I wanted to start a thread to share some of the knowledge which Ive gained about how marriage and divorce operates. I have a pretty good understanding of how the law operates in community property states, from work, but not so much of how things work in other states. Again, I am no expert on this stuff, but this is a general framework of how things work.
Before I get into the meat of it though, I want to bring something important up: "Co-habitating" with a woman, aka f***ing her and letting her live with you, may grant the woman some benefits of marital protection, even if you are not married. : There is a very famous case out there called Marvin - it basically says that if two people live together, and either person ever tells the other "don't worry about finances, you don't need to pay rent with me" that person has just created an oral contract with the person - as a result, if woman is "in the know", she can goto court after you guys break up and force you to pay her rent until she sorts her life out.
Now, moving on to actual marriage...
Community property states
There are two kinds of systems of marriage in the USA: Marriage in i) Community property states, and ii) common law states (non community property)
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. (and according to wikip, Alaska, which provides the option to select community property division.
How your property is divided upon divorce
In a community property state, all property which you own before marriage, as well as all property which you acquire by a gift, inheritance, or is the profit of any property which you own before marriage, is your separate property. That means that when you file for a divorce, all of this property, which you brought into the marriage, is given back to you - your wife takes none of this property. There may be an exception for businesses however:
If you bring a business into a marriage, upon divorce, the court will always assign your principal investment into the business back to you. In other words, if you invested $500,000 into a business before you got married, the court can never touch this initial $500,000. However, the court may, distribute some of the income of the business which was acquired during the course of the marriage. There are two ways the courts will do this:
i) the courts may treat all the business income from the marriage as community property, and split it 50/50 ; if you made $1 mil profit during the marriage, your wife takes $500k and you take $500k.
ii) the courts may assign the martial community a "reasonable salary," while you keep the rest of the income. In other words, if your business makes $1mil, the court may determine that a reasonable salary for the business was $100k a year - if you were married for 3 years, the courts would grant the community $300k, which is then divided 50/50 between you and your wife. So, as a result, your wife would take 150k, and you would take the remaining 850k of the 1 million income.
^ Obviously, you want the court to go with option #2, because that way you take more, but the court weighs multiple factors into determining which formula to use.
Also, any profits from property you own before divorce is also separate property, and the courts don't touch this: if you made a real estate investment before marriage which grows in value, the courts can't touch the value which accrued during the marriage, because that is the profit of a separate property.
Aside from what is noted above, the income of both spouses during marriage is generally communuty property and thus divided equally.
Co-mingled bank accounts Note, there is an exception for co-mingled bank accounts - if you put your separate property funds (like income from business or whatever) into a co-mingled bank account to which your wife has access to, or from which community purchases are made, the courts may imply a gift of the funds to the community, and these funds can be split 50/50. So, rule: always keep your separate property in separate accounts.
However, implied-contract rules apply...
Despite receiving the protections of the community property/separate property system mentioned above, a lot of men may get screwed if the court implies a contract between you and your wife. This may occur if you tell your wife "I will make all the money here, and you stay home and raise the children!". Upon divorce, the court may find that you created an oral or implied contract with your wife, and she relied on this contract to her detriment. As a result of this, you may be forced to pay spousal support for X amount of time until the wife gets her shit together - you can petition this order every once in a while, but it is expensive. So... how to get around this?
Prenups.
A pre-nuptual agreement is one which designates whether property or funds acquired during marriage are separate property or community property. Also, prenuptial agreements may explicitly state that the upon divorce, neither spouse is entitled to spousal support. Beyond that, you can also decide anything you want in a pre-nup. The one thing which cannot be waived in a pre-nup is alimony paid out to raise children - this is considered to be against public policy.
but, warning...
A court may designate a pre-nuptial agreement as "unconscionable" and thereby ineffective if: before signing i) both spouses did not receive a disclosure of assets of the other spouse, ii) spouse did not have 7 days to sign the agreement, and iii) spouse did not receive a written statement that she should consult an independent attorney.
Also, if you and your wife get married in a different country, but then move to a community property state like California or Washington and become domiciled by buying a home there, the wife can then declare a divorce and be entitled to the protections of the community property state system - Ive heard of a case where a rich arab guy bought a house with his wife in Texas because he was doing some oil contracts there, temporarily, but the wife quickly filed for divorce and took a substantial part of his business income. Snake.
Recommendations If you are interested in marriage, my take-aways are:
1. Wait to get married - If you build up your life before you get married, and get your finances and business in order before marriage, and then store them in a separate account, your wife will never touch this money because it is "separate property."
2. Get a pre-nup - Don't be a bitch about it. No matter what, get a pre-nup. See an attorney before marriage to learn the lingo, or read-up online - Let your future wife know that designating the character of your property is an important financial decision for you in your journey to financial freedom. If she is interested in being a partner with you, she should value financial integrity, and this would help you see that you are both on the same page.
