Tuesday, August 2, 2016

Itemize Before Re-Marrying

As sensible as it may be to secure a pre-nuptial agreement, particularly in a second or subsequent marriage, there are obvious emotional and personal issues that might prevent the party who would most benefit from the agreement to refrain, feeling uncomfortable even broaching the subject. I get that. It is easy for well-meaning friends, family and counsel to direct our lives. But ultimately, it is our life, and we have to weigh the pros and cons, and deal with the consequences.

As a low-hanging fruit concept for those who for whatever reason are not inclined to go down the pre-nuptial route, I suggest at least having both parties sign off as to the inventory of the assets each party is bringing to the marriage and value of those assets.

This isn’t asking either spouse to waive his or her interest in marital property or even the growth during marriage of non-marital property, which are common arguments against a pre-nuptial. Nor does it necessarily have to involve fees or other professionals.  Nonetheless, it can avoid lots of headaches, frustrations, and expenses should the marriage not last forever.

The reason I know this is that I am currently providing financial analysis for a second marriage that only lasted six years. By the way, the occurrence of divorce is much higher for those who re-marry than for first time couples. [1]Also, second marriages often last less than ten years[2]. In this divorce case, the husband has a business, retirement and non-retirement accounts, and they have lived in the home that he owned prior to the marriage.

Although both parties agree that the pre-marital value of these assets are non-marital, the wife will want to lay claim to half of the appreciation of each of these assets over the six years of the marriage. Now we have to re-construct the values for each of these assets not only today, but also as of the date of marriage, including the business, which can be very expensive and contentious to value.

We all have insurance policies which itemize the fair market value of valuables. If there is a loss, there already exists a valuation to which the parties agreed. In a similar fashion, it shouldn’t be too uncomfortable simply to itemize the value of assets each party is bringing to the marriage, and this serves as insurance to establish those values up-front rather than arguing and paying a fortune down the road.

Seeing so many things that go wrong after the marriage ends enables us to provide financial analysis and planning before the couple takes their vows. This aims to facilitate couples living happily ever after regardless whether they remain together or apart.   


* Divorce financial planning is a fee-only process that does not involve investment advice or securities transactions. All information provided herein is financial and educational in nature and should not be relied upon as legal or tax advice. You should consult with your tax advisor or attorney regarding specific tax issues.

[1] Second (And Third) Marriages: Destined for Divorce? Huffington Post 02/08/2013,
[2] (1)National Center for Health Statistics, B. F. Wilson. 19B9. Remarriages and Subsequent Divorces: United States. Vita/ and Hea/th Statistics. Series 21, No. 45. DHHS Pub. No. (PHS) 89-1923. Public Health Service. Washington: U.S. Government Printing Office