What’s the Scoop with Prenups? Understanding Prenuptial Agreements
Movies often feature prenups, or prenuptial agreements, as this thing that rich people get when they pretty much know their marriage will end in a divorce. Today, Pete and Seth talk about these mysterious beasts. Are prenups really signals of inevitable divorce? Are they all that bad? And are they just for rich people?
Turns out, prenups can be quite helpful even when it’s not about large piles of money. They can also help if you’re marrying someone with huge amounts of debt! Did you know that?
And there are also postnups, which is basically an agreement put together after you’re already married. Harder to sort out but still viable.
Still, don’t just write it down on the back of a napkin. These are legal documents and require a lot of thought. So tune in to this episode to learn more about these mysterious agreements.
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Pete Wright:
Welcome to How to Split a Toaster, a divorce podcast about saving your relationships from TruStory FM. Today, your toaster wants to save its stuff.
Seth Nelson:
Welcome to the show everyone. I'm Seth Nelson, and I'm here as always with my good friend, Pete Wright. Today, you're just stuck with the two of us. And we're going to talk about things that people don't want to talk about. It's not death, it's not taxes, it's prenups.
Pete Wright:
I have, Seth, an understanding of the prenuptial agreement only from the movies.
Seth Nelson:
Oh, you're a movie buff as everyone knows.
Pete Wright:
It's true. That means I am effectively ignorant on the prenup, but what I know is they are scary. That's what I've learned from movies. Everything I've learned from movies is prenups mean you're not committed to the relationship, or you're trying to protect your goods and your ill-gotten booty from your probably not-good-for-you potential partner. Seth, is that everything? Did we nail it?
Seth Nelson:
No, we got to back that up. First off, I'm going to get this out right at the top of the show because if I don't, as you know, I'm currently engaged and I will no longer be engaged, not because I'm married because she'll break up with me if I do not mention Intolerable Cruelty. The best movie ever when you're talking about prenups and divorce and negotiations. It was on one of our holiday bonus shows we talked about it. The guy eats the prenup at the wedding dipping and barbecue sauce to just tear it up. On the advice of council, do not do that.
Pete Wright:
Oh, I thought you were going to go the other way. Well, at least we know what the stakes are.
Seth Nelson:
Check your local jurisdiction.
Pete Wright:
So let's start at the very beginning, a very good place to start. What is a prenuptial agreement?
Seth Nelson:
A prenuptial agreement is a contract that if someone comes to me and says, "I want to prenup," this is what I say. "Here is what I believe you are asking me to do for you. To create a contract that will be valid and enforceable in the event that you get a divorce. Is that what you're asking me to do?" And if the answer that is yes, then we have a lot of work to do. And here is the concept. When you get married, whether you know this or not, you're entering into a contract, you have certain rights upon divorce. But in Florida, check your local jurisdiction, and throughout the country, you are allowed to enter into a contract that changes the law as long as it's not against public policy. You've got a confused look on your face, Pete. And you're a smart guy.
Pete Wright:
No, I do. I was about to de describe the confused look in my face, but you nailed it. I'm confused right now. Can you define what it means to change the law in Florida?
Seth Nelson:
Currently now in Florida, if you get divorced and you have property, we will go through equitable distribution where we identify your assets that you own by yourself titled in your name, that you own with your spouse, that you own with third parties. We do the same for your spouse. We do the same thing with your debts. That's identification. Then we go to classification and we say, "You know, what is it? Marital or non marital. And then how do we do it?" If it's marital, it's split 50/50. I'm just using shorthand here.
Pete Wright:
So this was exactly the whole concept. We say pre prenuptial agreement and my mind says, don't we already have laws on the books that handle this kind of thing?
Seth Nelson:
Yes and no. In Florida, and this is why it gets confusing so just listeners, stick with me for a moment, we're going to get to these questions that I'm sure you're thinking in your head. But in Florida, if I have a savings account, let's call it just a good old fashioned savings account, and it's in my name alone and I get married and I never touch it. I don't add money to it. I don't pull money out. It just sits there and gets its little interest rate over time over time, over time. In Florida, under the current state of the law, when we get divorced, that would be mine, because it was a premarital asset. Easy peasy.
