Welcome back to another episode of "Finding the Guardian of Your Soul®". I'm your host, Lisa Shield, and today we have a very special guest joining us. We are thrilled to have the distinguished family law expert, Aaron Thomas, on the show. Aaron is a three-time recipient of Atlanta's Best Divorce Attorney Award and the founder of Aaron Thomas Law, one of Georgia's fastest-growing family law firms. With a Harvard Law School background, Aaron has represented high-profile clients ranging from NBA legends to Grammy winners. In today's episode, we dive deep into the world of prenuptial agreements and unravel their significance in relationships. Aaron shares his expertise on the topic, emphasizing the importance of transparency when it comes to finances in a relationship. He enlightens us on the intricacies of prenups, from debunking common myths and misconceptions to navigating the legal requirements for their enforceability. Aaron provides insights into how couples can approach the conversation around prenups in a counterintuitive way, paving the way for happier and more equitable marriages. We also explore the various aspects of financial planning within a relationship, discussing joint and separate accounts, retirement savings, and the division of assets before and after marriage. Aaron shares his personal experiences and offers valuable advice on setting boundaries, having regular financial checkpoints, and aligning intentions for a healthier financial future. Whether you're single and curious about prenups, engaged and contemplating one, or married and looking for strategies to improve your financial communication, this episode is packed with valuable insights and practical tips. Join us as we embark on this journey with Aaron Thomas to unlock the secrets of finding the guardian of your soul. Continue On Your Journey: Lisa Shield | YouTube | Facebook | Instagram | Book a Call With Lisa Email the podcast at: podcast@lisashield.com
What You'll Hear In This Episode:
- About Aaron’s areas of expertise, including divorce, custody, child support, and pre- and postnuptial agreements
- The importance of setting clear financial terms during engagement reduces marital issues
- Fairer prenups lead to happier marriages
- Discussing what couples want to achieve with the agreement instead of using the term "prenup"
- Addressing the negative connotations and stereotypes associated with prenuptial agreements
- Meeting legal requirements such as signing the prenup at least a week ahead and having an opportunity to meet with an attorney
- Using prenuptial agreements to achieve transparency in relationships
-- Negative consequences of financial surprises during a relationship, such as hidden debt
- Regular meetings to discuss finances, similar to shareholders' meetings
- Communal assets and their potential complications in divorce, such as owning a house or making mortgage payments before marriage
- The potential loss of pre-marital assets in divorce settlements
- The benefits of having joint and separate accounts or an allowance system
- The tendency for people to be more comfortable being physically naked than financially open
- Lack of transparency in finances negatively affecting other areas of a relationship
- Being open about finances showing vulnerability and strengthening the overall relationship
- Not all family law attorneys are knowledgeable about prenuptial or postnuptial agreements
- The trade-offs involved in prenuptial agreements and the importance of making an intentional choice
Key quotes:
"My wife and I have regular checkpoints, whether it's annually or quarterly or even monthly, for us to sit down and talk about the finances." — Aaron Thomas
"A couple can be married for 10, 15, 20 years, and then a divorce happens and all of a sudden the wife is like, ‘What do you mean he wants half of the house that I paid for for 20 years? What do you mean he wants half of my retirement when he sat on the couch when I was out there busting my rear end to earn this money?’ She didn’t realize that when she got married, the default rule is that everything the couple earned over the course of the marriage is considered marital property." — Aaron Thomas
"Setting clear financial terms during engagement reduces marital issues, and fair prenups lead to happier marriages." — Lisa Shield
"Without a prenup, a lot of people lose what they built up even before the marriage." — Aaron Thomas
"Most couples find it best to have, like I said, three buckets, a joint bucket and then two separate buckets so you still have autonomy over the money in your separate funds." — Aaron Thomas
"It's one of the biggest issues about relationships in general…people fall in love and they're under the illusion that whatever they're feeling in the initial stages is going to go on for the rest of the relationship." — Lisa Shield
"People today...have an easier time getting physically naked than they do getting fiscally naked." — Aaron Thomas
"What you are saying is that having a prenup isn’t just about preparing for what will happen in the case of a divorce. When you write a prenup, you're also looking at how you're going to handle your finances throughout the marriage. That's a very important distinction that you're making there." — Lisa Shield
"And I would actually say that one of the sexiest things my husband ever did was on our fifth date, he sat down and he literally said, these are my finances. He told me. And for me, I felt so taken care of because he was being completely transparent. It spoke volumes about who he is, who he would be as a partner, and what our future would look like together. A lot of couples are afraid to talk about those things, but for me, it was sexy." — Lisa Shield
Continue On Your Journey:
Lisa Shield | YouTube | Facebook | Instagram | Book a Call With Lisa
Email the podcast at: podcast@lisashield.com
Lisa Shield [00:00:00]:
Camera. Good morning, everybody, and welcome to getting inside the right male Mind. I'm Lisa shield. And I'm Benjamin Shield. And we should put your mic up, honey, I think a little higher. More? Yeah. Okay. All right.
Lisa Shield [00:00:18]:
And we have the most wonderful guest. I am so excited to welcome Erin Thomas today to our show. Erin, it's a pleasure.
Aaron Thomas [00:00:33]:
Thanks for having me on. It's an honor to be here.
