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roth IRA and prenuptial agreement
Old 04-23-2014, 10:15 PM   #1
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roth IRA and prenuptial agreement

Does anyone here have experience with prenuptial agreements when it comes to roth IRA's?

Would such an agreement protect my IRA if I wish to get married to someone who doesn't have one as well? I'm not too sure how something like this would work, but for example my mother and father got a divorce when I was young, and my father had:

A roth IRA account
work 401k account


When they got divorced my father gave up the IRA and kept his 401K since they were of equal value at the time. He then started his own roth IRA again once the divorce was finalized. But they never did have a prenuptial agreement of any kind. I'm starting to get older and have more and more money saved up. Its hard to think it could all be gone just because I wanted to marry someone and it didn't work out.

Any thoughts?
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Old 04-24-2014, 04:47 AM   #2
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I believe the 401k is automatic, by federal law, goes to the spouse, and ONLY after you are married, with their written permission can you put someone else as a beneficiary, not sure if that holds true for divorce
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Old 04-24-2014, 06:23 AM   #3
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If you are thinking of getting a prenup, you need to get a lawyer. The soon to be significant other also needs one. It's important that you not put undue pressure on each other. No pulling out the prenup she hasn't seen before the night before the wedding with a threat to call it off if she doesn't sign right then. You have to disclose your assets so they future spouse knows whats being foresaken and what they would get. There's a lot to doing a good prenup that would hold up in court if challanged.

All sorts of eventualities would need to be included. What if there are children born during the marriage? What about children from earlier relationships? Does longevity of the marriage matter? How is income received during the marriage treated?

You really would have a hard time just covering your Roth.
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Old 04-24-2014, 06:58 AM   #4
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+1 on the advice to consult a lawyer ASAP. This is not something where you want to rely on the advice of the laypersons on this forum, or even lawyers not knowledgeable about the marital property laws in your state.

As an aside, I would say that your father made a very poor divorce settlement by agreeing to give up a Roth IRA in exchange for a 401k of equal value. The after tax value of a Roth IRA is generally much higher than the after tax value of the same amount of money in a tax deferred account such as a 401k.
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Old 04-24-2014, 08:32 AM   #5
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If you are thinking of getting a prenup, you need to get a lawyer. .......
I agree. Been there and done that. In the mean time read up on the topic so that you minimize your time with the meter running in the lawyer's office.

Prenuptial Agreements - Nolo.com
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Old 04-24-2014, 08:59 AM   #6
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A 401k automatically lists the spouse as a beneficiary unless otherwise stipulated and agreed to by the spouse in writing. After divorce this is no longer the case as he/she is no longer the spouse. You can choose any beneficiary you wish assuming the divorce decree doesn't stipulate otherwise.

IRA's, Roth or TIRA, are not subject to such rules and you can designate any beneficiary you wish.

If the 401k was earned while you were married the value of that 401k would be considered a joint asset. If you are dividing up assets (I get this account, you get that one) tax considerations need to be taken into account with 401k and TIRA as the true value of those assets can only be determined after subtracting the future tax implications.

Should you get divorced, in most cases, any assets you bring to the marriage are considered yours. Only growth in the value of those assets are viewed as community property and considered in division of assets.

Clearly a prenup could put some teeth in division of assets by clearly stating what each party brings to the marriage would remain theirs in the event of divorce. That of course won't stop a divorce lawyer from going after those assets but having the prenup would greatly aid your cause.

Definitely see a lawyer if you have considerable assets and you are entering into a marriage...especially if the future Mr./Mrs. Right has minimal assets.
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Old 04-24-2014, 03:04 PM   #7
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We did a pre-nup due to second marriage and kids. Basically it said what is his is his, what is mine is mine, and if we put each others names on anything, it becomes joint. It just set out the rules - then listed the assets. It was pretty painless and gave me some peace of mind because he was moving into my house and his ex-wife was a total momma bear when it came to his daughters. I never worried about him if we split up, I worried that if he died his ex-wife would come after my assets on behalf of her daughters.

Best money I ever spent.
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Old 04-24-2014, 06:00 PM   #8
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My concern about my assets isn't so great right now. I'm just worried about what my assets will be. My roth ira is only valued at $18000 right now (I'm 28). But these early years will greatly influence my total value of the ira when I'm 65. So if I get a divorce in 10 years I want to protect what I started.

So it is legal to have a pre-nup saying the roth ira is mine and she can't claim it as joint assets.

What about the money I earned and contributed to the ira while I'm married to her?. Will she be able to say that money is joint assets despite the pre-nup for the first $18, 000?

Can I say "any money I put in my ira is all mine even if we get divorced?"
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Old 04-24-2014, 06:50 PM   #9
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I worried that if he died his ex-wife would come after my assets on behalf of her daughters.
I imagine you have a will to protect you from that?
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Old 04-24-2014, 07:05 PM   #10
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Why are you asking the forum what's legal? Nothing we say carries any weight whatsoever in a court of law, unless you are lucky enough to find an attorney here who is licensed to practice law in your state. Please hire an attorney and pose these questions to him or her.