But nobody lives their life like that when they're married. What they do is they're like, "Oh, I got a savings account. I got a little extra money. I'll toss it into my savings account." The moment you do that and the money that you tossed in there came from your wages, which were earned during the marriage for marital labor so the wages are marital money and you've taken marital money and tossed it into the non-marital savings account, you've commingled it. And under the law you cannot tell one dollar from the other and therefore it's all commingled.
Pete Wright:
So even the value that was there before you commingled it, that becomes marital property. You've just converted it.
Seth Nelson:
Right. I described this as a little savings account, but now I'm going to change the hypothetical. There's $100,000 dollars in this savings account, and you throw in 20 bucks.
Pete Wright:
You've just committed marital alchemy.
Seth Nelson:
Exactly. Which your spouse will love for upon divorce. That's the only thing they're going to love about you upon divorce. No one lives that life like that when they're married. They don't think about, "Hmm. If I get divorced, I better keep this little side account of $100,000 non-marital, don't add any money to it." That's the law. But you can have a contract not to apply that law or change it. That's what a prenup does. A prenup might say any account that is titled in either one of our own individual name upon divorce is our money.
Pete Wright:
No matter what you do with it during the marriage.
Seth Nelson:
Correct.
Pete Wright:
So that $20 on top of that $100,000 is now a hundred grand plus 20 of your money.
Seth Nelson:
That's right, because we've changed how we're going to deal with that account upon divorce. Here's the greatest example, an IRA, stands for Individual Retirement Account. It has the word individual, right in the title. It can only be titled in one person's name. Yes, you can have beneficiaries that if you die it will go to, but it can only be titled to only one legal holder of that account, whatever the individual's name is.
In Florida, check your local jurisdiction, if you keep depositing money into your IRA during your marriage, and you're going to pick up on this quick, Pete, there's a non marital component and there's a marital component. Because you're going to have money from before the marriage and the growth on that money, and you're going to have money that you put into it during the marriage and growth of that money. And now I see the look on your face, you're like, "Wait a minute, Seth. I just asked you on that savings account if you could identify it, and it's a different rule for retirement accounts."
Pete Wright:
Yes. Why is it a different rule for retirement accounts, Seth?
Seth Nelson:
Welcome to my world.
Pete Wright:
I'm so sorry.
Seth Nelson:
Because the law deals with different accounts differently and it doesn't necessarily make intellectual sense.
Pete Wright:
So this might be a great example of when to use a prenuptial agreement intelligently too. Just practically it's it is an individual retirement account. We're going to say in the prenup on divorce, "Any gains on that account are my gains."
Seth Nelson:
And any money I put in during the marriage, the active appreciation I'm putting money in, active. That and the gains on that, passive. The passive gains on that are all mine, and all the money I have there before, all mine. Oh, and wait a minute. The house that I owned premarital.
Pete Wright:
Yeah, how do you handle houses?
Seth Nelson:
You, one, in a divorce in Florida if you owned a house premarital, you're married for 10 years, you never put your spouse's name on it and you go to get a divorce, a portion of the value of the house could potentially be marital in a portion non-marital. Because when you're actively paying down that mortgage, you're eating away at the principle, which means you have more equity, that portion could be value. There's actually a Coversure fraction that we use to figure out marital versus non marital. What was the debt at the time? What was the value at the time? What was the equity at the time? How much money did you put to improve the property? Do you get that money back? And so literally they're going to love this. Pete. In words, but in the statute, it lays out what the mathematical formula is. And of course I, being a law nerd and loving Excel, created an Excel worksheet to plug in these numbers.
Pete Wright:
Yeah, of course you did. Of course you did.
Seth Nelson:
But in a prenup you could say, "That house is mine. And when I sell that house and buy a new house, as long as it's titled in my own name, it shall also remain mine upon divorce."
