She Said, He Fled. Divorce in a FIRE Focused Family

[Today’s post is a guest post I requested from The Vigilante of iVigilante fame, a family law man who dropped an entire blog post worth of knowledge in a comment on my post about derailing early retirement, which happened to include an ugly topic: divorce. I liked his style and depth of knowledge, and he clearly likes to write.

CAPFUNDR-250x250I’ve got a sound marriage despite all the time I’ve been devoting to this blog. But if you’re sitting in a room of physicians, and you look to your left, and you look to your right, there’s a good chance at least one of you will be divorced at some point (if not already).

I was actually surprised to see a study that showed a relatively low divorce rate among physicians. I know a group of five docs in which four have been divorced, and I don’t think that’s at all uncommon.

As you might have seen, we started tracking our expenses a little more than a year ago. Many of my blogging friends do the same. It occurred to me that having a detailed ledger of every dollar spent could be quite useful for someone in the unfortunate position of facing a divorce, particularly for a high earner, but low spender.

Was there any merit to my logic? Wait, we’re talking law, not logic. What was I thinking? Let’s see what The Vigilante (Twitter handle @ivigilanteblog) has to say.]


The Vigilante

“The Court finds no error in the support calculation. The Order remains as entered by the conference officer. Dr. Anderson, I’d recommend you adjust your spending if this is a problem.”

The words of the judge stung. As if the divorce wasn’t bad enough, here was the court just completely ignoring the realities of her finances. Dr. Anderson and her soon-to-be ex-husband had never, ever spent more than $80,000 per year – they discovered Physician on FIRE while she was in med school, and they wisely saved for financial independence and early retirement from graduation on.

Now she owed him more per month than either of them had ever spent alone, so he could “maintain his standard of living” in the divorce. Why? How was this fair? Where’s the justice?!?

Her husband was a public servant grossing about $50,000 per year. She made $250,000 per year. In the divorce, assets were split down the middle: because he had less to his name, he took the house and about $200,000 of her retirement. Under the support laws, he was also entitled to spousal support to maintain a standard of living while the divorce was finalized. He wouldn’t consent to the divorce – his attorney advised him not to consent because he could collect spousal support until the two-year separation period lapsed, at which time Dr. Anderson could get the divorce without his consent. (Aren’t attorneys just the worst?) [PoF: Yes.]

The spousal support calculation – which took the difference between her net income and his, multiplied it by 40%,* and spit out the amount she had to pay until the divorce would be finalized in about two years – meant she owed her former husband $4,655.28 per month for the next 23 months. For those of you who forgot your calculators, that’s $107,071.44!

Dr. Anderson presented her case well. She had detailed records of finances for the duration of their marriage. All 10 years since med school, meticulously recorded, graphed, and thoroughly explained to the court. If the goal of spousal support was to maintain a standard of living, why would she pay more per month than either of the two had ever spent alone? He would now have his own net income – which was already greater than his solo spending and only about 1/5 lower than their combined spending – plus her support of $4,655.28 per month to “maintain his standard of living.

The court ignored it all.

 

Hyatt Maui

Mr. A gets a lifestyle upgrade

 

What gives?

 

I’m a divorce attorney. I have seen this scenario play out dozens of times. There are two variations to the same problem that plagues the obligors in support matters all over the country: The parties always think the law will customize itself to their needs.

The two variations are simple and seem logical on their face. One the one hand, you have low-income earners (or high spenders) who come to the court requesting an adjustment to their spousal or child support because they “can’t afford it.” They have rent, a car payment, and utility bills to take care of – how can they afford to pay their ex on top of that?

On the other (far less common) hand, you have divorced couples who did not spend a lot of money compared to their high incomes. These high earners, like Dr. Anderson, wish they could just pay support in an amount that actually reflected the standard of living that, by getting married, they agreed to help the other sustain in the event of divorce.

But both cases are treated just like the typical case. It’s the best and worst thing about living in the Land of the Free: the same laws apply to all parties. The problem is, in the typical case – the type the support laws were written for – the parties spent nearly all that they earned.

There is, unfortunately, no exception in the law for financial independence blog-readers.**

Assumptions are the problem.

 

Assuming that the parties spent nearly all they earned, the spousal support calculation might make sense. Dr. Anderson and her high income would suddenly disappear from her husband’s life, and he might be stranded with a high car payment, mortgage payment, bills, etc., and need time to refinance/sell/downsize various investments, or replace items like furniture that went with Dr. Anderson. The spousal support would help him get back on his feet, ensuring that both parties to the marriage could get on with their lives.

But in a financial independence setting, Dr. Anderson is right to question the need for this type of support. Her husband doesn’t need help getting back on his feet; on the contrary, he has more assets than he did during the marriage and he has an income sufficient to provide for pretty much the same lifestyle without her help. What can she do?

Frankly, she has two options, and neither are easy.

First, Dr. Anderson could consider appealing the decision of the court, making the case to her state’s court of appeals that the law was applied incorrectly and/or is simply wrong and should be amended to account for financial independence-seekers. This might work, but the road is long, hard, expensive, and (at least in my opinion based on admittedly limited knowledge of where support laws will go in the future – I’m a lawyer, not a fortune-teller) incredibly unlikely to result in any change for her.

Second, Dr. Anderson can invent a time machine.

 

Enter the Prenuptial Agreement

 

She needs a prenup. I’ve been saying it a lot lately, but it’s because I so very strongly believe it: prenuptial agreements are absolutely crucial for the FIRE community.