Lisa Shield [00:00:36]:
Well, once I read through your website, I thought if I needed a prenup, this would be the man that I would hire. So we're going to jump in. I'm going to tell everybody a little bit about you before we get started. So Aaron Thomas is a distinguished family law expert, and he is a three time recipient of Atlanta's Best Divorce Attorney Award. A Harvard Law School graduate of 2002, his firm, Aaron Thomas Law, was heralded from 2015 to 2022 as one of Georgia's fastest growing family law firms, serving clients from NBA legends to Grammy winners, aaron's vast expertise encompasses divorce, custody, child support, and pre and postnuptial agreements. As the founder of Prenups.com, which is a great I don't know how you got that website, but he is the renowned authority on crafting equitable prenups. Aaron believes that setting clear financial terms during engagement reduces marital issues, and fair prenups lead to happier. Welcome, Erin.
Lisa Shield [00:02:00]:
Like I said, it's awesome to have you here. I think this is an incredible topic for our audience and something that is so difficult for people to talk about.
Aaron Thomas [00:02:15]:
Yeah. Thanks again for having me. And you're right. I think it's one of the most difficult things for people to talk about, and often one of the most misunderstood topics that there is out there, and.
Lisa Shield [00:02:28]:
Probably one of the most important, I would guess, if it's handled correctly, that it can be a game changer if couples know how to approach it. And if it's handled poorly, I imagine it's a game changer.
Aaron Thomas [00:02:44]:
I think that's exactly right. I think the terms of a prenuptial agreement can be one of the greatest things you do for your relationship, or it could be the biggest red flag for your relationship, depending on what you write into it.
Lisa Shield [00:02:56]:
Yeah. Aaron, for those unfamiliar, please explain what a prenuptial agreement is and why someone might want one.
Aaron Thomas [00:03:05]:
Yeah, thanks so much for asking me that. A prenup is really a set of rules that defines your financial relationship both during and, if necessary, after the marriage. And I like to point that out because so many people believe, as I did before I got into family law, that a prenup is essentially just a plan for divorce. All you're doing is planning what happens if the marriage doesn't work out. And after getting into family law, I discovered that you can really set a lot of guardrails and kind of lay out a lot of the rules of how finances are going to be dealt with during the marriage. Itself, which is, of course, where a lot of the arguments come from. A lot of the confusion and disagreements that happen in marriages happen around finances during the marriage itself.
Lisa Shield [00:03:56]:
Great answer. And Aaron, what's the difference between a prenuptial and a postnuptial agreement? And is one more effective than the other?
Aaron Thomas [00:04:05]:
Yeah, a prenup and a postnup are really similar. A postnuptial agreement can cover pretty much all of the same things that a prenup can cover. It's just signed after the date of marriage. I see. Okay, so some people come to me, and they wanted to get a prenup, and they ran out of time with all of the wedding planning, but they still want to clarify kind of what is considered their joint property, what's considered their separate property, what are going to be the rules regarding finances during their marriage. And so they come to me for a postnuptial agreement. At that time, other couples, they've had something happen in their relationship. It could be something as simple as acquiring a property or one spouse starting a business that they want to make sure is kind of separated from the marital estate.
Aaron Thomas [00:04:52]:
And other times it's something like infidelity or some kind of crisis. And the couple needs to clarify where they stand to hopefully give them an opportunity to work on the marriage after resolving some financial issues, but also make sure that if the marriage doesn't last, that they're not going to. Spend 20% of their net worth and two years of their lives in a courtroom battling over what happens if the marriage comes to an end.
Lisa Shield [00:05:19]:
Right, great. And Aaron, this is a sensitive question, but how can couples approach the conversation about a prenup agreement without it seeming like there's a lack of trust?
Aaron Thomas [00:05:32]:
Yeah, that is a great question. I love that we're getting this out here early in the conversation because most people, when they hear prenup, immediately, they think it's a big red flag. Right. They think that, oh, you don't trust me and you're expecting our marriage to break up. And the way that I think that couples should approach the conversation around a prenuptial agreement is a little counterintuitive. I tell people to avoid using the word prenup because, let's be honest, it carries so much stigma, it carries so much negativity that people hear it and they want to run for the hills. I think that couples should start by talking about what it is that they want to accomplish. And so, for example, for a prenuptial agreement to be enforceable in any of the 50 states of the United States, each spouse has to disclose all of their assets and debts to one another in writing.
Aaron Thomas [00:06:39]:
We actually accomplish this in the prenups that we write by having each spouse kind of write down a net worth statement, and we literally attach that statement to the end of the agreement. And just that kind of transparency on the front end of a relationship I found can work wonders. Nobody wants to be surprised with $50,000 of student loan debt or 100 grand of credit card or IRS debt that they didn't know about, and they don't find out about it until the joint bank accounts are being garnished. Right. No one likes those kinds of surprises. So just getting everything out there at the beginning of the relationship can be such a huge thing for couples. And then deciding, how are we going to set up our bank accounts? Are we going to have everything run through one joint bank account? Are we going to keep separate bank accounts? Are we going to do a combination of separate bank accounts and then a joint bank account that pays for joint expenses? Talking to your fiance, your spouse about, I want to sit down and talk about that. Another thing that my wife and I do is we have kind of what I call an annual shareholders meeting, where it's on the calendar as a repeating event every December 1.