So now here comes the rub. Your spouse looks at you and says, "Wait a minute, I have a good paying job. I'm going to quit my job because we want to have children and we're deciding that I'm this spouse that's going to stay home with the children. And you're going to keep your premarital home. And then if we sell it and buy a bigger home, because we have kids and I'm making a home for us and it's great for the kids to live in. And by the way, with your job, you travel a lot. And then we get divorced, I got to move my ass out because it's your house?"
Pete Wright:
Yeah. That's sure what it sounds like.
Seth Nelson:
"That doesn't really feel like we're a team in this, right?" And there's the rub, because now negotiating a prenup is talking about getting divorced when you're "No longer a team" or a different type of team, you're still raising children together, but just not in the same house. And there's a lot of hurt feelings, really raw and like, "Wait a minute, that's not how I viewed marriage." And we're like, "No shit, because we're talking about divorce."
Pete Wright:
This isn't a conversation about marriage anymore at all. And you're coming into it from the spirit of being potential newlyweds and there's a lot of joy here. And what you're telling me, Seth is that as an attorney, you're going to suck the joy out of the conversation.
Seth Nelson:
No, that's not what I'm telling you. I am telling you that a client has hired me to try to suck the joy out of the conversation. Then I'm going to do my job, okay.
Pete Wright:
You're like the final test for marriage. If they can survive you, they win. You're the brass ring man.
Seth Nelson:
That's awful. So what happens then is it can get very stressful very quickly because the one side emotionally and I've switched from the topic of, "Hey, you can change the law. You can define how you're going to do a divorce," to the negotiation of it in the emotionality of it. One person is saying, "Wait a minute, I don't feel like I'm going to be secure. I thought we're getting married. You would always want me to be secure." And the other one then says, "So are you just marrying me for my money?" That's the dynamic that we deal with.
It becomes a lot easier to negotiate a prenup when both people have relatively equal financial status, because if they're both financially secure, let's just say, both parties have a net worth of 10 million. They are on their they're in their fifties. They're not going to have children together. They both want to leave their life's work to their children from previous relationships that doesn't have that same emotion because they're both going to want the same thing.
"Hey, we each have our stuff. We love each other. If we put anything together, if we buy a house together, divorce will split it. Neither one of us wants alimony from the other because we can live off of our either earnings because we're still working or we can live off of our assets in case and I want to leave my stuff to my children one day, you want to leave your stuff to your children one day." I'll come back to that point, because those are death provisions, not divorce provisions, but that negotiation is a whole lot easier than someone who's just starting out. Maybe someone has significant net worth or has a business that might grow a lot during the marriage and the other one doesn't and there's a big disparity of incomes and the lifestyles they're going to lead and people get used to a certain life style and they don't want to be "Out on this street" when they get divorced. That's a different emotional negotiation than the one with two people that both have 10 million.
Pete Wright:
But isn't it also a practical negotiation too? What are you going for if you're the spouse that doesn't have the big net worth, right?
Seth Nelson:
Security.
Pete Wright:
At some point doesn't the divorce process, alimony, child support, isn't that what it's supposed to do for you on separation?
Seth Nelson:
Yes, it's supposed to work that way, but you've talked to me long enough to know that's not necessarily the case.
Pete Wright:
It was a leading question.
Seth Nelson:
The other thing, what a prenup does and why it's not necessarily a one percenter type thing, right?
Pete Wright:
That's what we're getting at.
Seth Nelson:
Some people like, "Why do I need a prenup? We both don't have anything." Well, part of reasons for getting prenup, and this is the good and the bad, I'm not advocating people do or don't in this conversation. What I'm saying is part of the reason for getting a prenup is you define the terms upon the divorce, which means you shouldn't have a big legal battle and a ton of legal fees when you're talking about uncouple in your finances. And I said that very intentionally, uncoupled your finances, because in Florida, check your local jurisdiction, you cannot do a prenup about time sharing of kids. You cannot do a prenup about child support. So if you want that fun litigation experience and go into mediation and staying late and working on a weekend and then go into a trial and being deposed, you can get all that in the parent- [crosstalk 00:15:53].
