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Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 03:35 PM   #1
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Pre-nuptial Agreement to Protect FIRE Nestegg

Flowing from a discussion that seemed to partially hijack another thread, this thread is intended to provide a place to discuss the use (or even the necessity) of a pre-nuptial agreement to protect a FIRE nest egg.

As I posted in the other thread:

Quote:
There are all manner of perspectives on pre-nups, but the nature of my legal training forces me to look at all sides of a particular "transaction" -- including the downsides.* Do I trust her now?* Absolutely.* But people change, particularly when a marriage doesn't meet expectations.

I look at a pre-nup from the perspective that it's an insurance policy we never expect to use.* I have health insurance, even though I never want to get sick or injured.* I have car insurance, even though I don't want to get into an accident.* I'll eventually have life insurance, even though I don't want to die prematurely.* Overall, insurance covers contingencies that are generally outside my control -- and how someone feels is most assuredly outside of my control.
Here are links to a few interesting articles discussing the two perspectives on pre-nups:

http://www.findarticles.com/p/articl...37/ai_n8585954

http://www.askmen.com/fashion/how_to...89_how_to.html

http://www.legalzoom.com/articles/ar...icle11120.html

Finally, here's a very interesting article with lots of statistics for those of you who want to see the numbers:

http://www.lawyers.com/legal_topics/...icleid=1002260


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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 04:00 PM   #2
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Jay, I think you are absolutely correct. The contra posters are crossing their fingers and whistling while they walk past the graveyard.

Very rarely does someone get married because he/she think his/her betrothed is not really "the one", but she/he will do for a while. Everyone thinks he/she is thinking clearly, has found the most adorable sweetest kindest sexiest most loyal person in the whole wide world to marry. But a goodly portion of these folks find out that not only is the ensuing marriage not peaches and cream, it is downright intolerable.

In fact, that very thing has even happened to a not insignificant number of people who post on this board. They either left, or someone left them.

It's the stochastic nature of life. I say use the pre-nup. If he/she balks, take a walk. You have to wonder why the reluctance. And anyway, since when is there a shortage of prospective partners?

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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 04:46 PM   #3
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Here's another analogy. People with substantial assets have wills drawn up for themselves all the time. Is drafting a will a statement that you don't love and trust your family to carry out your wishes after you're gone?
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 05:07 PM   #4
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Quote:
From HaHA:* I mis-spoke. I really am not accusing you of anything. I just used your post to advance a claim that I think is frequently true, though clearly not in your case.* Please let me apologize.

Ha
So... this is where you've all moved to!*

Picking up from the previous thread, HaHa, absolutely NO need to apologize for calling me a typical woman! -- this is all just give-and-take!* I'm going to have to use more of those smiley faces to indicate gentle ribbing as opposed to serious debate!*

I actually think you may be right about women opposing prenups more than men - and for financial reasons.* Let's face it, woman on average MAKE much less than men, even today, and may take years out to have children (how's THAT for bringing an "investment" into the marriage!).

I don't worry about any of that, since I've easily supported myself for many years. My point is that anyone you won't trust with your money is not worth trusting with FAR more important things-- your heart, your children, and possibly your life (by this I mean the Schiavo case and others like it - her so-called "life" was in her husband's hands.)

You can't plan for everything, or even most things -- better to pick someone you can really trust across the board. I don't think prenups are a bad idea so much as I think it's a bad idea to marry someone you need a pre-nup with.

I bow to your lawyer's instinct, Jay, I'm sure you've seen some nasty break-ups. But I've known people who divorced and divided asssets quite amicably, and managed to keep their integrity throughout the process. Marriages come and go a lot these days -- but integrity never falters.

I actually brought up later-in-life merging of funds in another post.* I wanted to hear from the successful folk - the ones who had long-term, happy, work-together-well-as-partners marriages.* Virtually 100% of them share and share alike.*



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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 05:11 PM   #5
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

This is an interesting subject because I'm getting married next month. I hadn't really considered a prenup. My nestegg is only about 60k so far. My fiancee has no savings, and makes less money than I do. The way I think of marriage is that we're going to throw all our stuff together. If it doesn't work out we each get half and start out all over. So in the worst case I'll end up with only 50% of what I have now, plus 50% of what I saved during the marriage. I think of that just as the risk of getting married. The only reasonable thing a prenup could do would be to protect the savings I've gotten so far. I certainly don't want it to say that I get 60% of the stuff if we split up, because my salary is higher or something like that.