Aaron Thomas [00:07:51]:
We're going to sit down and we're going to talk about the finances. What were the big surprises from last year? Are there things that happen that we can use to influence our budget for the upcoming year? So telling your spouse, I want to sit down. I want to have regular checkpoints, whether it's annually or quarterly or even monthly, for us to sit down and talk about the finances. And let's be clear, I may not want to pay for your credit card debt that you're bringing into the marriage, and you may not want to pay for my student loan debt that I'm bringing into the marriage. Can we be clear about what falls into what I call the different buckets? My bucket, your bucket, and our bucket? There are certain things that particularly couples today that are getting married later in life. The average age is probably ten years ahead for today's marriage than it was a generation ago. And so people have more complex financial lives, and what's going to go into the joint bucket? What's going to keep into our separate buckets? And can we decide what's going to go into those different categories of expenses? And there's a myriad number of other things that couples can discuss that would go into their prenuptial or postnuptial agreement. But if couples talk about those things first, what they want to accomplish first, and then the last thing is, all right, if we agree on all of these things, can we commit to this in writing? Can we put it down, put our signatures on know, let's make it legal? And yes, it's called a prenup.
Aaron Thomas [00:09:21]:
But I think when you start from the component parts of what you want to accomplish, rather than the name that has so much stigma attached, it can be a much more positive experience.
Lisa Shield [00:09:30]:
So, Erin, what do you do? My guess is that these situations can sometimes become egregious. I know personally of people where it came down to the wire. I mean, the woman was putting on the wedding dress and signing the prenup at the same time. Right. Sometimes one party or the other begins to feel like it is a preparation for this is what's going to happen, or they're preparing for an inevitable divorce. Have you had marriages sink or swim? Like, people decide they weren't going to get married because of a prenup?
Aaron Thomas [00:10:19]:
It is extremely rare. But, yeah, there are people who, for example, the example that you just gave someone is getting ready to walk down the aisle or the invitations already been sent out, or, God forbid, the guests have started arriving in town and the document isn't signed yet. I tell people that, Work with me, start as early as possible. Six months is not too early to start talking about these kinds of things. The wedding itself is going to be one day, maybe two or three days of an event, but your marriage is supposed to be for a lifetime. You're talking about decades. And planning how you're going to manage your finances is such an important thing that cannot and should not be left to the last minute. If you are presented with a prenup on the day of your wedding or the day before your wedding, number one, don't sign it.
Aaron Thomas [00:11:21]:
This is something that is supposed to be an agreement. That means both people had a say in it. It should be a collaborative effort, not something that is prepared by one spouse's attorney and then just dropped. And it's a take it or leave it. And by the way, I'm not even going to give you any time to look it over or to review it with an attorney. It should be a negotiation. So if there's any question at all, get your own attorney to kind of explain things to you from your point of view and think about what you want to accomplish. A prenup should be about a lot more than just protecting the wealthier spouse's assets.
Aaron Thomas [00:12:01]:
It should afford protections to kind of the less moneyed spouse as well. And that's part of what I want to do, is educate people on what they can ask for so that if you're presented with a prenup, hopefully months before the wedding, you know that there are things you may be giving up career opportunities to play more of a homemaker role, you may be changing where you live. There are things about your life that are going to change, and you want to make sure that if things don't last, am I going to be left holding the bag or can I solidify my own financial security through this agreement? Whether that's through alimony, through some kind of asset division, the best prenups are going to afford protection to both spouses, not just one.
Lisa Shield [00:12:56]:
Erin, first of all, I want to just highlight something that you said for listeners, which is this isn't necessarily a preparation for what you're going to do. In the case of divorce, when you write a prenup, when you establish this, you're looking at how you're going to handle your finances throughout the marriage, and that's a very important distinction that you're making there.
Aaron Thomas [00:13:27]:
Yeah, no, that's absolutely right. I mean, the way that I try to describe how a prenup should be viewed is kind of along the lines of a business partnership agreement. You are going into a partnership? No, it's not a business partnership. But if you were to start a business with somebody else, you would probably draft up some kind of partnership agreement, and any decent partnership agreement is going to lay out? Yes. What happens if one person wants to leave the business or if the business dissolves? But that's not the point of the partnership agreement. Right. The point of the partnership agreement is to allow for the business to succeed. Right.
Aaron Thomas [00:14:10]:
And so that business partnership agreement is going to put in lots about what each person's rights and responsibilities are during the pendency of the business itself, as well as, of course, write in what happens if the business doesn't succeed or if someone wants to leave it. And kind of continuing around this business analogy, the explanation that I like to give my parents were married in the 1960s, and the average couple that got married back then, they got married at an average age of about 2020 to 21. And a couple in the 1960s getting married at age 20 was a complete blank slate. They likely had no assets. Credit cards had just had been invented, so they didn't really have those. 401 KS hadn't been invented yet. Student loan debt wasn't anything like it is today. You could literally just work your way through school.
Aaron Thomas [00:15:01]:
So most people didn't have credit card debt. And the average couple getting married in the 1960s, maybe they had one bank account between them, maybe a vehicle, no house and nothing else. I mean, they were like a blank slate. They were like a startup business in your garage versus the average couple who gets married today. The average first marriage today is your age 30. Each spouse has four or five bank accounts, three or four credit cards, a couple of different retirement accounts, at least one vehicle per person. Likely each person, or at least one of them, has some equity in a piece of real estate, a property, maybe there's a small business. And so if the couple getting married in the 1960s was like a startup in your garage, the average couple getting married today, it's like a corporate merger.