Not the type of prenup that says: “If we divorce, you get nothing, and by the way we have sex at least twice per week (three times where a week contains a federal holiday),” but, rather, the type of prenup that sets reasonable boundaries for things like spousal support, alimony, and the division of assets such that both parties can move on relatively unharmed in the event that they don’t live happily ever after.


In other words, a prenup that results from an equal bargaining position and the good intentions of a couple in love – not a celebrity prenup or a genius-billionaire-playboy-philanthropist prenup.***

Dr. Anderson would have benefitted tremendously from a prenuptial agreement that superseded her state’s one-size-fits-all support laws. She and her husband could have agreed to anything: a reasonable support payment based on historical spending, an alimony payment based on helping her husband reach some minimum passive income goal and nothing more, or some particular dollar amount adjusted for inflation over the years, for example, rather than relying on state law to determine what would happen.

Dr. Anderson could have ended up paying a much more reasonable amount – or avoiding spousal support altogether – had she negotiated an agreement based on her circumstances in advance. Instead, she’s making a heartbreaking court appearance to challenge well-established law that some scumbag divorce attorney brought to her husband’s attention. And wishing she had a DeLorean and a flux capacitor.

 

 

 

* This is the actual support calculation in Pennsylvania to determine the “guideline amount” of support where there are no children involved. With children, it’s 30%. There is some room for adjustment of the guideline amount based on child support, other support obligations, and factors such as health insurance provided by one party to the other. There is also room for deviation from the guideline amount based on many factors like a party’s other household income, substantial assets, or just plain fairness. But generally, the guideline amount – plus or minus 10-20% – is used. So while it’s not inevitable, this is an extremely realistic scenario!

** Well, in Pennsylvania. I cannot speak to the rest of the country, but I sincerely doubt that the FIRE crowd has had a substantial impact on any state’s laws. It’s the problem with being so damn frugal; our discount lobbyists are the worst.

*** That being said, early Tony Stark, circa the first Iron Man movie, is kind of a personal hero of mine.

 

[PoF: Interesting, isn’t it? Expect the law to allow false assumptions to trump actual spending records. The best answer is to stay happily married for ever after, but as The Vigilante and many of you know, that isn’t always possible.

I’ll be interested to hear your comments on this insightful guest post. Don’t forget to thank The Vigilante for his contribution!

p.s. I made some enhancements to the functionality of the comments. You can now subscribe to receive replies to your comment only, you have five minutes to edit comments if a typo slips in, and you’ve got the ability to use bold, italics, and links in your comments. Bonus points if you use all three.]

 



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75 comments

  • Divorce is the single biggest destroyer of wealth in this country. The point of getting a prenuptial is very well stated as odds are not in your favor as a married couple as sad as that is. For the rest of us already married folks remember to take time out of every day to do one nice thing for your spouse. It will be one of the best investments you can make.

    • Thanks for your comment. I’m going to show it to Mrs. Vigilante so she’ll start being nice to me!

    • S.G.

      Actually the statistics aren’t as bad as everyone thinks. Well under the 50% constantly quoted and much lower depending on demographics.

      • You’re right. I talked about this in my own post about protecting your marriage. The “50% of all marriages end in divorce” statistic that people throw around is most likely wrong. But the real number is likely to be around 40%, which isn’t much better. Who knows, maybe it’s only 35% for first marriages. But in my other post, I talked about how the expected cost of ending a marriage is an insanely big risk for FI purposes even if the divorce rate is only 20% – a prenup is way cheaper than the expected cost of divorce!

        • S.G.

          Absolutely, but even 40% seems high. I just worry about the psychology of divorce. The more prevalent and likely divorce seems the more people seem to do it. I recently read an entire book about it where she broke down the numbers as well as she could and did so from a marriage counseling perspective and said she has a lot of luck when she can quote things that give hope.

          One problem with divorce is it is an emotional process about things that should be as non-emotional as possible. Divorce is usually the final step in one that involves a lot of pain. I totally support the pre-nup idea, but from another perspective I think a lot of people I know would have reconsidered divorce if they had realized how financially devastating it would be. So it’s as much about being prepared as informing people that even with a prenup, living life as a single income household is more than twice as hard as living as a double income household and FIRE is a lot farther away, even if you get everything you want.

          • The more prevalent and likely divorce seems the more people seem to do it.

            Seems logical, and might be right, but I’m not sure. Divorce has been progressively more well accepted in Western society over time, and yet divorce rates are declining today and have been since about the 70s/early 80s by most estimates.

            • S.G.

              Sure. You’ll obviously hit critical mass. And there has been a backlash in the current generation due to people growing up in divorced families and realizing what that felt like as a kid. There is also the fact that people are getting married later, which I’m not positive is a net good simply if it avoids divorce because it avoids a lot of good stuff as well. But divorce falls under the ever shifting umbrella of “acceptable social behavior”. How acceptable is it? Is it acceptable to change spouses like shoes because you’re bored? Only in cases of abuse or abandonment? Divorce and pregnancy are often contagious.

  • Catherine T

    As physicians, temptations seem to be everywhere. I might suggest not cheating on one’s spouse as a way to a avoid a costly divorce. Not drinking/using is another good option. Just “being nice to your spouse everyday…” is a bit naive, dontcha think?

    • Not cheating helps, but that’s a cited cause of only a very small number of divorces!

      More concerning is differences of opinion that develop over time, particularly with regard to finances. Everyone enters into marriage thinking and hoping it lasts, but people change, and sometimes people enter into marriage without full disclosure of all aspects of their future shared lives. You can’t really predict that, but discussing finance as extensively as you need to for a good prenup certainly helps!