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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 05:11 PM   #6
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Quote:
Originally Posted by Jay_Gatsby
Here's another analogy. People with substantial assets have wills drawn up for themselves all the time. Is drafting a will a statement that you don't love and trust your family to carry out your wishes after you're gone?
Biiiig differences. We're all going to die, like it or not, and a will is simply stating what your wishes are for your belongings after the inevitable arrives.

A prenup presumes the relationship is going to die, and lets your DS to be know that you're considering the invevitability of its demise and that you think theres a chance they'll make a grab for your dough on the way out the door.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 08:36 PM   #7
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Quote:
Originally Posted by Notth
Biiiig differences. We're all going to die, like it or not, and a will is simply stating what your wishes are for your belongings after the inevitable arrives.

A prenup presumes the relationship is going to die, and lets your DS to be know that you're considering the invevitability of its demise and that you think theres a chance they'll make a grab for your dough on the way out the door.
Although death is inevitable, the issue is not inevitability. Rather, the issue is one of trust. Why not just verbally tell your family your wishes? Why put your wishes in a binding legal document? Don't you trust them to carry out your wishes?

Likewise, what about my "insurance" analogy? Certainly you don't think that the various kinds of insurance people buy demonstrates that the triggering event is inevitable. For example, you might buy disability insurance. Does that mean that it's inevitable you'll become disabled? What about fire, flood, or hurricane insurance? Are those things inevitable?

I'll admit that a pre-nup in my mind = protection. Why do I need protection? It isn't because I don't trust her NOW, but rather that there may -- and I stress MAY -- come a time that our marriage changes. People fall out of love just as often as they fall into love. You can't regulate, legislate or adjudicate love, but you can plan for the possibility (however remote a chance that may be) that you'll no longer be in love with one another.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 08:52 PM   #8
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

The validity of your several arguments may or may not hold up, Gatsby, but I suspect that is beside the point. Take it from a left-brained individual who's sometimes learned the hard way -- the human heart will not be moved by logic.

That said, I wish you the very best of luck...
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 09:42 PM   #9
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Yep, you cant quantify, capture or negotiate love and romance.

But trying to legislate the potential directions it takes will surely change both characteristics...not for the better.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 10:04 PM   #10
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Very interesting problem - I dont envy your position of being a lawyer and having lots of money (at least in this problem). * I think it would be better for both of you to not get married. *Just live together. * I lived with a women for 10 years - when she decided to leave, we split our shared assets down the middle and our separate assets we kept, *although neither of us had alot of money. *I suppose after 10 years everything was community property and after such a long time I could have accecpted her getting half of everything. *We easily made a commitment of marriage without approval from the state. *I'm not sure a lawyer could do that so easily.* *Oh yeah - we didn't need approval from the state when we split up either.* * * * * * *
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-17-2005, 11:22 PM   #11
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

I'm no lawyer, but I think the law in most states is that you get to keep what you brought into the marriage. So even if you decide not to do a prenup (which I agree is anti-romantic), the least you can do is to not comingle your assets. Just keep separate investment accounts, and create a joint account for paying the bills. Your spouse still gets your assets in the case of your death, but you'll have some protection in case of divorce. And you can discuss this strategy *after* the wedding, around the same time you're both updating your wills.

Personally, I "donated" significant assets to the partnership (like a house and enough funds to last for years), but I still have enough uncomingled assets to keep me on my feet if the partnership dissolves.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 12:27 AM   #12
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

I am 57 and currently single. In the event of my getting married, I would be concerned with the possible loss of part of my nestegg if it didn't work out.
I'd like to think that most of the marriages that fail were made with all the best intentions. My FI was planned for me alone. Unless I was living with my girlfriend for many years and we then decided to get married, I would probably opt for a prenup. I also wouldn't want to depend on state law to protect me as laws may vary between states. What about living abroad?

I don't feel like going back to work later in life.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 09:14 AM   #13
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Okay, a question for all those anti-prenups out there (not that I'm necessarily a pro-prenup...this is simply a question for y'all)

If you don't suggest a pre-nup, then how/when do you start talking about how you have sacrificed so greatly over the years to build up your nest egg to retire early and provide security, and that your stash is NOT there so the both of you can go splurge it in Mexico?

