Protecting assets prior to marriage

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Geographer
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Protecting assets prior to marriage

Post by Geographer »

I'm previously divorced but have saved a significant amount of investment assets to my net worth (~$700k) and would like to remarry eventually, but I'm absolutely horrified of having to split this hard earned money in the event of another divorce. I know the easy solution is *never* get married again, but we're all human and want to spend or lives with someone else. Especially since I'm still young.

A prenuptual agreement seems like the obvious method to ensure protection of any investments purchased pre-marriage, but is there any further step that can be done to protect these assets? They are a 401k, IRA, and taxable brokerage account at Vanguard. Can a trust be designated which keeps these isolated from any future union?

I'm looking to move back to Europe soon, so there may be an international aspect to this situation as well. Thanks in advance for any advice, or words of wisdom for others who've been in similar situations!
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Sandtrap
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Re: Protecting assets prior to marriage

Post by Sandtrap »

1. **Seek legal counsel. (questions to include the following).
2. Possibly, setup a trust.
3. Keep your assets in your own accounts/brokerages, etc. Do not mix with the finances of another.
4. Etc.

j :D
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CAsage
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Re: Protecting assets prior to marriage

Post by CAsage »

There was a massive discussion on a similar topic recently, have fun!

viewtopic.php?f=1&t=365046
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.
jimkitt
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Re: Protecting assets prior to marriage

Post by jimkitt »

Your issues are determined by state law. In most states non marital property stays seperate s no comingled. Assets you already have, or inherit afterwards are not marital property in most states (none that I know of). The only question is how your state views appreciation of seperate property. In many states passive appreciation stays non marital property/ Passive means stock accounts, bonds, CD, savings accounts,etc, including capital gains on non business property(a home for example). A rental can also be considered passive if it isn't using your spouses labor and your rental income stays seperate property, as in not co mingled. Once you start comingling it might be viewed as a rental business that supports the family.
vtsnowdin
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Re: Protecting assets prior to marriage

Post by vtsnowdin »

If you are worried about this at all DO NOT Marry THEM!!!
You can set up lots of options that give your current paramour a fair and more then generous return for her (or his) efforts.
RudyS
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Re: Protecting assets prior to marriage

Post by RudyS »

Lots of info in the previously-referenced thread. One point worth mentioning/repeating is that if/when you both sign a pre-nup, it is important that you EACH have their own attorney.
vas
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Re: Protecting assets prior to marriage

Post by vas »

vtsnowdin wrote: Wed Jan 26, 2022 8:22 pm If you are worried about this at all DO NOT Marry THEM!!!
this ^

I would only add that if you and your partner have disproportionate assets or disproportionate incomes you should just jump ahead to the worrying part.
“For every complex problem, there is a solution that is clear, simple, and wrong.” - H. L. Mencken
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janiebegood
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Re: Protecting assets prior to marriage

Post by janiebegood »

Anecdotally, a 70-year-old married an 80-year-old, with the agreement that they would share expenses but that the "chunks" of money they each brought to the marriage would remain separate. There are emails with their children about this "agreement" and the understanding that the chunk the 80-year-old came to the marriage with was intended for college costs for his grandchildren when he passed.

A few years passed. The now 85-year-old died. The now 75-year-old widow happily accepted the inheritance of marital assets... including the $200K "chunk" her husband intended to go to his grandkids. She sold the place they shared, moved out of state, and cut off all contact.

Agreements aren't enough. Email evidence is not enough. If you're going to preserve your assets, do so deliberately and with legal force behind it.
vtsnowdin
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Re: Protecting assets prior to marriage

Post by vtsnowdin »

janiebegood wrote: Thu Jan 27, 2022 12:27 pm
Agreements aren't enough. Email evidence is not enough. If you're going to preserve your assets, do so deliberately and with legal force behind it.
Yes totally agree.
One must consider that the Honey Bunny you love today, and loves you back now, might get sick of your farting old A$$ in ten years and come to hate your children from a previous marriage and love them not.
mptfan
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Re: Protecting assets prior to marriage

Post by mptfan »

Geographer wrote: Wed Jan 26, 2022 7:20 am I'm previously divorced but have saved a significant amount of investment assets to my net worth (~$700k) and would like to remarry eventually, but I'm absolutely horrified of having to split this hard earned money in the event of another divorce. I know the easy solution is *never* get married again, but we're all human and want to spend or lives with someone else. Especially since I'm still young.
You have to choose...