Aaron Thomas [00:15:50]:
That's how complex the finances are. And you would just never do that without some forethought and without an agreement in writing know, how is this going to look? How can we join such complex financial worlds without it blowing up in our.
Lisa Shield [00:16:08]:
So, Erin, let me ask you, if somebody wanted to do a prenup can any family lawyer do this or is it really in your best interest to hire somebody who specializes in this kind of work? And also can you work across state lines? Like, could you do a prenup for us here in New Mexico? Not that we need one, we've been together for 21 happy years. But if we needed a postnup right?
Aaron Thomas [00:16:45]:
No. Great question. So not all family law attorneys are well versed in prenuptial or postnuptial agreements. Part of the reason that I'm so passionate about this is because of how much I've seen couples spend thousands, tens of thousands, sometimes even hundreds of thousands of dollars on divorce cases that could have been avoided with a prenup or a postnup that cost a few grand. And so most of the money in this industry is in divorce, frankly. And so the average family law attorney out there will probably do 50 to 100 divorces for every one prenup that they do. So you can very well, if you're looking for someone to draft a prenup for you, you should interview someone and ask them how many they've done. Because if they've done one prenup over the past three or four years, that might not be the person that you want advising you.
Aaron Thomas [00:17:45]:
So I think, yes, absolutely, look for someone who is a specialist@prenups.com. We are expanding states. We are in New Mexico. We've got attorneys all across the country who are experienced in drafting these types of agreements. We want to be kind of that trusted resource. So you don't have to go to a family law attorney, know the last one they did was six or seven years ago. And someone that knows the kinds of provisions that you can include in your agreement that actually not just makes divorce easier if your marriage doesn't work out, but makes divorce less likely by putting in place the things that are based on the principles of transparency, communication and fairness. I believe that those three principles make for a fair prenup, but they also make for a good marriage.
Lisa Shield [00:18:40]:
Brilliant. Brilliant. What about after a marriage, let's say if debt accrues with shared property and things like that, can a pre or postnup handle what happens after a marriage?
Aaron Thomas [00:18:59]:
Yes, absolutely. In fact, and that's a great question. I'm glad you brought that up. The way that we typically recommend drafting prenups or postnups is using what I call a title based system. So often what couples will do is say, whatever is titled in my name belongs to me, or if it's a debt is my responsibility. Whatever is titled in your name belongs to you or is your responsibility. And whatever we put in joint names is a joint asset or a joint debt. And what that allows couples to do is their agreement can kind of grow with them.
Aaron Thomas [00:19:37]:
It gives them the flexibility of, okay, if we're going to open up a new business and we want this to be a joint venture. We can just put both of our names on it and under the terms of our agreement, it's automatically going to be 50 50. We both own half of it, we're both responsible for half of the debts. Same thing with a property. And there may be instances where you say, hey, I want to buy this property over here. It's just going to be my thing. I'll be responsible for all the expenses associated with it, but I'll also own it. And couples can say, okay, then we're just going to title that in your name.
Aaron Thomas [00:20:07]:
Or you may want to start a business, we'll title it in your name and you'll own it, but you'll also be responsible for any debts from it. And that way couples don't have to go back and revise, hire an attorney a second time to revise their agreement. They can just decide over time, this is going to be joint, this is going to be separate, and we'll title it the way that we want. And then as couples grow in their relationship, they may decide, hey, I got X amount of money from this business over here, but really, that should be joint. I'm going to transfer that money into the joint account. And now they have the ability to flex and move according to their circumstances without having to go back and hire an attorney every time they open up a bank account or make a purchase of an asset.
Lisa Shield [00:20:52]:
I see. So if a couple has a second home for rental or for vacation and there's damage to the home after the divorce, that could be something that's written into the pre or post.
Aaron Thomas [00:21:05]:
Exactly. Yeah. That defines whether that's going to fall on just one party or whether it's going to fall on both parties.
Lisa Shield [00:21:12]:
Erin, what are some things that you would tell people to put into, like, that may get overlooked, that are commonly overlooked that absolutely should be in a pre or post?
Aaron Thomas [00:21:26]:
Knop yeah, great question, great question. One is, I think that all couples should have some equivalent of, like, a shareholders meeting in their agreement, a regular time where they sit down and they talk about the finances. Household finances, as you probably know, is not a set it and forget it type of thing. They're going to need to be continuing conversations throughout the course of a marriage. And so whether you decide to do that quarterly or annually, have some kind of time where you sit down and you open up the books and both parties kind of share where they are, there's a chance to course correct. There's a chance for someone to voice if they don't think that things are being treated fairly. It involves both spouses in the budgeting process, and it doesn't have to be all doom and gloom. Part of my wife and I's annual meeting is we're big travelers.
Aaron Thomas [00:22:22]:
And so one of our rules is 5% of all the income that comes in, the household is going to go into a travel fund. And so we'll talk about what are the trips that we want to take next year. And because we set aside a certain portions of our money to go into the travel fund, that money is there. And there can be exciting things. For some couples, it's a baby fund or it's a house fund or it's a rental property fund. So that would be one thing. Another clause that I think is super helpful for a lot of couples to consider is a clause around counseling. My wife and I have a provision in our agreement that says that either one of us, once per year, can trigger the counseling provision, and we have to go to three counseling sessions.