Good luck getting your future spouse to agree to what you seem to be proposing. It looks like a guaranteed way to get any sensible woman to walk away from the engagement. I suppose it could work, though, if you agree that you each get to make equal contributions to yours and your wife's IRAs each year. That's at least equitable, not the "I want all assets in my name" proposal that you seem to desire.
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Old 04-24-2014, 07:19 PM   #11
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Not reflecting on the OP, but whenever I hear the term prenup, it makes me laugh because I think of George Costanza suggesting one to Susan, to make her break off their engagement.

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Old 04-24-2014, 09:37 PM   #12
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The absolutely best pre-nup is staying single.

If she wants you, and not your money, this should be fine. If not, do you really want her?

Ha
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Old 04-26-2014, 04:46 PM   #13
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I imagine you have a will to protect you from that?
A will is a snapshot in time, and would have had to have been updated. I felt more secure setting out the ownership of assets in advance. My husband was fine, he actually had more in assets than I did.
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Old 04-26-2014, 04:48 PM   #14
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No you can't add to your IRA, or Roth IRA during a marriage and say it's yours. In a comm property state it's half hers.

You need to see an attorney, or don't get married. Doesn't sound like much of a partnership if you are thinking you want to protect money from her while you are married.
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Old 04-26-2014, 06:20 PM   #15
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Originally Posted by BellBarbara View Post
We did a pre-nup due to second marriage and kids. Basically it said what is his is his, what is mine is mine, and if we put each others names on anything, it becomes joint. It just set out the rules - then listed the assets. It was pretty painless and gave me some peace of mind because he was moving into my house and his ex-wife was a total momma bear when it came to his daughters. I never worried about him if we split up, I worried that if he died his ex-wife would come after my assets on behalf of her daughters.

Best money I ever spent.

Just curious how the prenup protected you from his ex IOW, the few prenups I have heard about were in case of divorce... the split did not apply if they remained married...
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Old 04-26-2014, 06:32 PM   #16
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Any legal doc that shows intent, helps. He did not have a will at the time, but even if he did, it was my house, so that wouldn't matter.

My nightmare scenario was that we marry, he dies, and probate rules say 1/2 goes to me and 1/2 goes to his kids. But 1/2 of what? That could be the battle. If he had a will, it would not say anything about my house, but what if ex wanted to battle this issue? I saw an attorney because I knew the character of his ex-wife (user, taker) and wanted to make sure I was safe.
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Old 04-27-2014, 01:48 AM   #17
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Any legal doc that shows intent, helps. He did not have a will at the time, but even if he did, it was my house, so that wouldn't matter.

My nightmare scenario was that we marry, he dies, and probate rules say 1/2 goes to me and 1/2 goes to his kids. But 1/2 of what? That could be the battle. If he had a will, it would not say anything about my house, but what if ex wanted to battle this issue? I saw an attorney because I knew the character of his ex-wife (user, taker) and wanted to make sure I was safe.
Premarital assets are not in the 'half'... it sounds like your house is part of this.... the big issue is income off assets...

I cannot remember which way it goes, but I do remember during training the teacher was talking about separate property etc.... his example was a cow... if you owned the cow prior to marriage, that cow was yours... however, if it had a calf, I think it was community property... some people think it is separate...

In the real world.... it is more unrealized gains vs dividends... if a stock value goes up... separate... if it pays dividends... community (take this with a big gain of salt... it is late and I did not research and I am trying to remember something I learned over 30 years ago....)...
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Old 04-28-2014, 09:53 AM   #18
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Isn't it possible to open a NEW Roth account, at the time of the marriage - and put all new contributions into that account. Leave the old account to grow. This way, in case of divorce, it's clear what assets predated the marriage and which assets were contributed during the marriage.

Obviously - at the time of death - the beneficiary rules will apply - and the wife should be listed as the beneficiary on the new account. (Not sure about the old account - if the old beneficiary would stay in place - that might be able to be challenged.)

But if the OP is concerned about separation of assets at a divorce - it seems prudent to demarcate the pre-marital Roth from the Roth after the marriage, by opening a new brokerage account for a Roth for contributions during the marriage.

Like BellBarbara - when my dad remarried he and my step mom redid their trusts to explicitly state that *their* children get *their* assets. (My dad bequeathed a fixed amount to my stepmom to ensure she wouldn't have issues with bills.) My step mom is still alive and her assets will be distributed among her kids - as it should be.
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Old 04-28-2014, 10:31 AM   #19
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Isn't it possible to open a NEW Roth account, at the time of the marriage - and put all new contributions into that account. Leave the old account to grow. This way, in case of divorce, it's clear what assets predated the marriage and which assets were contributed during the marriage.

This would be possible if the prenup specifically states that any appreciation would go to the owner of the old account.

Otherwise appreciation that occurs during the marriage would be considered community property in most states.
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Old 05-08-2014, 02:30 PM   #20
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I have been doing some research on this and from what I have been reading it is acceptable to have a prenup stating a retirement account and even contributions to it can be protected while in a marriage. Does anyone have any articals or something to read up on that says the opposite?
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