3. Get a post-nup: If you did not get a pre-nup, you may still get a post-nup.
4. Make sure your wife works. This way, if you do, unfortunately, get divorced, she can't say that she can't support herself to obtain spousal support.
Before I get into the meat of it though, I want to bring something important up: "Co-habitating" with a woman, aka f***ing her and letting her live with you, may grant the woman some benefits of marital protection, even if you are not married. : There is a very famous case out there called Marvin - it basically says that if two people live together, and either person ever tells the other "don't worry about finances, you don't need to pay rent with me" that person has just created an oral contract with the person - as a result, if woman is "in the know", she can goto court after you guys break up and force you to pay her rent until she sorts her life out.
Now, moving on to actual marriage...
Community property states
There are two kinds of systems of marriage in the USA: Marriage in i) Community property states, and ii) common law states (non community property)
There are nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. (and according to wikip, Alaska, which provides the option to select community property division.
How your property is divided upon divorce
In a community property state, all property which you own before marriage, as well as all property which you acquire by a gift, inheritance, or is the profit of any property which you own before marriage, is your separate property. That means that when you file for a divorce, all of this property, which you brought into the marriage, is given back to you - your wife takes none of this property. There may be an exception for businesses however:
If you bring a business into a marriage, upon divorce, the court will always assign your principal investment into the business back to you. In other words, if you invested $500,000 into a business before you got married, the court can never touch this initial $500,000. However, the court may, distribute some of the income of the business which was acquired during the course of the marriage. There are two ways the courts will do this:
i) the courts may treat all the business income from the marriage as community property, and split it 50/50 ; if you made $1 mil profit during the marriage, your wife takes $500k and you take $500k.
ii) the courts may assign the martial community a "reasonable salary," while you keep the rest of the income. In other words, if your business makes $1mil, the court may determine that a reasonable salary for the business was $100k a year - if you were married for 3 years, the courts would grant the community $300k, which is then divided 50/50 between you and your wife. So, as a result, your wife would take 150k, and you would take the remaining 850k of the 1 million income.
^ Obviously, you want the court to go with option #2, because that way you take more, but the court weighs multiple factors into determining which formula to use.
Also, any profits from property you own before divorce is also separate property, and the courts don't touch this: if you made a real estate investment before marriage which grows in value, the courts can't touch the value which accrued during the marriage, because that is the profit of a separate property.
Aside from what is noted above, the income of both spouses during marriage is generally communuty property and thus divided equally.
Co-mingled bank accounts Note, there is an exception for co-mingled bank accounts - if you put your separate property funds (like income from business or whatever) into a co-mingled bank account to which your wife has access to, or from which community purchases are made, the courts may imply a gift of the funds to the community, and these funds can be split 50/50. So, rule: always keep your separate property in separate accounts.
However, implied-contract rules apply...
Despite receiving the protections of the community property/separate property system mentioned above, a lot of men may get screwed if the court implies a contract between you and your wife. This may occur if you tell your wife "I will make all the money here, and you stay home and raise the children!". Upon divorce, the court may find that you created an oral or implied contract with your wife, and she relied on this contract to her detriment. As a result of this, you may be forced to pay spousal support for X amount of time until the wife gets her shit together - you can petition this order every once in a while, but it is expensive. So... how to get around this?
Prenups.
A pre-nuptual agreement is one which designates whether property or funds acquired during marriage are separate property or community property. Also, prenuptial agreements may explicitly state that the upon divorce, neither spouse is entitled to spousal support. Beyond that, you can also decide anything you want in a pre-nup. The one thing which cannot be waived in a pre-nup is alimony paid out to raise children - this is considered to be against public policy.
but, warning...
A court may designate a pre-nuptial agreement as "unconscionable" and thereby ineffective if: before signing i) both spouses did not receive a disclosure of assets of the other spouse, ii) spouse did not have 7 days to sign the agreement, and iii) spouse did not receive a written statement that she should consult an independent attorney.
Also, if you and your wife get married in a different country, but then move to a community property state like California or Washington and become domiciled by buying a home there, the wife can then declare a divorce and be entitled to the protections of the community property state system - Ive heard of a case where a rich arab guy bought a house with his wife in Texas because he was doing some oil contracts there, temporarily, but the wife quickly filed for divorce and took a substantial part of his business income. Snake.
Recommendations If you are interested in marriage, my take-aways are:
1. Wait to get married - If you build up your life before you get married, and get your finances and business in order before marriage, and then store them in a separate account, your wife will never touch this money because it is "separate property."
2. Get a pre-nup - Don't be a bitch about it. No matter what, get a pre-nup. See an attorney before marriage to learn the lingo, or read-up online - Let your future wife know that designating the character of your property is an important financial decision for you in your journey to financial freedom. If she is interested in being a partner with you, she should value financial integrity, and this would help you see that you are both on the same page.
3. Get a post-nup: If you did not get a pre-nup, you may still get a post-nup.
4. Make sure your wife works. This way, if you do, unfortunately, get divorced, she can't say that she can't support herself to obtain spousal support.