My goal is about $500k when I turn 30, and my future significant other would have to at least be financially sensible (if not financially astute like me), and I don't know how or when to broach the subject of "well, if we do end up getting married, then we'll both have to save up for the house payment, etc." Have your conversations stayed pretty sane, or did the other half suddenly go nuts and start talking about how you have this and that, and that they expect you to part with a good chunk of it?

OR....when the subject of personal finances comes up, do you simply stay with talking about debt levels and just skip the assets side of the equation? It's not that I would want to keep ANYTHING from my future wife, but how do you figure out if, upon finding out particulars of your financial net worth, if she'll say "Wow, you must have really sacrificed for that" versus "WOW! Do you know how many purses and pairs of shoes I could buy in Paris for that!?!?!"

It's not that I won't love my future SO...it's just that I haven't been making sacrifices left and right over the past few years so she could (probably) be spending far more than I have been and living high off the hog before we meet.

It'd be great to meet my fiscal equal...but being an INTJ, I'd like to plan for my fiscal opposite.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 10:28 AM   #14
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Quote:
Originally Posted by Peter76

OR....when the subject of personal finances comes up, do you simply stay with talking about debt levels and just skip the assets side of the equation? It's not that I would want to keep ANYTHING from my future wife, but how do you figure out if, upon finding out particulars of your financial net worth, if she'll say "Wow, you must have really sacrificed for that" versus "WOW! Do you know how many purses and pairs of shoes I could buy in Paris for that!?!?!"

A starting point would be not dating anyone who isn't managing their own money well. I don't think its that hard to determine whether someone is a LBYM type - I don't discuss finances with my friends often but I have a hint about which ones spend every dime of their pay (or more), those that are frugal, and those that are irresponsible but trying to change (because they ask for advice and take it).

I think its quite possible to talk about shared goals and values without bringing dollar figures out in the open right away. Hopefully by the time you get to the point of revealing your numbers you won't be too surprised by the response. Yes, I know some people change after the marriage but I think there's a slim chance that a LBYM-type who is as excited about ER as you is going to turn into a major frivolous shop-o-holic after tying the knot.
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Re: Pre-nuptial intentions on the path to hell...
Old 06-18-2005, 12:12 PM   #15
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Re: Pre-nuptial intentions on the path to hell...

First, Jay, I'd like to thank you for ruining my marriage. (Just kidding.)

A little perspective-- I've known my wife for over a quarter century, we've been married almost 19 years (of which we've actually lived together for 16), and we have a 12-year-old. This is our first and, I've been told, only marriage. We came from similar backgrounds, met at college, and both started with steady Navy jobs & similar (minimal) savings. It's a partnership in harness, not a lead-follow relationship.

So in an atmosphere of complete respect & trust I brought up this subject during the morning honey-dos. "Hey, honey, this guy on the ER board doesn't want to get married without a pre-nup." Her answer: "I'm in favor of that." My response: "Hunh?!?"

During the ensuing two-hour discussion scattered over a six-hour day before school let out (you married veterans understand what I'm talking about) we eventually we agreed that pre-nups are absolutely essential for pre-existing kids or for taking care of family that could suffer divorce "collateral damage". We also agree that a pre-nup excuses full commitment & compromise (as well as sucking the romance out of a marriage) while she thinks it's a valuable springboard for a financial discussion.

Second, thanks for those great links. I especially appreciated this Psych Today summary:

"Dubin: Romantic love is one thing; marriage is another. It is a spiritual and emotional bond, for sure. But it is also an economic partnership. Whether you have a prenuptial agreement or not, once you get married, you've agreed to the laws. If you think your marriage does not have economic consequences, then you're not living in the real world.

Margulies: Romantic love suggests loving with abandon, risking all and a complete sharing of two lives. It does not contemplate holding back, limiting commitment, separating interests and refusing to risk or share. Yet these are precisely the objectives of the prenuptial agreement."

For those slinging the ">50% of all marriages" statistic, according to the National Center for Health Statistics, 43% of first marriages will end in divorce or separation within 15 years in the United States.

And from the survey:
"No regrets - divorced Americans make do without a prenuptial agreement. A large majority (71%) says they have no regrets, and only two percent say they did have a prenuptial agreement."

