s being used
against you. So it can get messy really quickly and emotional and south.
Speaker 1 – 30:16
Absolutely. So generally speaking, you know, six to 12 months before you get married, this should not be a last, like,
the week before the marriage, Private, calm setting, not during wedding planning. And then I would just frame the
conversation about, it’s our future together, it’s protecting. I Plan on being with you for the rest of my life. But, you
know, statistically, let’s make sure that we’re both on the same page. And this will, this conversation will clearly show
if you’re not on the same page, should be part of your financial plan. You know, involve your financial advisor.
Typically in some states, you don’t have to get two attorneys. You could have one, but generally speaking, you’re
going to want to have to want each party to have their own attorney.
Speaker 1 – 30:57
I think the framing that you tell your attorneys and be super important because the more you fight, the more the
attorneys bill. So if you have the conversation, there’s lots of good resources out there. You know, talk to an advisor
that has the knowledge, say, what should this look like in general? And then just have the attorney say, hey, I know
this may not be fair. I just want you to, I want your opinion, but I want you to sign off on this and keep it as peaceful
as possible.
Speaker 2 – 31:21
Yeah. Yeah. And that’s in general, attorneys, if you go with a strategy, you’re going to save money because you’ve
already thought it through and it’s just like, hey, look this over and there’s not a lot of back and forth and hourly bills.
Speaker 1 – 31:32
Yeah. And do it yourself. Like, don’t involve like, and if you’re inheriting a bunch of assets, but like, the worst thing you
can do is like, have your, both your parents involved.
Speaker 2 – 31:41
Yeah, don’t do that.
Speaker 1 – 31:42
Yeah. Just. It’s a good stress test of like, are you ready to get married? Can you have conversations between the two
of you without involvement, like public serving everybody else their opinion and what they’ve done? Yeah, I think
that’s a potentially a red flag.
Speaker 2 – 31:57
Yeah.
Speaker 1 – 31:57
So, okay. Any other, any other thoughts before closing up? I think the reality is, like, have the conversation. I think this
is a fit for most people as long as it doesn’t go against your religious or beliefs.
Speaker 2 – 32:12
Yeah. I think just in general, it’s a, there’s a bad stigma on prenups just in society. Society and have the conversation.
And again, it’s to protect both parties. It doesn’t have to be, it doesn’t have to be something where somebody else is
not getting taken care of. But I just think there’s a lack of understanding that if you don’t have a prenup, you have a
prenup with the government. So it’s like people just don’t fully understand how it actually works if you get divorced.
So educate yourself, research your state and see like, hey, what. What actually happens if we don’t have this in place
and then go from there and build it how you want it.
Speaker 1 – 32:51
Absolutely. Yeah. And again, I think the. The privacy could be important because your parents or her parents or
partner’s parents could be totally for this or totally against it. So it’s just a highly polarized, polarizing conversation
that I think if you get it right, you’ll hit a sweet spot. And if you get it wrong, it’ll give you the opportunity to
communicate. Learn how to communicate during tough times.
Speaker 2 – 33:14
And two, once this is in place, you can review these and change them whenever you want.
Speaker 1 – 33:18
So your prenup can turn into a postnup? Yeah, yeah. You can make adjustments after you’re married. We’ve seen
that happens all the time. You’re feeling really good. Say, you know, someone’s on a second marriage and they’re like,
I really want to protect myself. And then they get married, and then the wife’s or the husband’s not happy, and. And
they’re feeling good. They can adjust it, make it more. There’s a huge income increase. They can adjust it. That’s
happened all the time.
Speaker 2 – 33:43
That could be a whole.
Speaker 1 – 33:43
Not.
Speaker 2 – 33:43
We didn’t even think of this. That could be a whole nother episode. If you’re on your second marriage and you have a
lot of wealth, how do you do this? That’s an even more complicated, nuanced.
Speaker 1 – 33:51
Yeah, I think that. That the prenup, the need for a prenup in general is probably even more important on your second
marriage because your assets have already gotten split in half once. Now it’s twice. And now if you’re trying to, like,
protect kids, but also, like, settling that next partnership, making sure that everyone is. Is provided for and protected,
and feelings, financials, all kinds of things get, like, at competition with each other during that.
Speaker 2 – 34:16
So I could be wrong on this, but I think I’m almost certain the probability of a divorce on a second and third marriage
is, like, way higher than it goes.
Speaker 1 – 34:24
Higher. Yeah. There’s some people now that are like that, arguing with those. Reality is, it’s a greater than 50%
probability for any marriage in America historically. We wish you the best, and let’s have a plan in place to make sure
that the best is executed well and there’s mutual understanding. And if, God forbid, it doesn’t work out, we got the
plan in place as well, so. Well, please reach out if you have any questions and look forward to catching everyone next
week. Thanks for tuning in to our podcast. Hopefully you found this helpful. Really hope this is as beneficial and
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and please share with any friends or family members that would also find this beneficial. Thank you very much.