Prenup question -- minimal assets?

[Anonymous]

My fiance wants to sign a prenup that protects the investment he made in the down payment of our home. Other than that though, there aren't really any major assets for him to even protect. He has a 401(k). Both of our names are on the home. Do I need to get a lawyer and execute a legal document just to protect his ~$70k on a shared home? I don't really object to it, it is his money, it just seems weird to me. I'm not sure he even really understands what a prenup entails (nor do I, really, but I know it's probably more than just a matter of getting a paragraph-long document notarized).

[Anonymous]

Super weird.

The only thing I can think of is that he's being asked by his parents to get one, so when he does get assets from them while they are alive (or dead), you can't touch it.
Does he own his own business?

[Anonymous]

Is it very general, or does it specify the house down payment and 401k?

Maybe his family is wealthy, but he hasn't told you?

[Anonymous]

His parents do not have any assets, he doesn't have his own business, there is no secret hidden wealth. He really seems to just want to protect the down payment money. That's actually why I'm not particularly opposed -- it's not really money I had much of a hand in helping him generate. If he was trying to block me from money he made while we were married it would be really different, since I'm helping him get through grad school, etc., but that's not the case. I think he just has a vague idea of protecting this down payment money and no real legal knowledge of prenuptial agreements.

[Anonymous]

Yes, you need a lawyer to do this. First, there are a bunch of legal formalities that need to be observed for a pre-nup to be legally binding. Second, there are a bunch of factors to consider in how his share of the house is treated if you divorce. If his $70k represents 10% of the current value of the home, does that mean if you divorce he gets 10% of the value then, representing the appreciation on his share? Or does he get just his $70k back plus an amount of appreciation equivalent to what he would have earned if he'd put it in an index fund. If the house has lost value at the time of divorce, does he still get his full $70k, or a lesser amount?

Further, if you'd be giving up rights to something you'd otherwise be entitled in a divorce, what protections will the pre-nup include to make sure you'd not getting the short end of things later?

[Anonymous]

Anonymous wrote:His parents do not have any assets, he doesn't have his own business, there is no secret hidden wealth. He really seems to just want to protect the down payment money. That's actually why I'm not particularly opposed -- it's not really money I had much of a hand in helping him generate. If he was trying to block me from money he made while we were married it would be really different, since I'm helping him get through grad school, etc., but that's not the case. I think he just has a vague idea of protecting this down payment money and no real legal knowledge of prenuptial agreements.

He had $70k to put toward a downpayment but you're helping him pay for grad school? I think if you're going to do a pre-nup, there needs to be come kind of off-set for the financial support you've given him pre-marriage that let him keep his money tied up in a house without taking on additional debt.

[Anonymous]

Does he anticipate to make more money than you after school?

In my opinion, 1 million plus would be my threshold to consider a prenup, or half million if you didn't work or if you were bad with money.

[Anonymous]

Has he had a lawyer draft a proposed prenup or even consulted with a lawyer about this, or is it just a vague "I think we should sign a prenup?" If it's still vague and he hasn't actually taken steps to have it done, the ball is in his court. I'd probably sit tight and see if he actually acts on it. In the meantime, you can say something noncommittal like "I'm happy to consider it. Let me know when you've had a lawyer draft up terms."

If he does follow thru, you definitely need your own lawyer (don't sign anything without meeting with one). And you need to decide if you're willing to sign it.

[Anonymous]

I don't think it's that weird, and I would sign it. Does it say something like if you divorce, he gets $70kand then you split the rest? Seems fair

[Anonymous]

OP your perspective is very mature. I'd hate to spend legal fees on protecting $70,000. Let your fiancé pay for the pre-nup. The hard part is you really need two attorney's - one for him and one to protect your interests. I'm not a lawyer but I'd see if you can just draft a notarized agreement that if you divorce and sell the house whatever equity exists on the sale he gets the first $70,000.

[Anonymous]

Anonymous wrote:Does he anticipate to make more money than you after school?

In my opinion, 1 million plus would be my threshold to consider a prenup, or half million if you didn't work or if you were bad with money.

He makes more than me now (a little under 2x my salary) and his salary will increase with his graduate degree(s). Unless I drastically change careers he will likely always make more money than me. I'd be pretty surprised if he raked in $1M a year, but I guess it's not outside the realm of possibility some day.

He had $70k to put toward a downpayment but you're helping him pay for grad school? I think if you're going to do a pre-nup, there needs to be come kind of off-set for the financial support you've given him pre-marriage that let him keep his money tied up in a house without taking on additional debt.

