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Lillian Karabaic is headed for new ventures—this is her last column for Pay Dirt. You can continue to follow her money thoughts over on Twitter. Check back each week for new columns from Athena and Elizabeth.
Dear Pay Dirt,
I’ll be getting married in about a year and a half. I have tried to be a good steward of my money and I’m doing OK. I have paid off half of my mortgage. I own the house myself and purchased it before I met my fiancée. My car is paid off. I have no credit card debt and I have a decent 401(k) and an emergency account of $150,000. My fiancée has no savings and a smaller 401(k).
She has enjoyed her early years with travel and going out. She had a credit card debt of about $20,000 that I paid off so she could avoid the interest. She has paid that back in the five years we have been together. She now has a part-time job, in addition to a good full-time job, to save for the impending wedding of her dreams which will cost about $65,000. We are splitting that in half, even though I would prefer a much smaller wedding. I brought up the subject of a prenuptial when we talked about marriage and she understood. Now she is not interested in doing that anymore. I’m a little fearful because I have sacrificed a lot to get what I have and I’m worried that if things don’t work out, I will lose my house. Is there anything I can do before marriage to protect my assets?
—Nervous in the Northeast
Dear Nervous,
Your fiancée started making good financial decisions once you met. She’s paid off her debt to you (and accepted your help to avoid compound interest). She is willing to work a second job for her dream wedding. Despite all these financial decisions involving you (you were her lender, and you are the one she is getting married to), you still seem to think of all of these decisions as “hers.” You view each of your two spheres of finances as non-overlapping entities. But you’ll have to start making money decisions together.
You don’t get to approach this marriage with a “hers” and “mine” mentality. Even with separate finances, my spouse and I make daily collaborative decisions that affect one another’s balance sheet: where we choose to live, how we divide household expenses, which health insurance is a better deal, and tax considerations as a married filing jointly couple. It varies by state, but if you don’t want your marital home to become marital property, you’ll generally need to get a legal document that sets it aside. Even with such a document, there are still cases where your assets could be at risk for your wife’s debt. There’s no secret magical sauce to protect your assets except a prenup. (Okay, maybe several secret accounts in the Cayman Islands.) Prenuptial agreements exist to clearly divide assets in the case of a marriage dissolving. But not all prenups are iron-clad—a judge could decide that your wife is entitled to a share of your home in divorce (if she’s paying fairly into the mortgage, for example).
It could be worth starting a charm offensive if your fiancée is backtracking. Spell out why prenup can be good for both of you and healthy for your relationship. Putting together a prenup will help you discuss and clarify your financial goals in a structured way. Each of you can get legal help to ensure your interests are represented. Since you’re an anxious and meticulous person with money, hopefully, she will see the prenup as a way to calm you and start out on even footing. You agreed to a more expensive wedding for her; she can agree to have a series of conversations about money.
If your fiancée is unwilling to get a prenup or do premarital financial counseling, you must consider whether you’re a good match long-term. If you’re constantly stressed about the worst-case scenario and your nest egg, and she’s regularly splurging on a “dream” purchase, will you be happy together? Research has found that money arguments are the second leading cause of divorce. As Amy March from Little Women said in the 2021 film: “Don’t sit there and tell me that marriage isn’t an economic proposition, because it is.”
—Lillian
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