Explain to me the financial risk of SAH if partner is a high earner

[Anonymous]

Anonymous wrote:

Anonymous wrote:Get a post-nuptial agreement before you stay home.

This

+1000.

And I would not depend on future earnings.

Do you have enough net worth today that will make you comfortable if you were to go your separate ways today?

[Anonymous]

NP. My sister didn’t quit working, despite her desire to and her husbands desire for her to, until they could put 5M explicitly in her name (they have over 10 M in assets). That seems low risk to me.

If the working parent is making 2M and you have 6M in assets (all earned during the marriage, so half or close to half would go to SAHP) I don’t see the risk.

[Anonymous]

Anonymous wrote:Assume the following:
Two people have been together for 10+ years and have small kids
Parent wanting to SAH has a professional degree, but earnings likely would never exceed 150K
Working parent has a stable job (think equity partner at law firm) earning 2M+ annually

What is the financial risk of SAH? If they divorce the SAHP will get at least some alimony and half their shared assets earned during the marriage, which would be significant.

I understand the many reasons working is still worthwhile, but it doesn’t seem to me there’s a big financial risk, unless I’m missing something?

This is state-dependent.

But from what I hear from a good friend who is a high-value divorce attorney: one of the big risks is that people in marriages have a very hard time predicting how their spouse will behave in divorce. Even if the law is on your side, spouses often go absolutely nuclear in divorce. The net result is it can sometimes take years to get the money that a SAHM spouse is entitled to, if it is ever found at all. People move money offshore, put it into bitcoin and launder it, ask for bonuses in cash, sell property to relatives at deep discounts, etc. Anything to hide assets that can be done, is done. And they gaslight too (“I didn’t get paid for consulting, just an honarium.”).

You can sometimes uncover this if you have a good forensic accountant but you have to have the cash to hire one. You also need cash to pay an attorney.

In short there is a difference between what you are legally entitled to and what you’d ever see in a contentious divorce.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Assume the following:
Two people have been together for 10+ years and have small kids
Parent wanting to SAH has a professional degree, but earnings likely would never exceed 150K
Working parent has a stable job (think equity partner at law firm) earning 2M+ annually

What is the financial risk of SAH? If they divorce the SAHP will get at least some alimony and half their shared assets earned during the marriage, which would be significant.

I understand the many reasons working is still worthwhile, but it doesn’t seem to me there’s a big financial risk, unless I’m missing something?

This is state-dependent.

But from what I hear from a good friend who is a high-value divorce attorney: one of the big risks is that people in marriages have a very hard time predicting how their spouse will behave in divorce. Even if the law is on your side, spouses often go absolutely nuclear in divorce. The net result is it can sometimes take years to get the money that a SAHM spouse is entitled to, if it is ever found at all. People move money offshore, put it into bitcoin and launder it, ask for bonuses in cash, sell property to relatives at deep discounts, etc. Anything to hide assets that can be done, is done. And they gaslight too (“I didn’t get paid for consulting, just an honarium.”).

You can sometimes uncover this if you have a good forensic accountant but you have to have the cash to hire one. You also need cash to pay an attorney.

In short there is a difference between what you are legally entitled to and what you’d ever see in a contentious divorce.

This makes sense to me.

But this would be true even if the SAHP continued working. If she’s working she has say 100K income to fall back on but still presumably takes a MAJOR lifestyle hit.

[Anonymous]

State mandated levels of child support are very low compared to what it really takes to raise a child. Think bare minimum in terms of food, housing, etc. Also, divorced parent is not legally obligated to pay for tutors, out of network medical care, private school or college nor, in many states, any child support beyond age 18. (Although DC mandates child support until age 21).

[Anonymous]

Anonymous wrote:NP. My sister didn’t quit working, despite her desire to and her husbands desire for her to, until they could put 5M explicitly in her name (they have over 10 M in assets). That seems low risk to me.

If the working parent is making 2M and you have 6M in assets (all earned during the marriage, so half or close to half would go to SAHP) I don’t see the risk.

Very well done!

This is the only kind of situation where one should consider ( i mean from a financial point of view) quitting their career to stay home.

5 mil would be the minimum for me too.

[Anonymous]

One thing you might be missing is that your assumptions were accurate 20 or 30 years ago, but not now. Judges now often assume a SAHP with a degree can just hop back into the workforce and award alimony and child support accordingly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Assume the following:
Two people have been together for 10+ years and have small kids
Parent wanting to SAH has a professional degree, but earnings likely would never exceed 150K
Working parent has a stable job (think equity partner at law firm) earning 2M+ annually

What is the financial risk of SAH? If they divorce the SAHP will get at least some alimony and half their shared assets earned during the marriage, which would be significant.

I understand the many reasons working is still worthwhile, but it doesn’t seem to me there’s a big financial risk, unless I’m missing something?

This is state-dependent.

But from what I hear from a good friend who is a high-value divorce attorney: one of the big risks is that people in marriages have a very hard time predicting how their spouse will behave in divorce. Even if the law is on your side, spouses often go absolutely nuclear in divorce. The net result is it can sometimes take years to get the money that a SAHM spouse is entitled to, if it is ever found at all. People move money offshore, put it into bitcoin and launder it, ask for bonuses in cash, sell property to relatives at deep discounts, etc. Anything to hide assets that can be done, is done. And they gaslight too (“I didn’t get paid for consulting, just an honarium.”).