      100% support for being nice, though 🙂

  • This is something that I hadn’t really thought in terms of folks who spend much less than they earn and have a major income imbalance. We’re in a similar situation – spouse is a DDS, I’m a lowly government attorney. We expect our incomes to be pretty far apart as her career grows.

    We’ve talked about whether we should consider getting a prenup but hadn’t really thought about it from the spousal support angle. We’d always thought of prenups as used to protect the assets we’re bringing into the marriage – i.e. I have this amount of money, you have this amount of money, lets decide now what happens to it.

    It never occurred to me that prenups could (and maybe should) be used to deal with spousal support issues. I’m not a family lawyer, so it never occurred to me that courts didn’t take into account what the parties are actually spending and what they actually need when calculating spousal support. Will definitely be something to think about.

    • Consider it not only for spousal support, but also to protect future assets. Especially your wife’s 😉

      Mrs. Vigilante and I both are bringing a lowly ~$10k in retirement investments into our marriage, combined. We structured our prenup to account for our FI future, which is just kind of taking off now (~1 month prior to marriage!)

      If we could account only for existing assets and spousal support, I probably would have just forgone a prenup and taken the risk that I might owe her substantial support in the future.

    • BH

      I doubt she’d have to pay you spousal support since you are a lawyer and you are probably capable of getting a job making at least as much as her. I’m not a family lawyer either, but in your situation, I’d argue for imputed income or the fact that you have similar earning power, regardless of whether you choose to kill yourself in a law firm. If that argument fails, I find that very depressing.

      More importantly than a prenup, in my opinion, is to marry an equal!

      The law as it exists creates perverse incentives. A lower income spouse is more incentivized to leave a marriage and/or cheat than a higher income spouse. Or a lower income spouse is incentivized to be lazy because during the marriage they are supported and after the marriage they are supported.
      That said, I’m not sure I agree with your comment about prenuptial agreements, as I think they signal a lack of trust and commitment to the community in the truest sense of the word. In my state, at least, it is easy to protect your pre-marriage property by keeping it separate, maybe in retirement fund, LLC or a trust. Don’t comingle it and you’re fine. As far as protecting your income, that probably can only be solved through a prenup, so there you go. You may have a point, but I personally feel that marrying an equal is a better solution for reasons other than planning for a divorce before you are even married.

      • All valid points although I’d disagree with the assessment that similar income is what makes you an equal.

        My fiance and I are certainly equals. We’re both well educated, have similar aspirations, similar backgrounds, etc. The fact that one spouse earns well more than the other doesn’t change that. Whether spouses are equal has nothing to do with income.

        It’s not easy for folks to have similar incomes, even if equally educated. Certain fields just make more than others. Not to mention that not everyone can have a two working household family and raise children too. I’d never think having a stay at home mom is a problem for a marriage, despite one side earning no money .

        My fiance I’m sure is marrying down by choosing to marry me, a lowly government lawyer living off taxpayer money who is not as smart as she is.

        But I’d hope that the income I make wouldn’t factor into her idea of what makes us equals.

        I understand the concept of marrying your equal, and do apologize if I misinterpreted what you meant.

        • BH

          I agree with you. “Equal” doesn’t necessarily equate to income, maybe more work ethic. I find the thought of having to support another person (where no children are involved) after divorce, especially if that person is capable of making a similar income, very frustrating (and the frustration is of course directed at the law and definitely not you). And I very much agree regarding the value of a stay at home parent; where children are involved, I think my gut reaction is quite different. On the other hand, I’m grateful my husband has a similar level of education, work ethic and income. And I’m glad neither of us brought up a preenup because if he had, I would have been very hurt, and I didn’t because I would not want to introduce distrust into our marriage.

          • BH: I trust Mrs. Vigilante fully, and I hope she trusts me. (The fool!) I’d bet Financial Panther could say the same.

            A prenup doesn’t have to be about mistrust, and to say that it is just seems like an argument from a purely emotional place. Like selling all stocks in the wake of a presidential election.

            You were on the right track, I think, when you said your frustration would be directed at the law. The law isn’t perfect; it’s a backup plan that is designed to be as fair as it can be, but “fair” means different things to different people, especially when it comes to areas of life that can be so radically different as personal finance.

            A good prenup protects both parties against crappy law, or against law that is not really designed for them – like how support laws are not designed with FI or RE couples in mind. One could argue – very convincingly, I think – that being willing to talk about a prenup or antenup is a sign that both parties to the marriage are actually very mature, know what their marriage means (it’s not just rainbows and butterflies – it’s a partnership, through and through), and are trying to make sure any damage to either party is minimized in the event they don’t live happily ever after.

            And – not that you were suggesting it – pretending everyone with good intentions does live happily ever after is just plain naive.

            • BH

              I think you both are making good points but ultimately, I believe that intimate relationships are suppose to be emotional, that’s what love is. You get married because you are forming a true partnership, with joint and several liability, as “joint tenants” not as “tenants in common”. The only way I personally could buy into a partnership like that is to marry someone who is at least an equal, otherwise, I just wouldn’t get married at all, which is much safer than getting married and requesting a prenup, which carries a heavy emotional cost to the requestee (even if they comply and even if they never admit it out loud, you’ve hurt them), and which can be overturned in court anyway.

              • I don’t think we really disagree on this, I’m just viewing the relationship as something separate from the marriage.

                Bear with me! You can live with one another, take care of one another, love one another, be loyal to one another, have religious ceremonies to commemorate your attachment to one another, fornicate (love that word), make babies, and do all the other marriage-y things we love without involving the state.