1) Get married and accept the risk of having to share some of your money in the event of divorce.
2) Do not get married and avoid that risk.

Pick one.
hudson
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Re: Protecting assets prior to marriage

Post by hudson »

Geographer wrote: Wed Jan 26, 2022 7:20 am I'm previously divorced but have saved a significant amount of investment assets to my net worth (~$700k) and would like to remarry eventually, but I'm absolutely horrified of having to split this hard earned money in the event of another divorce. I know the easy solution is *never* get married again, but we're all human and want to spend or lives with someone else. Especially since I'm still young.

A prenuptual agreement seems like the obvious method to ensure protection of any investments purchased pre-marriage, but is there any further step that can be done to protect these assets? They are a 401k, IRA, and taxable brokerage account at Vanguard. Can a trust be designated which keeps these isolated from any future union?

I'm looking to move back to Europe soon, so there may be an international aspect to this situation as well. Thanks in advance for any advice, or words of wisdom for others who've been in similar situations!
I'm not an expert.
I would say that you would need some kind of legal contract drawn up by an attorney where you are going to live and marry. The attorney will know what will work.
Gnirk
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Re: Protecting assets prior to marriage

Post by Gnirk »

Second marriage here, with prenup that my attorney advised me not to sign because it heavily favored my fiancée. Signed it anyway because the wedding was three days away. Huge difference in the assets we each brought into the marriage, but I knew from the outset that everything but the houses and a small traditional IRA would be left to his children. Likewise, my assets except a small IRA and the houses go to my two children. It’s never been a problem between us. Our wills reflect the same. In all fairness, he pays about 80% of our living expenses. If something happens to him, I plan to sell both houses and downsize.

I received an unexpected generous inheritance that I have kept completely separate which gives me peace of mind because I will be paying for long term care if I need it.
almostretired1965
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Re: Protecting assets prior to marriage

Post by almostretired1965 »

Easy solution. Marry up.... Worked for me. :D
newyorker
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Re: Protecting assets prior to marriage

Post by newyorker »

vtsnowdin wrote: Wed Jan 26, 2022 8:22 pm If you are worried about this at all DO NOT Marry THEM!!!
You can set up lots of options that give your current paramour a fair and more then generous return for her (or his) efforts.
Wait what?

Everyone gets married with a good intention but things happen in life that can lead to a divorce. Telling op to not marry is a bad advice i think.
newyorker
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Re: Protecting assets prior to marriage

Post by newyorker »

janiebegood wrote: Thu Jan 27, 2022 12:27 pm Anecdotally, a 70-year-old married an 80-year-old, with the agreement that they would share expenses but that the "chunks" of money they each brought to the marriage would remain separate. There are emails with their children about this "agreement" and the understanding that the chunk the 80-year-old came to the marriage with was intended for college costs for his grandchildren when he passed.

A few years passed. The now 85-year-old died. The now 75-year-old widow happily accepted the inheritance of marital assets... including the $200K "chunk" her husband intended to go to his grandkids. She sold the place they shared, moved out of state, and cut off all contact.

Agreements aren't enough. Email evidence is not enough. If you're going to preserve your assets, do so deliberately and with legal force behind it.

Will moving all money into trust with beneficiary being the groom, will it be protected?
simplextableau
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Re: Protecting assets prior to marriage

Post by simplextableau »

Gnirk wrote: Fri Jan 28, 2022 7:44 pm Second marriage here, with prenup that my attorney advised me not to sign because it heavily favored my fiancée. Signed it anyway because the wedding was three days away.
As a teaching point to Bogleheads in general, this is why prenups should be done well before the marriage. That explanation of "because the wedding was three days away" is exactly why the validity can be attacked later and the prenup thrown out.
vtsnowdin
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Re: Protecting assets prior to marriage

Post by vtsnowdin »

newyorker wrote: Fri Jan 28, 2022 9:15 pm
vtsnowdin wrote: Wed Jan 26, 2022 8:22 pm If you are worried about this at all DO NOT Marry THEM!!!
You can set up lots of options that give your current paramour a fair and more then generous return for her (or his) efforts.
Wait what?

