Pre-nups and marriage: the future of shared finances

This is a super controversial topic, I know. But I plan to marry only with a solid pre-nup in place. I always knew I would marry with a pre-nup, since I was in my early twenties and my parents told me how much money they had then. My mom tried to tell me again recently and I told her I don’t need to know as it’s their money for them to spend in their lifetimes – I don’t need it. I definitely knew I would marry with a pre-nup when I was a 23 year old buying a condo with a 20% down payment and cash reserves leftover while still maxing out her 401(k). Hot stuff that sure intimated guys! My boyfriend, on the other hand, seems to find it attractive that I am wildly independent and know my way around Vanguard. I still remember his calm response when I first told him how much money I had saved, which was back when my net worth was in the high $300k range.

My boyfriend and I have started discussing what our pre-nup will look like, slowly, what our finances will look like in the future, how we will handle this appreciating like wild fire (too soon?) condo that I own right now as my separate property. A hot anniversary dinner topic, I know.

He was flabbergasted when I told him of how many people on the financial internet are so strongly in the one pot finances camp that they belittle people for ever separating their money or having a pre-nup. With the slow pace we are taking to the altar, by the time we get married, we could very well have a solid $2M net worth minimum combined. That’s a pretty huge difference from people who meet in college, with no money, have $50k/year jobs and get married in their mid-to-late-twenties. We are two financially stable, high income adults, a far cry from the people we were in college when we met.

Pre-nups aren’t just for people from old money. They’re for people who think strategically about how they will grow their wealth as a couple, while financially protecting both parties. For example, I picture using a pre-nup to re-title assets so that we could own this condo together without a mortgage or selling off any assets. Or we could use a pre-nup to re-title our separately lopsided, but balanced combined investment portfolios where one of us has 80% of their portfolio in taxable accounts and the other has 80% of their portfolio in tax-advantaged accounts, though both are completely indexed with maxed out 401(k)s, Backdoor Roth IRAs, and happy Vanguard accounts.

Right now, we track some shared spending in a spreadsheet. By we, I mean, I enter the data in the spreadsheet and update him every few months, usually to confirm that our system is working as expected and we’re splitting expenses just fine with our lackadaisical he pays for some items, I pay for others, and we split some 50/50 approach.

I tried to suggest to him that we make a game in 2015 of which one of us could save more money. When he remembers, he kicks himself for not agreeing to this game because it turned out that I took two months off unpaid and he had a record income year, so he totally would have won.

No, we’re not engaged. But we envision a future together, building wealth together. A mortgage-free life with index funds and maxed out 401(k)s. Financial security is sexy and don’t let anyone tell you otherwise.

Here is to many more years of a life of delicious food cooked at home and adventures together! Swoon.

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37 thoughts on “Pre-nups and marriage: the future of shared finances

  1. I am generally in favor of pre-nups. I think of it like this: would hash out asset distribution now when you love, respect, and want what’s best for one another or later when those feelings become embittered to the point you are considering divorce?

    That said I don’t know if we will have one before marriage. I think it would be good for us to have one, even if it says we split all assets down the middle, but it will be interesting to hear BF’s take on it. I feel like because we plan to have kids and because I am so strongly the high income earner between the two of us it would be unfair for me to take back all my assets and those assets proportional to my earnings. I’ll definitely be at greater risk of losing assets I bring into the marriage, but at the same time I really don’t want my future coparent to be destitute even if we aren’t married. That’d affect our kids as much as it would them.

    • “I think of it like this: would hash out asset distribution now when you love, respect, and want what’s best for one another or later when those feelings become embittered to the point you are considering divorce?” This! Also, whether you do this exercise or not, you’ll have your state’s laws as the default and not just the state’s laws where you get married, but the one where you get divorced. So by not getting a pre-nup, you are accepting that.

      Maybe you won’t actually get a pre-nup, but talking about all of these future hypothetical situations is so key. What will your finances look like if you turn out to be unable to have kids? How much are you willing to spend on fertility treatments / adoption? How will you handle inheritances? Will you pay for your kids’ educations? Or maybe you do have a pre-nup that keeps things more in your favor until you have kids / have been married for X years or something. I’ve heard of people who sunset their prenups after 10 or 20 years.

      If we wrote a pre-nup that kept all of our assets separate with the assumption that we would never have kids or if we did, we would both continue to work, but then we did have kids and the person with the lower assets was the one who stayed home, a postnup of some sort would absolutely happen.

      • Oh I totally agree we should have that conversation. We just haven’t yet. That said, if we decide not to prenup and worse case scenario I feel okay falling back on our states’ equitable division standard for divorce.