Aaron Thomas [00:23:08]:
One thing that I saw in my divorce practice was when one spouse wants to go to counseling, the other one isn't interested. I don't need it, you go get it on your own, that kind of thing. And then that spouse comes around, and the first spouse has given up on counseling. And my wife and I said, we're not going to play that game. If either of us wants to go to counseling, we're going to counseling, no questions asked. And we can do that. We can activate that provision once per year, and we've got to go to three sessions. And if either one of us wanted to end the marriage, then we've got to go to six sessions before we be allowed to file for a divorce.
Aaron Thomas [00:23:40]:
So we kind of put in place these steps to really give our marriage a better chance at lasting rather than just moving to divorce. And along the same lines, we would have to go to mediation. So if we did our six sessions of counseling and we still weren't happy, then we'd have to go to mediation to try to work out any issues. Sometimes it's not about saving the marriage. Sometimes it's about how do we co parent our child together, or how do we sell our assets without taking a loss? That kind of thing. So provisions that increase the communication and give you another chance at making the marriage work are things that are often overlooked that I think most couples should think about when they're drafting their prenup.
Lisa Shield [00:24:25]:
Aaron, is there anything that could make a pre or post unenforceable?
Aaron Thomas [00:24:32]:
Yes, so you cannot address custody or child support in a prenuptial or postnuptial agreement. The kind of straightforward reason is custody has to be based on what is in the child's best interest, which is something can only be determined at that point in time. Somebody can be a fit parent today, and five years from now, they could develop a drug addiction, or they could have abandoned the family. And courts don't want to be held to enforce a custody agreement that was decided well in the past. When those circumstances are no longer in play, you can't have a provision in your prenup or postnup that is against the law or kind of against public policy. Some things that I've seen on celebrity gossip blogs are talking about, oh, you have to maintain this amount of weight, or you have to if it doesn't make sense, if it doesn't pass the smell test, then a court is probably not going to enforce it. Now, the other things that you have to look out for in terms of when is a court not going to honor your prenup or postnup? One is if there was not full disclosure. So if you lied about what your assets or debts were coming into signing the agreement, then a court is not going to uphold that because by getting a prenup, you are basically trading the state's rules or what I call the default prenup.
Aaron Thomas [00:26:03]:
Every couple's got a prenup. You're either crafting your own or you're accepting the default rules of the state that you happen to live in. And to make that trade knowingly and voluntarily, you have to know what it is that you're potentially giving up an interest in. And so you've got to be honest about your assets and debts. Number two, you can't force the other person to sign the agreement. They call it signing under duress. So you can't hold a gun to somebody's head. You can't say, I'm going to withhold your kids from you unless you sign this agreement.
Aaron Thomas [00:26:37]:
And along those lines, giving someone a prenup on the day of the wedding or the day before could also be seen as having somebody sign the agreement under duress. So a lot of states have something in place where you've got to sign the document at least a week ahead of time. And both spouses have to have had at least an opportunity to have met with an attorney of their own choosing. Whether or not they do is usually up to them in most states. But you have to at least had the opportunity to have met with an attorney. And then finally, an agreement can't be what we call unconscionable, meaning it can't be so unfair that it offends the conscience of the court. The example that I usually give there is if one spouse is left with all of the assets and the other spouse is going to be left on public assistance, you can be sure that a judge is going to raise his or her eyebrow before kind of rubber stamping or enforcing that type of agreement.
Lisa Shield [00:27:36]:
Aaron if someone has a will that's been prepared before marriage and then they do a pre or postnup and there may be some contradictions, like in the will, it may say, I'm leaving all of my money to my son. In the prenup, it says, we're going to split things equally. What takes precedence?
Aaron Thomas [00:28:02]:
Yeah, great question. Great question. So this is another reason to work with a prenup lawyer that knows what they're doing, because there should be a clear separation in what a will does and what a prenup does. A will should decide what happens to the assets that belong to you. A prenup should decide between the assets that are held by you or your spouse. What do you own and what does your spouse own. So my will says, what do I do with the property that is solely mine, and what do I do with the 50% of the joint assets between my wife and myself? And so a prenup lawyer that knows what they're doing is going to write things in a way that they're never going to be in conflict. Whatever is in my name belongs to me, and I can pass down however I want.
Aaron Thomas [00:28:55]:
And whatever is in joint names with my spouse belongs 50% to me, and I can do whatever I want with that 50% and nothing else besides that.
Lisa Shield [00:29:03]:
Erin one of our listeners had a question, and she said, my question is what things that are normally split 50 50, like, by law per state, like a 401, can those things be overwritten by a prenup? Is it everything, or does state law preside over certain things?
Aaron Thomas [00:29:26]:
Yeah, no, great question. So you can basically overwrite state's laws by what you put in your agreement. And I'll address the issue that your listener brought up with the retirement account a lot of times if there is a 401. So 401K is an example of one of those types of assets that you can't put in joint names, right? You can't just put a 401K with your employer in the name of your spouse. And so if you want that to be considered a joint asset, you have to write that specifically into your prenup or your postnup that this is going to be considered a joint asset even though it's only in my name. What my wife and I decided to do to avoid that, as well as to avoid the cost of having to divide a retirement account, you have to go get an order from a judge, and it takes a time. Is we said that our retirement accounts are going to be considered separate assets. So I own my retirement accounts, my wife owns her accounts.