"[Of those with regrets] Childless divorcees regret not having a prenuptial agreement - for a variety of reasons. Divorcees without children regret not having a prenuptial agreement significantly more than those with children because their ex-spouse received too many of their assets (19% vs. 7%), because a prenuptial agreement would have made the divorce easier and less expensive (9% vs. 3%), because their kids would have benefited from such a “liquidated damages” agreement (7% vs. 1%), and because they themselves did not get enough of their ex-spouse’s assets (7% vs. 1%). Conversely, divorcees with children are more likely to report that they do not regret not having a prenuptial agreement (88% vs. 63% of divorcees without children)."

Third, I agree that a prenup is a great way to learn how the two of you feel about money. However the experience will undoubtedly be shared in a somewhat adversarial environment and I think there are better ways to start that discussion. Maybe not at a psychiatrist's or priest's office, but premarital counseling is a great place to start.

Quote:
Originally Posted by Jay_Gatsby
Although death is inevitable, the issue is not inevitability. Rather, the issue is one of trust. Why not just verbally tell your family your wishes? Why put your wishes in a binding legal document? Don't you trust them to carry out your wishes?

Likewise, what about my "insurance" analogy? Certainly you don't think that the various kinds of insurance people buy demonstrates that the triggering event is inevitable. For example, you might buy disability insurance. Does that mean that it's inevitable you'll become disabled? What about fire, flood, or hurricane insurance? Are those things inevitable?
I'm calling that first batch of questions a strawman, but I'll knock it down anyway. You're absolutely right-- I don't trust family (or friends or the probate courts) to carry out my wishes. At best they'd be subject to "interpretation". That's especially true if my spouse & kid aren't mentally competent at the time, and I'm sure that everyone has a story about "bad" adult children grabbing for all the goodies without a clear will.

As for insurance, it's designed to help you survive the disasters that you're financially unable to handle on your own. We used to need collision insurance, now we don't have it-- and we put the premium savings toward a replacement vehicle. We used to have a $250 home insurance deductible, but now we feel we can handle $5000 that'll be funded by the premium savings. I used to have life insurance to replace my working income, but now in ER I don't need it. I used to have dental insurance, but at current priced I've decided that I don't need it either.

I suspect that, given the life-expectancy statistics, I'll always need a marriage. (With my wife would be even better!) Although it's counterintuitive to some veteran marrieds, married couples do live longer than the equivalent singletons. (Personally I think it's the nagging, or maybe it just seems longer.)

Quote:
Originally Posted by Jay_Gatsby
I'll admit that a pre-nup in my mind = protection. Why do I need protection? It isn't because I don't trust her NOW, but rather that there may -- and I stress MAY -- come a time that our marriage changes. People fall out of love just as often as they fall into love. You can't regulate, legislate or adjudicate love, but you can plan for the possibility (however remote a chance that may be) that you'll no longer be in love with one another.
Well, here's where I think you're missing the point. You're seeing love & marriage as a binary relationship (now it's good, oops, now it's bad) instead of an enduring, growing, changing lifestyle. Marriages DO change, and so will yours, but it's mostly for the better. IMO having a contract escape clause evades the motivation (responsibility!) for you each to find a way to negotiate a compromise. The Psych Today article says it well: "Struggles over money are really power struggles. The prenup is simply going to memorialize the power distribution that exists. You don't need to work it out in a lawyer's office--you need to work it out in a shrink's office. Without a prenup, the stronger party has got to engage in more compromise in the course of the marriage. But with a prenup, he can just say, "Honey, if you don't like it--leave."

IMO, making yourself vulnerable and having the incentive to compromise is what keeps a marriage strong. If you want another incentive, read Diane Medved's "The Case Against Divorce."

Peter76, your point is well taken. (And with your former fiancee I'd probably feel the same way.) I'd avoid a financial discussion until the cusp of the engagement. The person's response to the balance sheet will certainly tell you whether they're motivated by love or lust/money. Then you can tell your intended that you're keeping your money in your personal brokerage account as your stake for this foolproof options strategy that you want to test.

But I have to admit that this thread shows all the signs of being another eternal reciprocated diatribe. If you've never been married, or if you've been through a nasty divorce, then it might be impossible to understand why most happily-married people don't care about pre-nups. And we HMs hope we never have to learn about them!
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 12:52 PM   #16
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Pre-nups, nups, and post-nups: The DW has me by the short ones. We were discussing what to do if something happens to one of us. My side of the family has a tendency toward strokes in later life. I told her to bring me home and take care of me in a manner I would like to become accustomed. I said to just keep the diaper pail in the basement . . . . She said she was going to use DEPENDS AND hire a full-time home health care worker to change them. I have always, my entire life, picked up pennies on the street to use for my retirement years--or popcicles. I'm cheap.