        • It might be worthwhile to just spend some time understanding what your state’s equitable division standard is, even if you don’t get a pre-nup (if you haven’t already). I believe in the power of knowledge around these sorts of things :)

        • It’s reaľly not much more involved than that and is governed by precedent more than law. In the case of short term marriages the goal is restoration of financial state prior to marriage. In long term marriages or those with children the judgment is whatever is “equitable” for the two parties, which is undertood as sometimes but jot always being an even split. But again ymmv according to your judge and jurisdiction.

          Regardless BF and I had a discussion last night on prenups and we pretty much agree on having one and what we’d want in it.

        • Well basically the conversation ended up like.

          Me: Prenup?
          Him: Sure, that sounds like a rational thing to do. You get all the house and money since you earn more?
          Me: Well, I was thinking we get initial asset proportions if we get divorced before kids but split half and half if we have kids. Also shared custody.
          Him: That sounds reasonable. I trust you to make what seems like the most financially sound decision and let me know what you are doing.
          Me: How about inheritances? You’ll probably get one and I probably won’t.
          Him: I was mostly planning on just passing that on to our kids.
          Me: If we get divorced how about you keep inheritance if you already have it and I get earned assets?
          Him: Sure that seems good.

          Fin.

        • Nice! It works out great that the one of you who is more likely to get an inheritance is the one of you who makes less money and has less money now :)

        • Hah, sometimes I wonder how much of it is “working out” and how much of it is a causative thing. ;p

        • In our case, it’s the opposite – the one with more money is also more likely to get an inheritance. Parents having less money -> student loans for college -> slower to build wealth. Parents having more money -> no student loans for college -> faster to build wealth.

        • That makes sense (and it also sounds like bith of you are anbitious folks generally). For BF, I have literally heard his mother say to him, “I have all this money and it’s not like I am spending it! One day it’llall go to you and your sister.” Which he has told me has factored into his not really being aware of money and how to handle it until we started dating. Definitely a thing I plan to NEVER tell our children.

  2. Haha this is great. My S.O. and I have similar talks. We just moved in together so getting our actual house in order and getting used to the different ebbs and flows have taken over, but I suggested we have another money talk by the end of the month. Prenups have been discussed in passing and we both agreed we should at least investigate this topic further.

    I know absolutely nothing about prenups, but could one earmark an inheritance after marriage to just one spouse?

    • At this point, most of our money talks happen randomly, like while out for a walk, after a housewarming party, out for dinner, or while making dinner. We don’t really force them.

      Most states I think actually assign inheritances as separate property, so long as they don’t get co-mingled with joint money, i.e. so long as they are left in an individually titled account. That’s something I worry about too. One friend is a super proponent of joint finances and will share any inheritances with their SO, which makes their SO uneasy!

  3. Totally. Like Taylor, even if we planned to combine finances (we did), I thought it was important to have the conversations that create a prenup. We didn’t end up having the prenup but I wasn’t opposed to it in the least. We did spend a lot of time talking over goals, and compromising on our approaches, so that by the time our finances were actually combined, we were generally on the same page as far as our goals and that was the most important aspect of the prenup in my opinion. Having it in writing would normally be important but I also knew that we were constantly evolving and that the numbers wouldn’t stay the same from quarter to quarter because I like to make moves with our money that aren’t always planned.

    • I love this! I know many people who went through those exercises like you did and decided it wasn’t necessary to have the pre-nup in place. But going through those exercises is so key I think.

    • Hah yes! We’ve cursed that poor fortune at times. It’s funny how much we both came around to the same ideas of many things without even growing up together though.

  4. Let me play devils advocate, I know you have done a fantastic job at saving, you are incredibly disciplined and bring a very no frills straight forward method to wealth building. I am a big fan.

    But…and of course you knew I was buttering you up in the first paragraph for a reason :)…..do you and your boyfriend really have that much difference in your net worth? Do you expect to inherit a drastically different amount of money from your family than he is from his? And I mean millions, not a few hundred thousand dollars. If so then I agree with you on a prenup.

    I would say, If there isnt a huge difference in what you bring in or what you expect to inherit, like 7 or 8 figures +, then I would consider the idea about how combining everything actually brings you closer to your spouse. There really is something once you are married to combining accounts and working together.

    There is something to having both feet into a marriage, that I think is hindered for most couples when they start out with a prenup..

    • Yes, we do. If you combine each of our expected inheritances and our current net worths, the difference is honestly in the several million dollar range.

      I would love to find a way to keep some assets separate, but combine other things and I hope that we’ll get there some day. I’m not sure what that looks like exactly though and I’m sure we’ll work that out eventually. And I agree with you that there is something to having both feet in a marriage. It’ll just take a bit of thought to figure out how to best do that in a way that we’re both comfortable with, without worrying about possibly losing multiple million dollars in a divorce.