                Once you involve the state, you’re basically saying “I’m entering into a financial partnership with this person.” By signing whatever documents you need to sign, you are getting tax breaks, increased contribution limits, hospital visitation rights and other benefits from the state, and you are in turn risking the stranglehold of the state’s laws regarding how it thinks your life should turn out if your financial partnership fails.

                We attach so many feelings to the word “marriage,” and rightfully so. But ultimately, the marriage certificate you file with the state has nothing to do with love. It’s finance. And because of that reality, I think a prenup makes sense.

                Promise I’m off my soapbox now 🙂

      • S.G.

        The risk to the relationship would depend more on how you approach it. If you approach it as an opportunity to talk about how to merge finances and financial goals and document what you think is fair with someone you love.

  • That’s a scary story, but thanks for sharing. I’m not married, but my girlfriend and I have talked about getting a prenup if we were to get hitched. Obviously we wouldn’t think either of us would get nasty and try to be unfair if we decided to split, but we all know people can get wacky with time. I’m in a similar COL state to Pennsylvania – How much would a prenup run for two people in their late 20s with very simple finances?

    • Legal fees of any type are pretty difficult to predict. Just ask Financial Panther. That said, I am also in my late 20s, and if our legal markets are similar, I couldn’t imagine spending more than $3,000 on a prenup similar to my own. I would expect to spend about half of that for a quality lawyer to draft it. But markets vary so much and the work of individual lawyers varies so much, it’s hard to say. Some might draft a very basic prenup at a flat fee of like $500, but I doubt anyone is doing so with FI in mind, so it might not be as customized as it should be. So I guess my main advice is to shop around (you can also do this after the wedding – an antenuptial agreement can do the same things) and see who you’re comfortable with and who understands your financial situation and plans. And if you have doubts because it sounds expensive, I touched on the expected cost in my own post on this topic.

  • Divorce can hit really hit the breaks fast when you’re on the FIRE Path. Interesting to see the impact with a real life example. Marriage is tricky since Nobody Can read the future. But having been married myself over 8 years now I know my wife and I are on a solid path. Quite a relief to my investment accounts, that’s for sure. And it makes planning for that day when we retire much easier together, that’s for sure.

    • I don’t generally like to appeal to emotion, but sometimes ethos works. It’s not technically a real-life example, but it’s good to put that picture in PoF readers’ minds of a stern-looking person adorned in a black robe, sitting up on an elevated platform in a gilded courtroom behind a gigantic bench saying “Sorry, no help for you. Support this other adult with a decade of work.” It helps the message sink in.

  • I’ve seen the horrors of constantly court-challenged alimony in my own family, and the only winners have been the attorneys, who have walked off with most of that family’s money over the years. I’ve always thought about pre-nups in terms of pure division of assets, but in light of your example, there should clearly be other considerations. Finances would be a major concern for me if I were to get married given our very different net worths and potential future earnings. Good food for thought; thanks!

    • Thank you for reading, Matt! And that’s a fair point – sometimes, the only beneficiaries to the divorce are the attorneys. But we’re a necessary evil. You never want us to be involved with your life, but when you need us – we’re the best friend you’ll ever have.

      • Of course — sorry to jump on the “boo, attorneys!” bandwagon. The real issue was the person constantly going to court over continued objections to alimony payments, which could have been avoided with a solid pre-nup.

  • While we all quake at the thought of a malpractice lawsuit (except for those with hearts of stone), we try to cover our ears and sing so we don’t hear about the threat of divorce. It can be so much more devastating both personally and fiancially.
    I don’t love the idea of a prenup in most situations because to me it taints the happiness and commitment of marriage. But I also know that sometimes forever isn’t realistic and while postnups are a thing, they’re even more awkward.
    Do you mind sharing your comment plugin? The features sound fantastic.

  • Great post! I haven’t seen the topic of FIRE and divorce yet. Such an important discussion.

    I am divorced. We had no kids and both worked. My income was significantly lower than his and I had far more expenses (rental properties) but we split our household spending down the middle . Thankfully we were only married a couple years before I realized I had made a big mistake. I left, he paid me 5k for the house we had just bought and rehabbed (40k short of what I put in), and I met him in court 1 year later to finalize the divorce (neither of us hired attorneys).

    I realize the amount of time in a relationship and if you have kids or not are huge factors (my BF is currently paying half his paycheck as maintenance for the next 11 years). But, in my opinion, what the guy in this post did is ridiculous…..and all under the guise of what he is “entitled” to. Splitting assets is one thing, but if you can afford to take care of yourself (as was his case), do it. And yes, I’m talking to the ladies also. When people, become bitter and want to go for the jugular it’s because they are hurt, angry, or sad. I get it. My divorce happened when my life hit bottom. Believe me. I get it. But being able to take care of yourself, as an adult, is a matter of pride. Showing your ex that you can stand on your own two feet is the best revenge. And for the Doctor Lady, girl, I feel for you!! Fair is never a factor. Next time, you’re best to get a prenup. It’s not romantic, but it sure makes things a lot easier.

    Hopping off my judgy soapbox now. I’m sorry!! It just makes me crazy when I hear stories like this. Divorce makes people a bunch of babies.

    • I hadn’t seen the topic of divorce addressed either, hence the litany of posts and comments I’ve put out myself this fall! It’s an incredibly important topic, particularly in the FI community – a threat to over 50% of your net worth that has about a 50% chance of occurring – and yet too much of this usually risk-averse community just shrugs it off and says “Hopefully not!”

      But rest easy – the story about Dr. A isn’t real 🙂 It’s just a story. But a realistic one that has played out thousands of times across the country.

      And 11 years of maintenance? What state are you in? That’s incredible to me, given a marriage of a couple years, but then again I practice in Pennsylvania and laws vary.

