![]() ![]() In 2014, The Economist named him one of the world's 25 most influential economists. His columns have appeared in The New York Times, WSJ, Bloomberg and The Financial Times. in Economics from Harvard University in 1977. Kotlikoff is an economics professor and the author of "Money Magic: An Economist's Secrets to More Money, Less Risk, and a Better Life." He received his Ph.D. My advice? When you kneel down and propose, take two things out of your pocket – a sparkling diamond ring and a leather-bound prenup, which will surely be worth far more than its weight in gold. It's far better to negotiate in advance how things will be settled than have one party feel they have, in getting married, lost bargaining power in making financial decisions that could damage them in the context of divorce. Whatever financial concerns would be addressed in a prenup will inevitably arise once you get married. ![]() This lets Sally take her shot while protecting Sam.ĭespite the clear benefit of prenups, not signing one is a huge mistake that many people make. But what if they sign a prenup that assigns, upon divorce, all construction debts to Sally, but provides Sam half the profits if Sally's company succeeds for, say, 20 years? If Sally and Sam marry without resolving this potential conflict, Sam may get cold feet and file for divorce before he co-signs the construction loan. ![]() So, if Sally's career takes off, but she takes off with the tile subcontractor, Sam will reap precious little from his investment. Moreover, Sally wants to live in Texas, which is far less generous in providing alimony than, say, Massachusetts. Plus, if they split and the house sells for $500,000, Sam will get stuck with $250,000 in "their" debt. The problem, from Sam's perspective, is that fulfilling Sally's dream means giving up his career. Her plan is to borrow $1 million, construct and sell a dream house, and use it to showcase her talents. Take the case of hypothetical Sally, who wants her spouse-to-be, Sam, to stay home with the kids while she pursues her lifetime dream of being a contractor. ![]()
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