Everyone gets married with a good intention but things happen in life that can lead to a divorce. Telling op to not marry is a bad advice i think.
The OP was talking about a second marriage which is a much different thing then a young couple just starting out.
I must admit I have no personnel experience with a second marriage as We are approaching 45 years of the first marriage with no plans to quit. :happy
But I have observed that many older couples find it advantageous to skip the wedding and keep their finances separate.
tibbitts
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Re: Protecting assets prior to marriage

Post by tibbitts »

Geographer wrote: Wed Jan 26, 2022 7:20 am I'm looking to move back to Europe soon...
I'm not sure most of the replies are addressing this aspect of your question, and I'd guess the answer might depend on exactly where you would be living and marrying.
aj44
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Re: Protecting assets prior to marriage

Post by aj44 »

Also divorced and let my current serious gf know very early on I wouldn’t get married again without a prenup. Once I propose we will each have our own lawyer and have one drawn up.

My specific concerns are my substantial 401k and defined contribution pension as both would be contributed to after the “I do’s”. Almost want to get a different job right before marriage so I can send them to my IRA.

I’d advise anyone to get a prenup, especially if there is an income/assets disparity. In addition to love marriage is a substantial contract, and assets are decided by state rules without one.
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Lee_WSP
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Re: Protecting assets prior to marriage

Post by Lee_WSP »

newyorker wrote: Fri Jan 28, 2022 9:19 pm
janiebegood wrote: Thu Jan 27, 2022 12:27 pm Anecdotally, a 70-year-old married an 80-year-old, with the agreement that they would share expenses but that the "chunks" of money they each brought to the marriage would remain separate. There are emails with their children about this "agreement" and the understanding that the chunk the 80-year-old came to the marriage with was intended for college costs for his grandchildren when he passed.

A few years passed. The now 85-year-old died. The now 75-year-old widow happily accepted the inheritance of marital assets... including the $200K "chunk" her husband intended to go to his grandkids. She sold the place they shared, moved out of state, and cut off all contact.

Agreements aren't enough. Email evidence is not enough. If you're going to preserve your assets, do so deliberately and with legal force behind it.

Will moving all money into trust with beneficiary being the groom, will it be protected?
A self settled trust with the settlor as beneficiary is rarely protected from creditors. But there are exceptions.

Divorce is different. It's very state specific. Oddly enough, doing that in a community property state confers greater divorce protection than in some separate property states.
KRP
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Re: Protecting assets prior to marriage

Post by KRP »

newyorker wrote: Fri Jan 28, 2022 9:15 pm
vtsnowdin wrote: Wed Jan 26, 2022 8:22 pm If you are worried about this at all DO NOT Marry THEM!!!
You can set up lots of options that give your current paramour a fair and more then generous return for her (or his) efforts.
Wait what?

Everyone gets married with a good intention but things happen in life that can lead to a divorce. Telling op to not marry is a bad advice i think.
A room-mate agreement would probably go better than a prenup+marriage
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JoeRetire
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Re: Protecting assets prior to marriage

Post by JoeRetire »

Geographer wrote: Wed Jan 26, 2022 7:20 amI'm absolutely horrified of having to split this hard earned money in the event of another divorce.

is there any further step that can be done to protect these assets?
You need to be speaking with an experienced attorney.

If you are horrified enough, you shouldn't get married.
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BFR
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Re: Protecting assets prior to marriage

Post by BFR »

This is really easy. Assets accumulated prior to marriage are your separate property. Do not commingle your separate property (before marriage) with community property (after marriage) and you will be fine. Setting up a trust to further make the distinction is helpful but not necessary. Do not use your community property in any way which would benefit separate property (e.g., using community property to pay interest on a loan related to an investment property owned by you prior to marriage).
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