I’m a 28-year-old male marrying a 30-year-old woman. I have racked up about $100,000 in student-loan debt by earning two graduate degrees; luckily I obtained a finance job with unlimited earning potential, just heavy work hours, so I am not too worried about repaying my loans if the Biden administration doesn’t assist.
However, my fiancée does not have any student loans and doesn’t have as high an earning ceiling as I do, but she has a heavy spending problem, whereas I am a saver by nature. We are getting married next year, and will be purchasing a home next year as well. Both expenses will be covered by us with limited assistance from our parents.
Due to my fianceé’s inability to save and her excessive spending, I know the financial burden will fall on my shoulders. We’ve discussed her habits, but she isn’t able to change so I’ve recommended keeping our finances separate until I can see more financial responsibility from her. I’ve also mentioned prenuptial agreements to safeguard my assets in case things go south.
That conversation didn’t go over well and I believe it will create resentment before we marry and could possibly be the cause for divorce down the line if she felt forced into signing one. I love her dearly, but I am really concerned. An estate attorney friend has recommended that I move my assets into a trust and even purchase our first home in trust.
Am I wrong for considering this plan, and not discussing it with my wife-to-be given that I already know that she won’t agree to a prenup? If things don’t work out, I don’t have any intention of leaving her high and dry, but I also don’t want to lose everything I’ve earned from being an aggressive saver my entire life. P.S. I live in a community-property state.
Putting your home and other assets in a trust without telling your fiancée would break the trust in the relationship, as much as that trust currently exists, and that would end your marriage sooner than if she felt strong-armed into signing a prenuptial agreement. She would find out sooner or later, probably sooner. It doesn’t sound like you trust her very much, as it is.
You can’t have any kind of relationship without trust: a friendship or professional partnership or even a boss/employee relationship founders when that trust is broken. Namely because you are always waiting for something untoward to happen, and no one likes to live or work under a cloud of suspicion. It certainly does not bode well for a loving, long and happy marriage.
Family attorneys don’t, on principle, rule a trust out to protect yourself in the event you divorce. “The key to using a trust to protect assets in a divorce is what is listed in the fine print,” according to Lomurro, Munson, Comer, Brown & Schottland, a law firm based in Freehold, N.J. “The terms and conditions of the trust must be written carefully.”
“If a spouse established a trust prior to the marriage, the assets placed in that trust are typically considered separate property as long as the funds are not combined with marital funds at any point,” the law firm adds. But there are drawbacks to setting up such a trust too, including costs, filing tax returns, and other restrictions on those assets.
Ultimately, if you have to put so much time and effort into setting up some kind of domestic asset trust, you should pay the same close attention — for now, at least — to whether or not you should be getting married. Interview 100 divorced couples and 50% of the people will say, “You can’t change people.” The other 50% will be that person in that marriage who could not be changed.
Your wife has made her shopping stance clear. She is not for turning. That only leaves you.
Quentin Fottrell is MarketWatch’s Moneyist columnist. You can email The Moneyist with any financial and ethical questions at [email protected]. By emailing your questions, you agree to having them published anonymously on MarketWatch.