Pete Wright:
This actually is broadening my horizons about the prenuptial agreement. Let's go back to the couple that doesn't have a lot of the security built in because their financial power is out of balance coming into. How would you struck a prenuptial agreement that actually works in both parties favor to provide that security going into the marriage that they're going to be taken care of coming out of the marriage. Are you setting up the party that earns less is going to get a certain something out of the marriage before they go into it?
Seth Nelson:
Yes. What you're doing is setting up what the financial relationship is at the end of the marriage. Sometimes I do it as well during the marriage. And here's an example of that is every month, one spouse will pay to the other spouse $10,000 and that money shall be transferred into that spouse's own individual account and that account shall be non-marital money. Or one spouse will contribute the maximum allowed under law for, I'm making up a number, 20 years to a spouse's IRA.
There're things you can can do to set up financial security in the future by requiring payments during the marriage. Now, it's a lot more palatable for people to say, "Yeah, look, we're married. He's going to put money into my IRA. We're going to hope that money's always going to be mine, whether we get to forced or not. But hopefully we stay married forever and I'm going to use it for retirement just like we're using his retirement strategy."
Pete Wright:
If we stay married, we never have to execute the prenup, then we both win because that means we've been financially successful and we're doing okay.
Seth Nelson:
By execute the prenup you're saying we never have to put it into practice. When I hear the word "Execute a prenup," I think about signing it. So it'll be signed.
Pete Wright:
Oh, okay. Sorry.
Seth Nelson:
It's all right. You know, these legal terms that aren't matching up with the real world terms and how we use it. You can certainly set up ways to get financial security. And look, the things that break down a marriage are communication, and things that people have trouble communicating about raising kids, money and sex. If we can take off the table the money argument and have that communication upfront, which is actually healthy for a marriage. So many people get married, they don't have financial conversations, so this forces a financial conversation. That is what I think is actually a benefit of doing a prenup. Isn't necessarily the document, it's the fact that it forces communication.
Pete Wright:
All right. So Seth, let's say I go out and I buy a new computer and I don't know if I want to buy the warranty up front. Sometimes I think, I'm a pretty careful guy, but maybe accidents happen and I decide, I usually have up to 90 days, I can go back and say, "You know what? I want to get the prenuptial agreement with my new computer." Can I do that with a marriage? Can I get it after I'm already married?
Seth Nelson:
I gotcha. Yes. In Florida, check your local jurisdiction, yes you can. It's called a postnup.
Pete Wright:
Postnup?
Seth Nelson:
You're already married. The nuptials have been completed. Post, after. They've been nut. I love it, that's awesome. So yes, you can do a postnup. Because in my experience this has happened where, let's just say somebody comes to me for a divorce. The big issue is money. And I say, Listen, you're raising a child together. You've got children together. The big issue is money. And you guys get into arguments and people say stuff like, "Oh, it's my house. I'm going to kick you to the curb." And that makes people feel insecure and then they want to get a divorce, this whole thing. What happens if we do a postnup and we define the money relationship during the marriage and upon divorce?
Pete Wright:
What if we can take money out of the consideration completely? What if we resolve that? Is there anything else in your marriage that you like?
Seth Nelson:
That's right. When you do that, sometimes that helps save a marriage. And I hate the term "Save a marriage," but people are deciding to stay together because "I've now had the difficult conversation with them through counsel, through lawyers, through a mediation. And we have signed a postnup agreement that said, you know what? Let's take the money issues off the table. Let's agree on how we're going to handle these things and then if we get divorced fine, there's our off ramp. We've already got it covered, now let's focus on kind of getting this back where it needs to be." I've used it as a tool to help people decide whether or not they want to stay married. Now, here it comes, Pete. In the same case, I've done prenups and post ops.
Pete Wright:
You do double, a pre-postnup.
Seth Nelson:
A double. A prenup, and then they get married and I do a postnup.
Pete Wright:
Is the postnup effectively an amendment of the prenup or is it a wholly different agreement?
Seth Nelson:
In effect, it's an amendment, but it's a whole new agreement. In the postnup it will say the prenup is null and void. Is no longer a valid enforceable contract and we're agreeing to set it aside.
Pete Wright:
Assumption is because something has changed in the financial relationship for one party and they want to balance things out.