      • Haha – I realize it wasn’t real in this case but, you’re right, this stuff happens! And people sit there scratching their heads wondering how did they get here? It’s such a sad place to be when you’re already dealing with the loss of a marriage. This is such a timely post because I just wrote a series on the subject of my divorce and short sales…its a little fresh! 😉

        And – no, not 11 years for a few year marriage – that WOULD be insane!! I was the one only married a few years – I meant my boyfriend was paying that to his ex. They had been married for 14 years and have 2 kids. When they got married she worked full time. They had kids and she stayed home. The boys are now 13 and 15 and officially divorced last year. Since then, she has a full time job again and with his maintenance makes more than he takes home. Nobody is getting rich out of the equation, he is in the red each month, but it will be a long road ahead.

        I bet you see it all! Hopping over to your site – I cant wait to read more… 🙂

  • First, I’m going for the bonus points.

    I guess, I have to play Devil’s advocate. I will say neither my wife or I are considering divorce. We have been together since we were 14. :O) But, just because you decide to be frugal together, doesn’t mean that expectation should necessarily remain when divorced. As Life-partners you committed do doing certain things together. It may in fact actually be quite painful to try to continue that life. Every frugal decision would also remind you of the life you no longer share.

    In addition, the $ not being spent was going to retirement and savings correct? If my first suggestion isn’t a possibility, isn’t it reasonable to expect for the ability to grow your now separate retirement?

    Ultimately, do everything you can to not get there. My wife and I didn’t have substantial assets prior to marriage. We have a small retirement now and equity in our house. We both made the decision for her early on to not work and take care of the kids and I took care of the income. As the kids have gotten older, we all share in taking care of the house and now she is working pursuing some of her goals as the kids are in high school or college.

    Communication is always key. Being able to overlook small things and talk about big things. I take my wife away for her birthday every year if even just for the day. We have a date night every week that alternates between just us and including one of our children. We continue to gross our kids out and make sure they and each other know, that we are both still crazy in love.

    cd :O)

    P.S. – Tested the edit feature. Way cool!!!

  • Vb

    What happens to the alimony amount if the higher earning spouse after divorce loses a job or just decides he or she doesn’t feel like working as hard and therefore has a lower income?

    • I can’t speak for other state laws, but in Pennsylvania the loss of a job might affect the support calculation, depending on circumstances. Sometimes the job loss results in decreased support, sometimes suspended support, and sometimes no change because the party is still employable and could find other work.

      If the higher-earning spouse quits/retires, the other spouse would have a good argument that it is a voluntary reduction in income, which does not reduce support. In most cases, that’s a good argument, although I did see one case as a clerk in which a man retired at about 51 years old and somehow managed to convince the Court to allow him to reduce support. I would not count on reaching that outcome in this state, though.

  • Thank you so much for this post. My husband and I got married in September (eloped!) and we are working on hashing out a postnuptial agreement. My lawyer suggested we make the IRAs current balances separate and any future growth and contributions joint and we laughed and said no, we would rather keep them entirely separate. I have so much in my IRAs and 401(k) at this point ($250k at age 28) that giving up half of future growth would be a huge disadvantage! We have such disparate assets that we honestly plan to keep pretty much everything separate going forward with some exceptions. We forgot about spousal support though – I should email my lawyer. Are there any other specific pitfalls you can think of?

    • That’s quite a retirement at 28, congrats!

      What your lawyer suggested was probably much more in line with actual divorce laws. I’m glad you laughed – I would have too. And then shown him or her a link to my blog 🙂

      I’ll be distracted for the next few hours with my actual clients, but if you feel like filling me in with a few details about your income/assets, I might be able to suggest questions to ask your lawyer so you can get the best antenuptial possible for your situation. E-mail me – thevigilante@ivigilante.com

  • When I first went to work at an oil major, my mentor told me – The best way to retire early is don’t get a divorce… He was 60 and had been through 2 divorces losing half of his 401k in each – not counting any other assets, as they were in common law states. Eeeshh…

    I hadn’t ever considered spousal support at a pre-retirement income level though. That’s just crazy. We won’t get a post-nup since we’ve been together 8 years now, and it would just seem odd at this point. Me:”Hey, maybe we should get a post-nup to protect ourselves from each other.” Her: “What have you been doing?” hahahaha

    Great post though.

    • Thanks! I suggest lighting candles, playing some smooth jazz, filling a bubble bath, maybe waiting until a gorgeous sunset of deep pinks and reds to ease into the idea of your first draft at an agreement. Really make an evening of it.

  • Great post! In California, the judges use the same basic idea of a formulaic income split that you described. They basically plug the numbers into a computer, and the computer spits out the support number. There’s very little room for the judges to tweak the numbers from there. The plus side is that it makes the number predictable. The minus side is that it makes the number too cookie-cutter.

    It’s hard to say what a “fair” result is, which is why they moved to the computer program method. I can see the argument from the ex-husband, if we assume the divorce is not his “fault”, that he should be paid some support to continue to fund his retirement accounts, now that his cheating, no-good scoundrel of a wife has left him scrambling. He might need a couple of years to adjust, or to get a higher-paying job, or something.

    If it was the husband’s “fault”, and he was the no-good scoundrel, it seems unfair for the wife to supplement his income, given that he’s a grown-ass man and should be able to support himself. Hence the computer program that ignores fault and just plugs in a number.

    Pre-nups are totally a great idea, and they don’t have to be a negative thing. It’s just a contract. We’re sitting down in advance, while we still like each other, and setting forth our expectations for what will happen if the stuff hits the fan. If it’s approached that way, I think any reasonable adult should be able to think about it rationally and move past the emotional hurt.

