RELATIONSHIP SUCCESS ODDS ARE 50/50
Would you find it fair to have your income/assets redistributed without your consent?
If you earn more than your spouse when a divorce occurs, family law rules will usually require you make alimony payments of up to 50% of your income, often indefinitely (including after you retire). Without a prenup that modifies those rules, your income may be redistributed without your consent to maintain an ex in ‘the lifestyle to which they have become accustomed.’
Even if you paid off your home before you met your spouse, the post-marital appreciation on your home is considered family property in many jurisdictions. That means if your home goes up in value by $1M, you would owe your ex $500K in a divorce even if they never paid a dime towards your cost of home ownership.
If you owned a business when you met your spouse and it went up in value while you were together, many jurisdictions deem that increase in value to be family property and, in a divorce, you would owe your ex half the increase in value in your own business. If you create a business while you are married, most jurisdictions say your spouse owns half your business on the basis that it is family property. Even if they made no contribution to your business, you would need to buy your spouse out of your business’ fair market value as at the date of separation.
If you create any artistic works (music, TV/film, images, and other creative works) or other intellectual property (IP), for example patents, while you are married, your creations will be deemed family property in many jurisdictions. In a divorce, your ex would own half of everything you created.
If you receive post-divorce royalties from creative works or IP that you created before you were married, most jurisdictions say they are part of your post-divorce income. That means our ex can attach to your future royalty stream on the basis that your royalties are part of your post-divorce income which can be included in their calculation for alimony entitlements. And if you receive post-divorce royalties from creative works that you created while you were married, most jurisdictions say your ex can attach to your future royalty stream on the basis your creations are family property. Either way, marrying without a prenup can create lifelong entitlements to your revenue from your creative works and IP without your consent.
Even if you had a $1M investment portfolio before you met your spouse, the post-marital appreciation on your investments is considered family property in many jurisdictions. That means if your investment portfolio goes up in value by $600K, you would owe your ex $300K in a divorce. And any contributions you make to your investment portfolio during your marriage are also considered family property in most jurisdictions, even if your spouse makes no contributions. Unless you modify the rules with a well-drafted prenup, your ex would be entitled to half the money you invested plus half of your returns on those investments.
If you did have a mortgage on your home and you used an inheritance from your family to pay it off, the equity in your home would instantly become ‘family property’ and, in a divorce, your spouse would be entitled to half in many jurisdictions.
In jurisdictions that recognize ‘common law marriage’, you can be deemed common-law partners simply for cohabitating beyond a specified amount of time (usually 2 – 3 years). After that, your partner would have the same family law rights against your assets and future income as if you were actually married. Without ever getting married, your partner automatically earns entitlements against all of your assets, and those entitlements are commonly retroactive to the day they moved in. Common law status also creates entitlements for alimony (spousal support) if the relationship ends.
If you are ordered to pay alimony, most jurisdictions will also order you to maintain a life insurance policy for the benefit of your ex so their alimony payments are replaced if you die. And you will be court-ordered to pay for that policy out of what little is left after up to 50% of your income is diverted for alimony. Can you imagine how much life insurance will cost when you’re in your 50’s and 60’s?
Without a prenup modifying the family law rules where you live, any debt your spouse accumulates while you are together is considered family debt in most circumstances. That means if your spouse racked up $500K in debt while you were together, you would be legally responsible for $250K of it in a divorce (unless you modified those rules with a well-drafted prenup).
If alimony is ordered in a separation/divorce, your ex can access information about your financial status through the courts indefinitely. Often, they can apply to have their payments increased if your income increases.