Aaron Thomas [00:30:25]:
But part of our annual meeting is to sit down and discuss what we're going to put in our retirement accounts, and we try to match them every year. So if she's going to max out her 401K, I'm going to max out my four hundred and one K. And that way we're both accumulating retirement assets of a similar value, and we keep them in our own name. And that way there's no confusion. I think there's also a psychological benefit of having the money in your own name. And then what a lot of my couples will do is, if one spouse isn't working, the working spouse will contribute to a brokerage account in the non working spouse's name in the same amount that they're. Contributing to their own retirement. So if they're putting 20 grand in the retirement, the non working spouse gets 20 grand in their own brokerage account.
Aaron Thomas [00:31:15]:
And I think there's really something powerful about having money in your own name, knowing that you can access it without having to go and ask for permission or ask for depend on someone to get the password. If something were ever happened, to know that you have direct access to money that is in your own name can be a powerful thing. But yes, you can override the state laws.
Lisa Shield [00:31:36]:
So, Erin, I'm going to jump to another topic. A lot of our listeners are corporate women. These are women who have a lot of assets coming into a marriage. There are still some double standards for women. I don't know if you encounter these where women feel sometimes feel entitled to what a man has, but they don't feel a man is entitled to a portion of what they've worked hard to accumulate. Have you encountered that and what do you do in a situation like that?
Aaron Thomas [00:32:18]:
Yeah, absolutely. I've encountered it and in fact, just over 50% of our clients actually are women. I think that there can already be some sensitivity on the men's part, often when they are the lower earner because of kind of what they view as the societal norms. And sometimes there can be some guilt on either party's part. But that phenomenon of what you're talking about that your spouse doesn't deserve a share of what you've earned, that happens in both genders. I mean, that is one of the things that led me to found prenups.com, is I realized that getting married is one of the most consequential, if not the most consequential financial decisions you'll ever make in your life. And it is like signing a financial contract, and so many people just have not read that contract. And I've seen many couples where, say, the wife is the primary breadwinner.
Aaron Thomas [00:33:22]:
She owned a house prior to them getting married. She pays every single mortgage payment. She is working. She is diligently putting away money in her retirement account. And meanwhile, her husband is kind of in and out of jobs, doesn't make saving for retirement a priority. And they're married 10, 15, 20 years, and then a divorce happens and all of a sudden she's like, what do you mean he wants half of the house that I paid for for 20 years? What do you mean he wants half of my retirement when he sat on the couch when I was out there busting my rear end to earn this money? And they don't realize that when you get married, the default rule is that everything you own is considered everything that you've earned over the course of the marriage is considered marital property. Every single paycheck that came in from the day after you got married is considered marital property. And everything those paychecks touched is considered marital property.
Aaron Thomas [00:34:15]:
So even if you own a house prior to the marriage, you're making mortgage payments, or you own a 401k prior to the marriage, you're putting money into that or that property is now commingled and trying to figure out how much of your 401k is due to the contributions you made prior to the marriage or after the marriage. You're talking about a team of forensic accountants to figure that out. And often a lot of people lose what they built up even before the marriage. And so it is an individual question for the couple to decide whether or not the things that they earn over the course of the marriage should be considered marital property or separate property. But it is all the more reason, and it's why it's so important for couples to have this conversation so that they're making this choice intentionally. They are signing this very important financial contract of marriage intentionally, knowing what the rules are going in. So they're not surprised 20 years down the line that something that they believed was their nest egg, their house or their retirement is getting split by a stranger in a black robe up on the bench and they had no idea that it was coming. And so whether or not you are someone that believes that everything should be considered joint, you were together, you were married, every single dollar should be 50 50.
Aaron Thomas [00:35:32]:
Or whether you're someone that says we can have this relationship without combining every single dollar to our names as part of that relationship, that should be an intentional choice and both of you should be aligned on what it is you're signing up for so you don't have confusion and it doesn't have to be all or nothing. It doesn't have to be every dollar is joint or every single dollar is separate. Most couples find it best to have, like I said, three buckets, a joint bucket and then two separate buckets so you still have autonomy over the money in your separate funds. My wife and I, we call it an allowance. We each get an allowance that we can spend whatever we want to spend our money on. For some people bristle a little bit at the term, but for us it works. And I just want couples to make this choice intentionally as to how they are structuring their finances so that both people are on the same page. You're communicating about it, you're aligned and you've done it intentionally rather than you just kind of went with the flow.
Aaron Thomas [00:36:33]:
And then you look up 20 years later and you're in a situation that you didn't anticipate.
Lisa Shield [00:36:37]:
Yeah, it's one of the biggest issues just about relationships in general is that people fall in love and they're under sort of this spell and this illusion that whatever they're feeling in the initial stages is going to go on for the rest of the relationship. And then people don't they're not realistic. They don't stop and look down the line and think about, this is a partnership, there are laws and there are the ups and downs of life. Like, Benjamin and I have been together for 21 years now. We've been married for 19. We're together for life. We know that. We've proven it.