    The tricky part around these parts is finding a family law attorney to draft a pre-nup at ALL. A lot of lawyers are not doing them anymore because of the liability. They make a couple grand to draft it, but the risk of it being blown out in a divorce is huge.

  • Xrayvsn

    Question: Why is divorce so expensive?

    Answer: Because it is SO worth it.

    This post definitely it home for me.

    Trust me, no one would ever want this distinction for having the worst horror divorce story, but for those people I have shared it with, they are amazed the ordeal I had to go through all because I had an M.D. behind my name and a shady opposing counsel

    I think in my case the whole thing was doomed from the start. I basically was thrust into an arranged marriage situation (I’m Indian) because of pressure from my family etc., and ended up marrying someone who was supposed to be a perfect match based on horoscopes (huge belief in India, etc) as well as similar education (she too was a medical doctor from the UK). There was no courtship period/feeling out period and essentially was married after 2 wks of actually meeting (there was a period of about 6 months where just communicated via email etc).

    Anyway when I finally couldn’t stand being married to her anymore (surprisingly lasted 7 years trying to preserve it because of the family obligations) I filed for divorce and that’s really when the craziness came loose.

    She hired an incredibly shady lawyer who saw me as deep pockets (a far too common stance by divorce lawyers regarding doctors) and my now ex wife being very litigious created an amazingly hard ordeal for me. The divorce proceedings took about 14 months and I easily spent over $300k on legal fees etc due to the many stunts they kept pulling (our judge who was a very senior judge said this was the most contentious divorce proceedings he was ever part of).

    Because my now ex wife was not working (she tried to get into a residency in the US but got kicked out after ECFMG discovered false issues on her application) I was the only breadwinner. The court basically raked me over the coals with giving her $12k at beginning of divorce proceedings so she can get herself in order, paying for 1/2 her legal fees as well as all of mine, plus a $4200/mo spousal/child support (have a daughter who was 4 at the time).

    I was lucky that although I was not a big spender (definitely saved more than I made) I did still have a good size mortgage on the marital home plus in 2010 when I filed. The real estate market had taken a dive and we were underwater on the home (otherwise I’m sure my ex would have pushed to take it from me). Judge awarded her my entire 401k (about $150k), 2 condos (had about $80k equity), entire HSA ($25k), and alimony $2100/mo for 2 yrs. (plus child support for $2100/mo) among other things. I think in the tally of everything, it was about a 60/40 split of assets favoring her and I got to keep all of the debt.

    Even after the divorce was finalized my vindictive ex caused me to go through 2 other litigations (had to defend a $4 million dollar civil lawsuit by jury (she was awarded $0) among other things) also adding to my legal costs. Finally a court mandated a psych evaluation on her (years too late in my opinion) when she finally was diagnosed with a mental disorder (paranoid personality) which explained pretty much why it was such a litigious event.

    In addition she held my credit score (actually really don’t care about this as much as I did back then) hostage as she would repeatedly fall behind on the 2 condo payments, with one condo finally being foreclosed on and the other started in foreclosure proceedings before she paid up (this too was finally sold after she came close to getting it foreclosed a 2nd time). Because of this some of the credit cards I had were closed or the balance available severely diminished (had one with a 65k limit that was dropped to 10k for example).

    I figure this divorce was a million+ dollar hit to my finances.

    I had two options, just give up or start over (I chose the later). I am very fortunate I am in a highly compensated specialty (radiology) and live in a low cost state (TN) with no income tax, etc (love geographic arbitrage).

    It was about 2 yrs after my divorce was finalized that I actually paid attention to finances (having to start from scratch at age 39 in 2010 opened my eyes because I felt I didn’t have time on my side to make another mistake).

    Financial resources like the Boggleheads and Whitecoat Investor were instrumental to me making headway (I fell into traps of having load funds suggested by financial advisors out of residency). This time I followed sage advice and put everything in low cost index funds (4 fund portfolio with Vanguard (total stock (us/international), REIT, and total bond).

    Biggest moment in my life post divorce was when I became debt free (paid of med student debt (originally graduated with about $300k) and paid off the mortgage 18 yrs ahead of schedule).

    I feel I am now far ahead of what I would have been even if I stayed married because I likely would have been in the same financial boat and just chugging along with costly investments that didn’t provide benefit (not to mention the complete turnaround in emotional happiness).

    It’s sites like this that actually get me motivated b/c I feel the best way to get revenge on someone who has wronged you is to live a great life, be happy, and essentially tell them that you took their best shot and not only survived but are flourishing.

    • Louis C.K. has a bit about divorce and how you should never say “I’m so sorry,” to a recently divorced person, because you’re making them feel really bad about being really, really happy. Seriously good advice for like 90% of cases!

      Interesting point on the arranged marriage. I’ve always thought it was crazy how so many studies have shown that couples in arranged marriages are about as happy or happier than couples who chose their spouse at various points in the relationship. But I suppose that means there are also plenty of people who ar unhappy in their arranged marriages!

      As for your divorce: 60/40 isn’t ideal, but it’s not that bad considering you were the sole breadwinner. It could have been worse. But WOW. Paying $4,200 in support plus half her legal fees? What was she doing with the rest of the support if not paying those fees?! And the credit score issue is something I didn’t want to address because the post was already plenty long enough, but I’m glad you did. Because it’s another danger of allowing divorce proceedings to drag out; if you don’t know where the house is going, for instance, sometimes one spouse will allow payments to go unpaid, punishing the other spouse. Or sometimes, they simply can’t afford it, and the higher earning spouse pays the mortgage for the lower earning spouse. They can ask for that as a credit in distribution (meaning, generally, that they ask to get that much more of other assets), but it isn’t always successful because of arguments like “It was a gift.” Infuriating to watch, and totally avoidable by prenup! (An although I say it’s infuriating to watch, I certainly do make that argument for my own clients every time – I want to get he best scenario for them, so as long a the law has that wiggle room, I’m gonna use it!)