      For example, we came to agreement that if we get married, we would like to own the property that we live in together, whether that’s this condo or another place. It’s awkward enough living in this condo together without sharing the condo while we’re unmarried that I wouldn’t want to say attempt a kitchen remodel without both of us owning the place.

      • Inheritances can and should be protected as separate property anyway. I know my parents utilize trusts which would protect that $$ from their kids spouses and such, though obviously if the kid distributes it and re-titles it, there is nothing they can do.

        I would see no reason to get a prenup unless I married someone with vastly more assets than I have, and that would be to protect them as obviously I’d end up in a better position to not have one if a marriage went south in that scenario. On the other side – I don’t feel like I have enough assets to worry about it if I married someone with less than i have. I probably wouldn’t marry someone with an enormous amount of debt and no plan to tackle it.

        I guess I don’t see why the parental assets would even be relevant if the hope/expectation is that the parents spend down their assets.

        Logically, I get why a pre-nup makes sense. A lot of people get taken to the cleaners in divorce. Particularly men. Emotionally, a prenup gives me a bad taste in society where divorce is so common. It almost feels like you’re going into the marriage and expecting a possibility that it may not be permanent. And while I obviously think divorce is a legitimate option for society, it’s not an option that I particularly would want to have the pleasure of experiencing, and the financial worries would be the least of it, though obviously one should discuss money issues including prenups with their partner well before they legally merge.

        • “I probably wouldn’t marry someone with an enormous amount of debt and no plan to tackle it.” This is so key. To me, the most important part is finding someone who has similar values in general and being comfortable with debt is just not me.

          I look at a pre-nup that it’s like figuring out a divorce agreement while you care about each other, rather than when you hate each other. Elizabeth Gilbert said that you should marry someone you would want to divorce (i.e. someone who would be kind to you in the process).

      • I think I get what you are saying, and I think you are saying you will do this, but just to mention it in a slightly different way, because its been important in making my marriage strong

        If there is a big difference in net worth coming in, and possibly inheritances, you might consider the idea of a prenup that specifically keeps those separate but combines everything else.

        I am recently married, (within the last 5 years), and I am a little older than most with my first marriage (mid 40’s), but I know that it has made a big difference for us to treat your current income as joint property. Regardless of income.

        Yeah, maybe some blow money to just spend frivolously. But everything else imo should be thought of jointly because financial decisions, goals etc should be done together. And its very different than when you are boyfriend/girlfriend vs being married.

        Just the effort to monthly discuss financial goals (we budget monthly), plays a part in strengthening our marriage. And we treat whats coming in as all one pot to be divided equally between the two of us.

        And you never know, fortunes can change, the member of the couple who is doing well, might end up out of a job, or might choose to do something else (maybe raise kids?). You just never know.

        • That’s definitely something we’ve talked about and would like to figure out a way to do. I’m not sure what the answer is. For example, let’s say before we got married, I had $X and he had $Y. What if that $X meant I could retire early in say two years, but his $Y meant he still needed to work for five years? Is that fair then to say that pre-marriage money is individual and post-marriage money is not? That would mean that I could retire and live off of his income and not touch my nest egg, which doesn’t seem particularly fair to him. I really doubt either of us would stay home if we even had kids (not in the plans now). If it turned out to be the one with the more assets who stayed home, that would be easier to balance out.

          These are definitely all things to discuss and I would love to find some way to join more things, but I don’t think the straight answer is to just join everything that was acquired post-marriage either. We do discuss spending, goals, and lifestyle to mesh those. We agree we don’t like debt (even mortgage debt) and are happy with index funds and investing the excess. We’re similarly frugal. All of those parts, to me, are more important than whether our money is legally joined.

  5. I think it’s your business how you want to handle your finances, so if this works for you guys, awesome! We didn’t do a prenup since neither of us had sizeable assets going into the marriage (certainly nothing like you’re talking about), and we knew we wanted to do the “one pot” style. The only time I would ever poke holes in the “separate money” notion is when people are married, don’t have a prenup and then operate on separate finances — that may be fine while you’re married, but if you get divorced, the court will not treat those assets as separate in most states. So I’d call that “pretend separate.” Whereas what you’re talking about is true separate. In our case, we’re happy doing one pot because it allows us to make sacrifices in the name of the common good that wouldn’t benefit us equally if we had separate finances — like even though my income has tripled in the time we’ve been together, Mr. ONL’s income has increased by a greater number of dollars, and we’ve a few times prioritized his career over mine because we knew that would net us out the most money. While that sounds deeply unfeminist, it has benefited me in absolute dollars more than if we took a more separate approach. But that’s just us! I think it’s awesome you guys are figuring out a plan that feels right to both of you.

    • Yes! I do not understand the people that keep their money separate without knowing what their partner is spending their money on at all or how much they have because it’s really 50/50 of the whole pot, not just separated unless you set up your pre-nup that way. That’s not the default for marriage. Meg at APW calls it a fictional money system, IIRC.