Lisa Shield [00:37:29]:
21 years. Everything we own is joint property. And we set our relationship up that way from the start. Having said that, during the course of our marriage, the baton has been passed back and forth many times. Benjamin was the primary breadwinner for probably the first 14 years of our relationship. He helped me establish my career and do the things I did. But illness COVID all of these life circumstances have come to play and many, many times it's gone from him being the primary breadwinner to me, to him back and forth, and the strength of our relationship, the foundation we have, has endured. But most couples, many couples don't plan for those kinds of ups and downs.
Aaron Thomas [00:38:27]:
Yeah, absolutely. And those kinds of things in your relationship only work with a certain level of transparency and communication and building that into the fabric of your relationship. And you don't get there by putting your head in the sand as to what these kinds of issues are going to be. A lot of people have the objection of talking about the money issues as, oh, it's not romantic, it's not sexy. But as you well know, there are lots of places in a 20 year relationship that are not the most romantic. If you have trouble having a difficult conversation, then a long marriage is not going to be for you.
Lisa Shield [00:39:14]:
And I would actually say that one of the sexiest things, one of the most romantic things my husband ever did was on our fifth date, he sat down and he literally said, these are my finances. He told me. And for me, I felt so taken care of because he was completely transparent and it spoke volumes about who he is, who he would be as a partner and what our future would look like together. So I think people are afraid to look at those things, but for me, it was sexy.
Aaron Thomas [00:39:59]:
I think that is fantastic and something that more couples should do. People today, from where I sit, it seems like have an easier time getting physically naked than they do getting fiscally naked. We treat the money conversations like they are so taboo. And I understand that it may not be first date material for everybody, it may not be third date material, but at some point it's got to come out. And if you are a couple who has been married for 20 years and neither of you have any idea what the other one makes, you don't know what kind of debt that person carries. That kind of lack of transparency is naturally going to bleed out into other areas of your relationship. And if you're willing to be transparent about these things that we hold so sacred and that are so taboo in many circles to talk about, then that kind of transparency actually bodes well for the rest of your relationship because, you know, you're willing to be vulnerable and put yourself out there. And, yeah, it is a romantic thing to do.
Lisa Shield [00:41:07]:
I thought was what I loved too was that Benjamin was both very proud of his earning capacity. He felt very proud of it, but he also felt confident that if it wasn't enough for me and I wasn't okay with it, then this relationship didn't need to go any further. So I thought that was really great. On another note, can a prenuptial agreement stipulate or limit spousal support or alimony in the end of a divorce? In the event of a divorce?
Aaron Thomas [00:41:52]:
Yes, absolutely. So in any divorce, there are typically four elements in play. There is asset division. So whether that is equitable division in equitable division states or the division of community property and community property states, dividing the assets and debts is one element. The second element is alimony. The third and fourth we discuss are child support and child custody, which cannot be addressed in a prenup. But asset and debt division absolutely can and alimony can as well. And I'm glad you brought up alimony spousal support because it is another kind of misunderstood topic.
Aaron Thomas [00:42:31]:
Most couples, particularly young ones that come to me, they say, neither of us want to pay the other one alimony. We're both career minded and we're both independent people and neither of us want to pay the other one alimony. And that's the most common request that I get. And certainly that makes sense in a lot of people's situations. You can put it in there, but a lot of times people don't consider it because they can't anticipate the kinds of scenarios where it may come into play down the road where you might want to think about it. And so I give couples a list of questions to discuss, such as is there a scenario where one of you might take a break from the workforce for some agreed upon purpose? Whether that is raising children, maybe it's taking care of an elderly parent. Maybe one spouse would be willing to move for the other one's job and you go to a location where it's not as easy to find employment given what you do. And if there are scenarios where one spouse might take a break from the workforce for some reason or another, if the marriage were to end at that time, would that spouse be hamstrung and unable to pay for their basic living expenses? If so, you can write a formula into your agreement that says something along the lines of for every two years that you're out of the workforce, you'll get a year of spousal support and that spousal support will be determined at, say, 20% of the difference in your incomes.
Aaron Thomas [00:43:54]:
So if one spouse is making 100 grand and the other is making zero, then they're going to get 20 grand a year split up into twelve equal monthly payments. So there is at least some kind of transition period for the low earning spouse to get back on their feet. And so I find that a lot of couples say, no alimony that's bad. I don't want to pay any kind of spousal support if we're not married, why should you be getting a dime? But after thinking about it, a lot of couples come around and think that some kind of period of transition where there is some transfer of money from the higher earning spouse to lowering your spouse makes sense. So, yes, you can limit it, but I would just encourage couples to think about it long and hard before they write it off altogether.
Lisa Shield [00:44:39]:
Erin, can the terms of a prenup be adjusted after, like, in the future?
Aaron Thomas [00:44:47]:
Yes. So the way that you do it can vary from state to state. Most states will allow you to kind of change the terms of your prenup, either through some kind of addendum or by signing a postnup that would take the place of a prenup. But pretty much everywhere there's going to be a way for you to alter or modify the terms of what you put into your prenup, because circumstances change. Obviously, marriage can take a long time. Life, as you know, can take all kinds of unanticipated twists and turns, and courts don't have any interest in locking you into something that no longer makes sense for you.