Our money already is pooled, so in my mind, I consider that supporting him in grad school, because it's OUR money that's going toward his tuition, save for some stipends from his employer. He makes decent money but I think he would struggle to pay a $4k mortgage + grad school + all other financial obligations on his own. He might disagree because 1) he makes more money and 2) he's much better with money, but that's how I look at it. Am I incorrect?

Yes, you need a lawyer to do this. First, there are a bunch of legal formalities that need to be observed for a pre-nup to be legally binding. Second, there are a bunch of factors to consider in how his share of the house is treated if you divorce. If his $70k represents 10% of the current value of the home, does that mean if you divorce he gets 10% of the value then, representing the appreciation on his share? Or does he get just his $70k back plus an amount of appreciation equivalent to what he would have earned if he'd put it in an index fund. If the house has lost value at the time of divorce, does he still get his full $70k, or a lesser amount?

Further, if you'd be giving up rights to something you'd otherwise be entitled in a divorce, what protections will the pre-nup include to make sure you'd not getting the short end of things later?

These are really good points, thank you.

[Anonymous]

Anonymous wrote:OP your perspective is very mature. I'd hate to spend legal fees on protecting $70,000. Let your fiancé pay for the pre-nup. The hard part is you really need two attorney's - one for him and one to protect your interests. I'm not a lawyer but I'd see if you can just draft a notarized agreement that if you divorce and sell the house whatever equity exists on the sale he gets the first $70,000.

Well thank you. I am certain he has not even considered legal fees. The bolded is pretty much exactly what he wants to do. Like I said, it's his money, I just don't want to be screwed out of something I'm entitled to in the future.

[Anonymous]

I feel for you OP. Over 30 years ago I didn't have a nickel to contribute to our down payment. My fiancé, now my DH, came up with the money on his own and never blinked except he did ask where my earnings had gone but that's another story! You have a very good attitude and just need to find the simplest solution.

[Anonymous]

Anonymous wrote:

Anonymous wrote:He had $70k to put toward a downpayment but you're helping him pay for grad school? I think if you're going to do a pre-nup, there needs to be come kind of off-set for the financial support you've given him pre-marriage that let him keep his money tied up in a house without taking on additional debt.

Our money already is pooled, so in my mind, I consider that supporting him in grad school, because it's OUR money that's going toward his tuition, save for some stipends from his employer. He makes decent money but I think he would struggle to pay a $4k mortgage + grad school + all other financial obligations on his own. He might disagree because 1) he makes more money and 2) he's much better with money, but that's how I look at it. Am I incorrect?

Why is his saved money "his" money, but your money that you can't save as your own because you're helping finance his grad school "pooled" money? There is a significant disconnect here in how you guys are treating his money and your money, and I'm concerned that this could come back to bite you later if you divorce. I'm not giving you legal advice because you're not my client and I don't know that I'm even licensed in your jurisdiction, but as an attorney, I would not recommend that a client of mine in your shoes go ahead with this plan.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:He had $70k to put toward a downpayment but you're helping him pay for grad school? I think if you're going to do a pre-nup, there needs to be come kind of off-set for the financial support you've given him pre-marriage that let him keep his money tied up in a house without taking on additional debt.

Our money already is pooled, so in my mind, I consider that supporting him in grad school, because it's OUR money that's going toward his tuition, save for some stipends from his employer. He makes decent money but I think he would struggle to pay a $4k mortgage + grad school + all other financial obligations on his own. He might disagree because 1) he makes more money and 2) he's much better with money, but that's how I look at it. Am I incorrect?

Why is his saved money "his" money, but your money that you can't save as your own because you're helping finance his grad school "pooled" money? There is a significant disconnect here in how you guys are treating his money and your money, and I'm concerned that this could come back to bite you later if you divorce. I'm not giving you legal advice because you're not my client and I don't know that I'm even licensed in your jurisdiction, but as an attorney, I would not recommend that a client of mine in your shoes go ahead with this plan.

Good points, thank you. I'm starting to think I do need to see a lawyer. Yes, there is some disconnect in how we view money and that's why I didn't automatically say yes even though I don't disagree with the idea on its face. The money that went toward the down payment was liquidated from his 401(k). Some of it he paid back but some he did not. I disagreed with the wisdom in doing that, but his money, and not really related here, in my opinion (money was saved before we combined finances).