Seth Nelson:
No. You're so nice to me, Pete, because I thought your assumption was going to be, "Because Seth, you want more attorneys fees." That was very nice of you. You're kind to me when we don't have guests on the show.
Pete Wright:
Never. I hope that one's keeping score.
Seth Nelson:
Here's the deal, and I'm going to back up to contract formation. Just what everyone wanted to talk about today.
Pete Wright:
Somebody ring a bell.
Seth Nelson:
If you are selling me your house and I don't know you, that's called an arm's length transaction. A willing seller and a willing buyer reach what they determine to be fair market value, money exchanges for an item, good, services, whatever the contract may be. Arms length transaction. Neither party has to enter into the contract. Both parties want to enter into the contract and a deal is formed. It's called the meeting of the minds. The lawyers draft it. Everyone signs it. You give over your keys one day at closing, you walk out of the house. You're not allowed to walk back in the next day because someone else owns it.
Prenups inherently are not arm lengths transactions. One, they know each other. Two, they're getting married. Inherently they're not, therefore in Florida the courts will look more closely at how was the contract formed because we want to make sure there is no undue influence or pressure from one party to the other.
Hypothetical. These are law school questions on exams that go craziness and then you're like, "Oh, what are the defenses for this?" You've been negotiating a prenup for six months going back and forth, back and forth. It is the day of your wedding and everybody is standing in the wedding facility, the church, synagogue, by the lake, wherever you're getting married and waiting for the bride to come in. And the limousine pulls up and the groom comes out and says, "Haven't signed the prenup yet. Not getting married unless you sign the prenup." It gets signed on the hood of the limousine, and then they walk into the facility, the church, the synagogue, wherever they're getting married and they get married.
Pete Wright:
Okay. That sounds like coercion to me.
Seth Nelson:
Or at least I'm under duress. I got a whole wedding party in there, I'm in my dress. High likelihood that's going to get set aside because it is too close in time to the wedding. So how do you prevent that? One, in formation you have negotiations back and forth. You have provisions that the husband wants in and the wife did not at the first draft, but the wife get some of those provisions in the draft document. That's a way to say, "Look, judge, we are being fair. This said she got nothing on my first draft, but by the eighth draft, she's getting 25% of my net worth. That's a way to show that we've been going back and forth and it wasn't doing undo influence. And we signed this before we ever sent out one invitation or a save the date card."
Pete Wright:
Yeah, no pressure.
Seth Nelson:
There was no pressure that the wedding was imminent. And then three weeks later, a month later we sent out the save the date card. Then we get married four months after that. All's good. Now, if I get people, which happens all the time, because you know what you do when you're planning a wedding. Right, Pete?
Pete Wright:
Absolutely nothing. My wife made all the decisions.
Seth Nelson:
Exactly. Well, that's why you're still married.
Pete Wright:
No, we're okay.
Seth Nelson:
But here's what your wife was doing. Where are we going to get married? Who are we inviting? Flowers, dresses, bridesmaid parties, flights, accommodations for the out of town guests, the gifts that you leave at the desk for the out of town guests. They're doing all these things. Nowhere on that list is a prenup, and if it is, it's at the very bottom. These are typical calls that I receive. "Seth, I got referred to you by a buddy of mine and I'm getting married in a month and I need a prenup." And I say, "Okay, you're asking me to create a valid, enforceable contract upon divorce. I'm telling you now that that valid enforceable contract will be challenged and most likely will be set aside because it's one month to your wedding."
Pete Wright:
It's just too close.
Seth Nelson:
So I have a solution for you. One, we can rush through and hammer out this prenup and it will give you a level of protection. Or as I like to call it, a false sense of security, because I'm telling you now I think it's going to get set aside. But at least it's something to argue. But then after you're married, after the honeymoon, come back to me and we'll do a postnup and we eliminate the pressure of the wedding because now we're already married
Pete Wright:
The stuff you hammer out in the prenup process, it's essentially the same document, right? I mean, you're just doing the homework before.