Lisa Shield [00:45:26]:
Aaron, I would imagine that the terms of a prenup or postnup are very personal for a couple. And are these agreements completely confidential? Would anyone else outside of the marriage or the couples have access to it?
Aaron Thomas [00:45:46]:
Every prenup or postnup that I draft by default has a confidentiality provision in it. You as a couple, you are disclosing all of your assets and debts to one another, as well as terms that they belong to you, they are private to you that you may not want out there. And so any good prenup proposed NUP worth its salt is going to include some element of confidentiality in there. Whether couples, some couples, as you see, I'm discussing some of the details of what's in mine here. So individual people may have different levels of secrecy around it, but I think as a default, they should be assumed to be private.
Lisa Shield [00:46:32]:
Awesome. And the last question is, what is the most crucial advice you'd offer to successful women who are considering a prenuptial agreement? What would you say to those women that they should consider?
Aaron Thomas [00:46:47]:
Yeah, great question. I think that women need to think about the long term of their lives, what kind of twists and turns those may take, whether or not they plan on having children. Women are more vulnerable to maternity leave and issues regarding child rearing. And I think that it's easy to have a tendency to look at marriage as simply just a romantic relationship. But I think if you get a good attorney and look at it as a financial partnership as well as a romantic partnership, get some advice from somebody who has been through this and has seen things that are unanticipated that happen on the back end. And make sure that you're putting things in place that both protect your relationship but also protect your financial life as well.
Lisa Shield [00:47:55]:
And I would think of a woman's entrepreneurial, maybe like me. When I met Benjamin, my career was not in full swing and let's just say, know, x number of years down the line. I have a substantial career. Would that be something I could go back and we could renegotiate the prenup now based on my earning capacity, considering it's vastly different than when we first met?
Aaron Thomas [00:48:26]:
Oh, yeah, absolutely. And I think by building into your relationship regular times to talk about the finances, that you're going to be much more likely to have those opportunities to say, we came to this agreement ten years ago when the situation was like this. Now, today, here's what it looks like. Maybe it's time for us to revisit, give a refresher to what our financial situation looks like. Having that kind of ongoing communication is what's going to give you the ability to do that.
Lisa Shield [00:49:01]:
Aaron, you took a subject that for almost all of us would be incredibly difficult, and you made it vulnerable, intimate, and in some ways fun. I don't know how you did. I would encourage I'm glad that you have coverage over much of the states with prenup.com and what a valuable service that you offer.
Aaron Thomas [00:49:36]:
Yes, thank you so much. I appreciate the kind words. My goal is to educate and kind of break down the stigma and the walls around a topic that, as we all know, is misunderstood and sometimes looked down upon. And I hope this has been of value to your listeners.
Lisa Shield [00:49:54]:
Oh, I'm sure. And I am going to encourage all of the women who go through my program to listen to this. I think it's invaluable information. The other thing that we didn't touch on, Erin, is that many, many of our clients are so established in their lives and their careers, if they're in their 50s or 60s or seventy s, that they're actually afraid of marriage. They're afraid to go down this road. And I think some of them are actually keeping partnerships at bay or at arm's length because they're afraid that they may get taken advantage of. And so hearing what you shared today is really going to be invaluable. And I'm hoping that you'll get calls from some of them as they get closer to their marriages, because many of my clients actually do in their fifty s.
Lisa Shield [00:50:52]:
Sixty s and even 70s wind up getting remarried.
Aaron Thomas [00:50:57]:
Yeah. I would just say to them that I had the same kind of fear myself. Practicing divorce law for 15 plus years will do that to you, make you gun shy. And now here I am, happily married for several years. And so if someone in my position can become a hopeless romantic, then there's hope for all of us.
Lisa Shield [00:51:19]:
Erin, you said you and your wife love to travel. I thought we'd end on this note. Where's your next vacation?
Aaron Thomas [00:51:28]:
We are still planning our next vacation, but there's a good chance it may be back to Costa Rica. That's a place that we love. We are returning.
Lisa Shield [00:51:38]:
We stayed at Nyara Springs. I don't know if you know that.
Aaron Thomas [00:51:45]:
We did. Nyara Gardens right next door. The sister property is one of the best places.
Lisa Shield [00:51:51]:
Beautiful.
Aaron Thomas [00:51:52]:
Absolutely breathtaking. Can't wait to go back.
Lisa Shield [00:51:56]:
Oh, wonderful. Well, Erin, thank you so much. We are indebted to you. This was a really wonderful I hope, you know, maybe you'll come back again if we'll come up with some more questions we would treasure for this sheer pleasure of your company.
Aaron Thomas [00:52:20]:
Thank you so much for having me. It really has been an honor.
Lisa Shield [00:52:23]:
Yeah, thank you. And I am Lisa Shield. This is I'm Benjamin Shield. Thank you so much for joining us today. You can learn more about us by going to lisashield.com. There is a button all over my website that you can click to watch my free 45 minutes presentation. Stay to the end because that's where you can sign up for a call with a member of our team so we can help you find what we call the guardian of your soul. You can also send us your podcast ideas to podcast@lisashield.com.
Lisa Shield [00:53:00]:
And you can listen to my other broadcast, which is finding the guardian of your soul. Thank you again, Erin. This was such a pleasure. And everyone, come back and see us again. Have a beautiful rest of your day.