You can sometimes uncover this if you have a good forensic accountant but you have to have the cash to hire one. You also need cash to pay an attorney.

In short there is a difference between what you are legally entitled to and what you’d ever see in a contentious divorce.

This makes sense to me.

But this would be true even if the SAHP continued working. If she’s working she has say 100K income to fall back on but still presumably takes a MAJOR lifestyle hit.

Atleast shed have 100k a year to count on, not an entry level job at 50.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Assume the following:
Two people have been together for 10+ years and have small kids
Parent wanting to SAH has a professional degree, but earnings likely would never exceed 150K
Working parent has a stable job (think equity partner at law firm) earning 2M+ annually

What is the financial risk of SAH? If they divorce the SAHP will get at least some alimony and half their shared assets earned during the marriage, which would be significant.

I understand the many reasons working is still worthwhile, but it doesn’t seem to me there’s a big financial risk, unless I’m missing something?

This is state-dependent.

But from what I hear from a good friend who is a high-value divorce attorney: one of the big risks is that people in marriages have a very hard time predicting how their spouse will behave in divorce. Even if the law is on your side, spouses often go absolutely nuclear in divorce. The net result is it can sometimes take years to get the money that a SAHM spouse is entitled to, if it is ever found at all. People move money offshore, put it into bitcoin and launder it, ask for bonuses in cash, sell property to relatives at deep discounts, etc. Anything to hide assets that can be done, is done. And they gaslight too (“I didn’t get paid for consulting, just an honarium.”).

You can sometimes uncover this if you have a good forensic accountant but you have to have the cash to hire one. You also need cash to pay an attorney.

In short there is a difference between what you are legally entitled to and what you’d ever see in a contentious divorce.

This makes sense to me.

But this would be true even if the SAHP continued working. If she’s working she has say 100K income to fall back on but still presumably takes a MAJOR lifestyle hit.

Yes, this is a risk in any marriage where there is a huge disparity in earnings. It is one of the costs and risks of being in a disproportionate marriage.

[Anonymous]

Anonymous wrote:Alimony is not really a thing. You would get child support.

Risk is you put career on hold and can't ever get it back. If you get a divorce you get 1/2, then child support, then the kids turn 18 and no more monthly payments. You have to support yourself and 10-15 years later, that 1/2 is gone bc you bought a house with it. You have little earning power.

Prob not that huge of a risk if you aren't on the brink of divorce, TBH.

Obviously spousal support is not a guarantee, but every SAHM I know in this area who has gotten divorced has gotten spousal support for at least five years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP. My sister didn’t quit working, despite her desire to and her husbands desire for her to, until they could put 5M explicitly in her name (they have over 10 M in assets). That seems low risk to me.

If the working parent is making 2M and you have 6M in assets (all earned during the marriage, so half or close to half would go to SAHP) I don’t see the risk.

Very well done!

This is the only kind of situation where one should consider ( i mean from a financial point of view) quitting their career to stay home.

5 mil would be the minimum for me too.

Unless this was drawn up as a formal transfer in some sort of post-nup, just “putting it in her name” doesn’t mean much. If not done correctly, he can claw it back. And it’s usually not done correctly.

[Anonymous]

Anonymous wrote:State mandated levels of child support are very low compared to what it really takes to raise a child. Think bare minimum in terms of food, housing, etc. Also, divorced parent is not legally obligated to pay for tutors, out of network medical care, private school or college nor, in many states, any child support beyond age 18. (Although DC mandates child support until age 21).

Sorry, but any dad making $2m who is going to screw their kids over is not worth being around. I’d rather live in a studio with my kids than be around an a hole like that.

[Anonymous]

Nothing is guaranteed in life. Nothing. Be as self sufficient as possible financially, emotionally, socially, spiritually. At the end of the day, the only person you always have is you. Of course, family and community are important for many reasons, including when you need a safety net. But the most important thing is not to lose yourself.

[Anonymous]

The way I've seen this play out is that the high earner spouse limits the funds that the lower earning spouse has access to during the divorce, then they hire a shark and slow the process down, so it could take years for c/s and alimony to be decided and during that time the low-earner is also racking up high legal bills. Additionally, I know a number of cases where the high earner threatened to pursue full custody with their endless resources and got the low-earner to settle for less in exchange for 50/50.

[Anonymous]

Anonymous wrote:

Anonymous wrote:State mandated levels of child support are very low compared to what it really takes to raise a child. Think bare minimum in terms of food, housing, etc. Also, divorced parent is not legally obligated to pay for tutors, out of network medical care, private school or college nor, in many states, any child support beyond age 18. (Although DC mandates child support until age 21).

Sorry, but any dad making $2m who is going to screw their kids over is not worth being around. I’d rather live in a studio with my kids than be around an a hole like that.

Your kids might not agree, especially if they are teens.

And people become a-holes in divorce.