      I’d say your comment is perfect, but you didn’t list I, Vigilante and Physician on FIRE as “resources that were instrumental to me making headway” :/

      • Xrayvsn

        You two definitely would have been instrumental to my recovery it I had discovered you earlier (I think physician on fire is less than a yr old and I was well on my way to financial freedom before that). Yeah it definitely felt unfair I had to go to work and she could just do nothing but collect a good amount of tax free money giving her plenty of time to conjure up more lies and accusations. Glad that very dark chapter in my life is way in the rear view mirror now

    • Ouch. Ouch. Ouch.

      Double ouch.

      I’m glad to hear things are going well for you now. And yes, this blog has only been around for 10 months. But it should be here for a long time!

      Best,
      -PoF

  • notadoc

    Per the WCI:
    “You can also marry a doctor. Physicians as a whole have a 29% divorce rate (higher among female physicians) but dual physician couples have only an 11% divorce rate. ”

    http://whitecoatinvestor.com/top-7-financial-errors-doctors-make-and-how-to-avoid-them/:link

  • John

    Hi PoF – first time commenter, but I love your blog. Thanks to the Vigilante for the post. Here is some interesting reading that I (and others) likely should have done before getting married.
    http://www.realworlddivorce.com/

    Phillip Greenspun (I don’t know him, but I found his site through Living A FI’s site) and several attorneys researched this pretty well, and, I can tell you that at least in Florida, the information is accurate. Anyone with a steady (it doesn’t even have to be high) income and the potential for savings enough to be FI should have a look through it before tying the knot.

    I went into marriage thinking it would also last forever, but after I sent my ex to law school she began to think differently. Coincidence? Maybe. Needless to say, I got off easy with a loss of only having to pay her student loans plus some other things totaling about $100K. It could have been worse, and I sure am glad I don’t live in MA, CA, NY, etc.

    Have a look through the information. It is harrowing and eye-opening to a naïve guy with a decent job. And sorry, ladies, but if you think that I am discriminating, just remember that the overwhelming majority of divorces are initiated by women (including mine).

    • Funny story: My student loans would be irrelevant in my divorce. (They usually are, plus I accrued all of it prior to the marriage, so it’s pre-marital debt in PA.) Dashed my dreams of marrying rich just to divorce and divide my student loan burden in half.

    • Thanks for sharing, John. I’m sorry to hear that happened to you, but I’m glad it didn’t turn out to be as bad as it could have.

      Aren’t lawyers the worst?

      😉
      -PoF

  • Interesting stuff Vigilante. I hope to never need this knowledge, but it’s good to know regardless!

    • Interesting, isn’t it? Not so much from a personal perspective, but from a “look what can happen” perspective. I have no pre-nup or interest in a post-nup, and will be celebrating 10 years of marriage next year.

      It is sad to hear of couples who drift apart years later. Just when you think you’ve got life figured out…

  • To all those who think that being married a long time means you’re past the “divorce window,” I’ll just say that my spouse and I were together nearly 20 years, most of that married. Things went along pretty swimmingly until Ex underwent a prolonged trauma that changed … everything.

    Getting sat down for the “I don’t want to be married to you anymore” talk was a complete surprise. I was completely in love, still, and Ex never once said anything to me about considering divorce. In fact, when I asked whether we should consider going to couples therapy, the response was “no, because we aren’t fighting.”

    While we did divorce right in that we were kind and respectful to each other and made every effort to be fair, everything we had was jointly held. Ex could have moved every penny we had before talking to me.

    My partner KC and I have already agreed to the general outlines of our prenup, because things happen – sometimes really horrible things – and people change in response to those things. Just because we want to always change together doesn’t mean we will always be able to, so Current Us is creating this prenup as a gift to Future Us. Much like our life insurance policies, we hope to never use it, but it’s there if needed.

    • I’m very sorry to hear that. At least you’ve moved on. I had a consult this past month with a woman who was in tears the entire time because her husband just…left. Out of nowhere. She had no idea why the marriage was over, she just knew that it was and she needed help. A similar scenario occurred with a family member of mine. It’s not common, but it happens.

  • This was an excellent article and opened my eyes to a twist on divorce planning that I hadn’t considered. Will definitely help in our advice for clients and I look forward to learning more on your site, Vigilante!

  • “If we divorce, you get nothing, and by the way we have sex at least twice per week (three times where a week contains a federal holiday)”

    OK, so I get that you can’t get this kind of language in a pre-nup.

    But what about a post-nup?

    Thank you so much for the insightful post and commentary. The topic proved to be quite interesting and surprisingly fun for such an ugly topic.

    Cheers!
    -PoF

  • Nice post. I find the topic interesting. From experience of friends and family it does seem better from a financial standpoint to stay married. Emotional standpoint probably not so much 😩😳😟

    I am curious as to know if you have seen any arguments like a 25 year marriage being considered less that that because there have been no ‘marital relations’ for the last 10 years 😬

    Or if a higher earning spouse who has been working like a dog for the last 20 years (Full time job and two part time jobs concurrently) goes through a divorce and doesn’t want to work 3 jobs anymore, is the alimony/support based on the FT job or the total of all 3 jobs, which aren’t guaranteed (even they have been consistent for many years).