      That’s definitely one of the parts that I worry about being too strict with separate finances – trying to make decisions for the common good vs for separate good becomes harder to determine the longer you’re together. Or even just on the little scale: even though I bought the laptop, we both use it, so should that purchase not have come out of joint funds? Those lines are pretty blurry even now. I’m okay with them being blurry on small things, but that’s part of why we would want to own our next place together / own this place jointly if we stay here if/when we marry in the future.

      Also, even if we have a pre-nup, I am so happy we agree on a lot of ways to manage our money. That makes it easier to transition at some point to more joint money, if we wanted to.

      I’m pretty flabbergasted at how many people assume that “one pot” is the best for everyone, without considering that people do come to marriage with assets. Anyone I’ve talked to who came to the marriage with assets had a similar level of assets and so it all worked out. One of the biggest fears my parents have for me is for me to get divorced and lose most of my money to someone. One of their first questions to my boyfriend was “Do you have student loans?” and I wonder some days how things would have gone if he did still have student loans at that time.

  6. If my girlfriend and I marry, we’ll probably have a pre-nup and wills and power of attorneys drawn up immediately. Gay marriage is legal, but some hospitals in small towns still refuse to let you in the room and making decisions for your wife. She has a positive net-worth and mine is currently very negative. She has a very different type of retirement account funded, too. I would not want her to feel like I’m taking from her & I’m working like mad right now on building my skills to get my net worth to shoot up and at least match her.

    • I would actually like to get living wills drawn up when we’ve been together five years so that it’s not my parents who would be making medical decisions for me. It sounds like you are on a path to improve your financial standing though, which I’m sure your girlfriend appreciates! That’s far more important than the actual dollar amount you have saved.

      • Having the people you want making decisions for you in the hospital is so important.

  7. I’ve seen friends & family divorce. Some have been equitable, but not most. The gal with basically a trust fund who has spent all of it, decided she didn’t like working & quit, worked off the books for spending money for a few years,now her hard working ex owes her a bunch for 1/2 the house & spousal support. Also she just didn’t pay or file taxes so before the papers were final he owed that too. Yikes!
    Another friend was forced to cash out her 401k (& pay all the taxes) to give 1/2 to her ex…nope she couldn’t just cash out 1/2 either!
    I dated a guy for several years, who was not great with money, and let the one company forced 401k be disbursed to him. I never asked him, but wondered to myself if that meant I was supposed to fund our retirement?? I was only putting $ away for me, that would affect calculations… I am much happier now, but it’s a lesson, the person you fall for may not have the same money goals as you.
    As I’ve gained more career years behind me, I fully intend on having a pre-nup that says my retirement funds are mine, and yours are yours. I might love you, but I am not going to compromise my financial future for you. *shrug*

    • Ugh that is not cool of the gal who had a trust fund! If I were her ex, I would be pissed at her. I’m glad you’re rid of that guy! I went on first dates with a few guys who were terrible with money and that just did not last. My boyfriend may not be a planner, but he still does have his head on straight with regards to money and our values there are aligned, which is great.

  8. I don’t think it is controversial – what blogs are you reading that are so adamant about this? Or is this real life people?

    We live in a community property state, and married with somewhat minimal and roughly equal assets, so we didn’t bother. We also have similar attitudes about money and such. One pot makes sense for us for a variety of reasons. In your position, something else makes complete sense.

    But – good point about the laws applying for the state you divorce in! If we ever move somewhere else, it would be something to look at, and possibly even do a post-nup if needed… Seems like not many states are community property, and “equitable distribution” can be interpreted widely depending on the judge, which seems kinda scary. Similarly, if we ever make any unexpected career shifts or unexpected choices around kids, it would be worth visiting the question again.

    • It’s both really. Anyone I know in real life who married once they had money, they didn’t get a pre-nup because they somehow ended up with similar assets by the time they married. (Or so they said.)

      “Equitable distribution” confuses me – it feels like it takes the control out of the people in the divorce and hands it off to the judge. Community property is far more straightforward. We have pretty similar attitudes and values around money, so I would be comfortable with one pot if we had similar assets. We have basically the same Investment Plans and attitudes towards debt and such, but my boyfriend doesn’t really plan or organize and the only spreadsheet he has ever made is for rebalancing when he adds new money to his investments.

  9. My husband and I did not do a pre-nup. We did, however, wait several years (and a kid) before combining bank accounts and other finances, and still keep separate investment accounts and credit cards. While I don’t regret not doing a prenup, I’m glad we took the time to talk finances, plans, and strategies.

    • The time to talk finances, plans, and strategies is so key! I don’t think enough people discuss those things when getting married. I’m also glad that we’re reasonably aligned on those ideas.

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