Seth Nelson:
And I'm reaffirming that I agree with all this and then it was entered fine the first time. But guess what? It's fine now. Even if the court finds it, the first one wasn't entered properly, which we don't care about anymore because it's gone.
Pete Wright:
We have a postop.
Seth Nelson:
Then new spouse says, "I'm not signing a postnup." Well now you got a marriage problem.
Pete Wright:
Because now you have an unenforceable prenup and a postnup that isn't getting signed.
Seth Nelson:
And then you're going to talk about divorce. That's just what's going to happen practically. I'm not saying it.
Pete Wright:
Let's say the prenup and the postnup will get signed. The prenup is tossed out because it was too close to the wedding, too much pressure. Then do we fault back to the laws of the state if nobody agrees on the prenup?
Seth Nelson:
This is my cynical joke. If you think about a divorce and you have a prenup and it says what one spouse is going to get and what the other is going to give, that is the spouse that's receiving their worst day in court, because if the prenup is upheld this is what they get. If they challenge it and get it set aside, they might have said, "Wait, I can get a whole lot more." So the prenup is their worst day in court, which I like to call, "That's my first offer." If you represent the other side, well, that's just a first offer. I know this is my worst day in court. I'm not going to accept your first offer guy that says this, so I'm going to sit there and go and try to get more. So how do you prevent that?
Pete Wright:
One might ask.
Seth Nelson:
Great question. Glad I thought of it. In Florida, check your local jurisdiction, you can have called a prevailing party clause, where if Pete, you challenge the prenup and your wife has to defend it and she wins, you've got to pay her lawyer fees. Now we've upped the ante. Everybody's got skin in the game.
Pete Wright:
Yeah, we have stakes.
Seth Nelson:
The other thing in Florida under the current law, you're not allowed to waive in a prenup or a post-up for that matter, temporary attorney's fees, temporary alimony. So if you want to argue about challenging the prenup and setting it aside and all of these things and argue about what the money should be and all along, you drag your case out for two years and you get paid temporary alimony the whole time and you suck them dry on temporary attorney's fees. And then finally the other side settles, because, "I'm just tired of paying this temporary stuff. Let me just get this done." The way that I draft it or advise my clients to let me draft it is put in there the prevailing party clause and put in there some case law that says we're allowed to do it that way. That's why you really got to know this stuff inside it and check your local jurisdiction because it can be an expensive proposition.
Pete Wright:
First on the culture of prenups. In your experience, what is the impact of a prenup on a marriage?
Seth Nelson:
In my experience, I've seen a higher likelihood that it ends in divorce than without a prenup. I don't think it's marginally higher. I haven't seen it where it's like, oh, divorces are 41% of marriages. People get divorced, but if you have a prenup, it jumps to 60%, that's all I'm talking about. There's other many other factors that go into it, but the reason why it's a little bit higher in my experience, they know what the off ramp looks like. It's not a question of what will I get? He's going to drag me through the mud. The litigation's going to go on forever. It's, "Hey, got to prenup. This is the deal. We're done."
There's less fear, there's less fighting, there's less, "Oh, I don't know." I think sometimes those same marriages might have ended in divorce anyway without a prenup, it just might have happened quicker with one.
Pete Wright:
Interesting. The on the same side, maybe a temporary period of the marriage where you're living in uncertainty and fear that keeps you in the marriage might give you a little bit of the restraint to stay in the marriage and try to work it out. One could make that case as well.
Seth Nelson:
Absolutely. There's a lot of reasons people stay in marriages for certain periods of time. One is the fear of what will happen if they get divorced. One is what will happen with the kids. I want the kids to not go through a divorce and live in separate households. I want to see my kid every day. And then right when the kids graduate from high school, the last one gets out and in college or right after our college, their parents get divorced and then the kids like, "Yeah, you guys weren't happy. You should have done it years ago."
Pete Wright:
You should have done it years. It could also be the fact that prenups have increased by 500% over the last 20 years. That could be a reason that prenups are showing a leading indicator toward divorce.