I can't stand this idea. I'll do whatever she says--forever--if she just doesn't waste money like that. What do I do? This is spousal abuse. How many "uses" can you get out of a Depend?
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 01:36 PM   #17
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Interesting stat for your dining pleasure.

There is a direct correlation between the size and expense of a wedding and marital financial problems along with severity of a divorce.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 05:11 PM   #18
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

Wow Nords, many thanks for the lengthy and well thought-out response. I’m not sure that I agree with you, but you speak from experience, but also from a different generation. Let me respond as follows:
Quote:
…we eventually we agreed that pre-nups are absolutely essential for pre-existing kids or for taking care of family that could suffer divorce "collateral damage". We also agree that a pre-nup excuses full commitment & compromise (as well as sucking the romance out of a marriage) while she thinks it's a valuable springboard for a financial discussion.
A pre-nup can excuse full commitment & compromise, but it can also ensure it. By this I mean that the spouse with less assets (and more financial dependence), will have an incentive to work out his/her issues before filing for divorce based on “irreconcilable differences”.

As for the Psychology Today article, I’m glad you liked it. I didn’t want to have a series of links to one-sided articles in favor of pre-nups.

Quote:
I'm calling that first batch of questions a strawman, but I'll knock it down anyway. You're absolutely right-- I don't trust family (or friends or the probate courts) to carry out my wishes. At best they'd be subject to "interpretation". That's especially true if my spouse & kid aren't mentally competent at the time, and I'm sure that everyone has a story about "bad" adult children grabbing for all the goodies without a clear will.
I don’t think it’s a strawman argument at all (naturally, of course). Courts will ignore your wishes in a marriage just as much as if you had no will. I don’t trust a court to dissolve my marriage amicably any more than I would trust a court to distribute my assets if I died intestate (aren’t divorce and probate both distributions of assets anyway?)

Quote:
As for insurance, it's designed to help you survive the disasters that you're financially unable to handle on your own. We used to need collision insurance, now we don't have it-- and we put the premium savings toward a replacement vehicle. We used to have a $250 home insurance deductible, but now we feel we can handle $5000 that'll be funded by the premium savings. I used to have life insurance to replace my working income, but now in ER I don't need it. I used to have dental insurance, but at current priced I've decided that I don't need it either.
Again, I’m not sure that I agree. People have insurance even though they could (not that they would want to) cover costly disasters. Insurance is a way to mitigate the risk to your assets. If you can self-insure (or under-insure), then you’re assuming the risk to your assets. Then again, if you can do so, you perceive the risks as minimal.

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Well, here's where I think you're missing the point. You're seeing love & marriage as a binary relationship (now it's good, oops, now it's bad) instead of an enduring, growing, changing lifestyle. Marriages DO change, and so will yours, but it's mostly for the better. IMO having a contract escape clause evades the motivation (responsibility!) for you each to find a way to negotiate a compromise.
This goes to the point you made above. However, just because you have a pre-nup doesn’t mean you don’t have to find a way to negotiate a compromise. The focus of any compromise should be on preserving the marriage, not preserving one’s assets. If one party doesn’t want to preserve the marriage, should that person be forced to forfeit his/her assets as a penalty?

At the end of the day, if we end up getting a pre-nup, I’d like to thereafter throw it into a drawer and forget about it. In fact, some people get pre-nups, and after a period of time, decide between themselves to terminate it. That may be very well what happens in my case.
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 05:23 PM   #19
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

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Originally Posted by Jay_Gatsby
Wow Nords, many thanks for the lengthy and well thought-out response. I’m not sure that I agree with you, but you speak from experience, but also from a different generation.
Ha ha Nords, I think he just called you an old dude!
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg
Old 06-18-2005, 09:17 PM   #20
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Re: Pre-nuptial Agreement to Protect FIRE Nestegg

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Originally Posted by Jay_Gatsby
In fact, some people get pre-nups, and after a period of time, decide between themselves to terminate it.* That may be very well what happens in my case.
Sounds like the board romantics are getting to you. You've no doubt heeard about the older couple who were planning a divorce. The attorney asked "Why did you wait so long? The wife said, "We wanted to wait till the children were dead."

Plenty of late life divorces, by people who thought they had solid marriages. Or at least one of them thought that.*

Ha
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