Until Death…or Divorce…Do Us Part

Getting married? Concerned about avoiding some of the financial nightmares you read about in case your marriage is one that ends in divorce?

Be careful about gifts or loans from family.  If your family is going to gift or lend you $30,000 for a down payment on that house you and your spouse are buying, you should consider protecting that money so that half of it doesn’t end up with your spouse in the event of divorce.  Most families would never choose to have “family” money end up in the hands of their child’s estranged spouse, but you are taking that risk with your family’s money when you receive gifted or loaned money without documenting that intent if there is a divorce.

If you plan to be an “at home” parent raising the children, think carefully about the financial impact of this decision.  If you and your spouse divorce, your rights and financial lifestyle may be significantly diminished in light of the recent alimony reform law.  Even if you are a dependent spouse without any earning capacity, you may be on your own financially if you cohabit with someone after a divorce.  You are likely to be on your own financially when your former spouse reaches social security retirement age (even if he or she continues to work).  If you are an alimony candidate by virtue of having stayed home to raise the children, your standard of living will be less than your former spouse’s; you can count on that.  Assets you receive in the divorce may be the only source of income to fund your retirement.

Consider a prenuptial agreement.  If done correctly and timely, you and your spouse can decide what should happen in the event of divorce, rather than having the outcome dictated by whatever laws controlling divorce rights are in place at the time of the dissolution of your marriage.  The above problems, and many others, can be cured by the execution of a Prenuptial Agreement in advance of the marriage.  Fairness can often be achieved more successfully during a time of engagement when parties are blissfully happy rather than after a divorce has been filed and the couple has split up.  Deciding financial expectations in advance can have a positive effect upon the relationship and contribute to marital harmony if done effectively.

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