Seth Nelson:
Exactly. And they have increased that much. I think a lot of that is that with social media and society nowadays, people are seeing more of these celebrity divorces and what's happening where maybe before they didn't really think about a prenup. Steven Spielberg set aside the prenup. Man, it was solid. Written on the back of a napkin. And then it was over a hundred million dollars. Now, I don't know what that to do with net worth. I have another question, Pete, which I'm hoping you can answer. Unless there are drawings on the napkin, how do you know which side's the back of the napkin?
Pete Wright:
Isn't it going to be written in the right?
Seth Nelson:
No, I don't know the answer to the question. Seriously, if you have a napkin that's just cloth or paper and it doesn't have like an embroidery, the embroidery should be on the front. But if it's just plain, which side's the back of the napkin? These are the things that keep me up at night.
Pete Wright:
You use cloth napkins because you're a real fancy lad, but paper napkins like I use it always bleeds through and the writing is backwards on the back.
Seth Nelson:
Oh, I see. But you're picking the front by which side you write it on, whether it's the front or not.
Pete Wright:
A hundred percent. That's right.
Seth Nelson:
Okay, I got what you're saying now.
Pete Wright:
That's called self-determination, Seth. Thanks everybody for hanging out with us.
Seth Nelson:
Hold on Pete, there's one more thing I want to throw in there because people always come to me and say, "Look, I've got all this wealth or I want to keep the house or keep my business." There's the reverse side of this, just real quick to end on. There's also debt.
Pete Wright:
Oh, I don't want to inherit your debt through this divorce.
Seth Nelson:
That's right. If you're running up bills on a credit card that I don't know about, I don't want to be responsible for it.
Pete Wright:
Yeah. Smart.
Seth Nelson:
Then it's like, "Okay, whatever debt's in your name is this. Or whatever's debt in your name is that." Or you say, "We're agreeing that we're going to have a joint credit card and the spouse will authorization use and the bills will get paid every month." But you can put a cap on it or you can say every month. And then when that starts going, you're going to be like, "Cutting it off." There's all these different issues. And then usually when you divide this stuff, and this gets really tricky, when you're going to divide stuff at marriage we can always say stuff like, "Well, the money's easy. That account's in her name-"
The nups. Honeymoon, and you find this great piece of artwork that you both love and you want to get it and hang it in your house and just keep it and to remind you of what a great time you had. But both of you ended up loving the artwork, not much the honeymoon, and so now you're going to get divorced. Who gets that artwork? How do you know? Because it's not titled. If it's a car, it's titled in your name. If it's a bank account, it's titled in your name. And so some prenups will say whoever paid for it gets it. So now during your 20 year marriage, are you really going to keep the receipts on everything that you wanted that you bought and squirrel them away in that little shoebox in the bottom of the closet?
There comes stuff like that. This personal property stuff can always be a problem. We have ways to draft around it, but in practicality are people really going to do it? There's a lot of different nuances on that front.
Pete Wright:
We're still human.
Seth Nelson:
Another thing that we do is any gifts for one spouse to the other during the marriage is deemed to be non-marital. In Florida, it's marital. We've talked about this, Pete. I'm in engagement ring before marriage, non-marital. Matching earrings on first anniversary, marital. They're worth a thousand dollars, someone gets the earrings, the other one gets 500 bucks. Here, earrings for the anniversary given? Done, they're hers. You don't get the 500 bucks back. There's a lot of little nuances to think about in pre and postnups.
Pete Wright:
Pre and postnups. Thank you, Seth, for the education. You've broadened my horizon, sir. They are broadened about the nups. Thank you very much and thank you everybody for downloading, listen to this show. We sure appreciate you and we will be back right here again next week on How to Split a Toaster, a divorce podcast about saving your relationships.
Closing Narration:
Seth Nelson is an attorney with Nelson Koster Family Law and Mediation, with offices in Tampa, Florida. While we may be discussing family law topics, How to Split a Toaster is not intended to, nor is it providing legal advice. Every situation is different. If you have specific questions regarding your situation, please seek your own legal counsel with an attorney licensed to practice law in your jurisdiction. Pete Wright is not an attorney or employee of Nelson Koster. Seth Nelson is licensed to practice law in Florida.