    Just asking for a friend……

    • Not so sure about the marital relations part, but I suppose it may be able to come into play as one of many factors to determine the actual “date of separation” or similar terms used in the distribution of assets in many states. Maybe?

      In Pennsylvania, at least, parties are generally held to only one 40-hour work week. I’m not saying it’s impossible to be held to more, but that’s the default and most common position.

      The catch is, if you choose to keep working both (or all three) jobs, it’s probably more likely that you’ll be held to your actual income from all of them – but if you leave, you would be able to argue that you only have one job, and your historical earnings at two or three shouldn’t be taken into account. So it’s almost like a bit of a penalty for extra hard work, but it’s also kind of like taxes: You’re still bringing home most of the money for yourself, even if you move up in tax brackets cause you brought home too much. If you pay 30 or 40% of that net income in spousal support, you’re still taking home 60 or 70%, so why not keep going if you enjoy it?

      Other states may vary, and it also varies based on so many other factors, so really this whole response is pretty meaningless. Sorry 🙂

      • ed69

        Thanks for the reply.

        The question about the multiple jobs was related to the FIRE aspect, if this person was working the multiple jobs to reach FIRE earlier and not because of enjoyment, in the event of a divorce said person would be like ‘why bother killing myself working so much for future alimony’?

        It would just suck if you were locked into having to work 60-70 hours a week, because you have been for a number of years, to pay for alimony.

  • It would suck! But that’s one of the few things in PA law that tends to favor the higher-income earner: Usually, they are basically held to the highest earnings they could have in a 40-hour work week, whether they are working 80 hours at 3 jobs or 2 hours at 1 job. But it’s not quite “black letter law,” i.e. a specific, easy-to-follow rule that is pretty much unquestionable, so there’s some wiggle room.

  • Gosh I hope I don’t have to ever see the inside of a court room. I can definitely see why Dr. Anderson is unhappy with the decision. It doesn’t seem fair but I guess if that’s the way things are set up it makes sense. While definitely not romantic I can see why prenups are becoming more normal.

  • Jacq

    I fully intend to have a prenuptial agreement especially regarding my retirement funds. I dated a guy for 7 years, and while I cared about him a lot, he was not good with money or retirement . (He let a 401k be disembursed and therefore at 7 years older than me had 0 saved for retirement. Being in sales, with each new job he started at the bottom of the pay scale.)
    I have learned a lot, but I have also seen what were good relationships decline. I was the hopeful fool who stayed 7 years, when I ought to have cut my losses at year 4 or 5. I want to make sure my hard earned retirement stays mine.
    As another poster noted, love is emotional, so why not set logical boundaries just in case, and then get back to living the life you want with that partner?

    • Love is emotional, so why not set logical boundaries just in case, and then get back to living the life you want with that partner?

      That’s awesome. And I don’t think this will have an effect on my marriage because we’re both low spenders and will have a large, approximately equal amount saved up, but I could see how a prenup could ease some of the money concerns in many marriages. At least the ones that come from a place of “You’re spending all our money, not just yours!”

      • Jacq

        A friend had to with draw her 401k & pay all the taxes to give her ex half. Not cool. I’ve also seen people egged on my family & friends to ask for more “you put up with this bs, you -deserve- it”. You marry the person & the family comes with it. I have friends who are good people, but it’s like something *snaps* in the emotion to greed sector when divorce happens. *shrug* I just plan to cover my assets when the time comes.

  • Nicoleandmaggie

    Standard of living also includes ability to save. People married to people with high powered careers often make sacrifices to their own careers that benefit the high earner. If the genders in this post were reversed it would be more obvious. If this physician only spends a little per year and savings are irrelevant to standard of living, why is she complaining about having to pay spousal support?

    • That is a really good point, and it’s the main thrust behind spousal support for couples that are not struggling financially. Spousal support, in that situation, is meant to provide for the opportunity to continue saving as planned.

      However, when you consider the possibility that the distribution of assets may end up heavily favoring that lower income earner who sacrificed all that earning potential, it seems pretty nonsensical to also throw spousal support at them in situations where they clearly do not need it.

      The point of the post isn’t to say that spousal support has no purpose; it’s to say that in many cases, spousal support makes no sense, or the laws guiding division of assets make no sense. And it’s important for couples about to marry to think about the possibilities in advance!

      A couple like this example could easily have come to a more reasonable agreement themselves. If they had the knowledge that perhaps Mr. A was going to sacrifice some time in his career to be a stay-at-home dad, or by taking part-time work, the parties might consider it “fair” that he get a bit more than half of the assets. But then, since he’s capable of supporting himself, no transfer of wealth occurs after the marriage, in the form of spousal support, alimony, maintenance, or the like.

      It’s actually kind of how my prenup is structured. Depending on the disparity in our assets, Mrs. Vigilante and I could possibly walk away owing one another nothing. But our most likely scenario is that, if we divorce, I will owe her a significant chunk of my savings. I’m the higher income earner, and her income is helping me amass my fortune, so we figure she gets the benefit of some of that fortune. But, on the other hand, once we’re divorced, she’s no longer helping me amass my fortune, so why should I share what I earn with her? She is not a stay-at-home mom; rather, she earns almost double what she would need to take care of herself if we split! So why should I pay her spousal?

      (Side note – she actually negotiated out of me a small spousal support payment. But this payment is smaller than what the calculation would likely provide for someone with my education – regardless of my work – and is triggered only if she is retired from full-time employment. It’s to help her get back on her feet, in that instance.)

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