Trust fund and Prenups

[lawman1909]

So, this is dealing with a current scenario in a friend's life who is concerned over this topic. Said person has money in a trust fund. This person is financially responsible, hoping to use it to help buy a home when they are of age. They are wondering if, A.) tell their girlfriend of it, and ask for a prenuptial agreement if they get married, or B.) don't tell, and if marriage happens, then let the other know when that time comes. How do you all suggest this person go about it? My recommendations are to side with being honest and asking for a Prenup, but that's just me. Since Prenups can be a sore subject, I'd like to hear from you all. Thoughts?

 

[JohnnyMerrill]

if you're that worried, don't get married

 

[Dave Hess]

How much money is involved?

Yes, a prenup should be signed.... just in case they fall out of love.

 

[lawman1909]

It's not me, but a friend. I wish I had a trust fund!!

 

[lawman1909]

He hasn't told me exactly, but said it's a "good amount." I can only imagine what that is, but I'm sure it's up there, maybe 50k? It was meant for his college, but he has a trade and didn't use it.

 

[Andrew1972]

Marriage as many here already know is not love it's contractual.

 

[philipp10]

Originally Posted By: lawman1909
He hasn't told me exactly, but said it's a "good amount." I can only imagine what that is, but I'm sure it's up there, maybe 50k? It was meant for his college, but he has a trade and didn't use it.


for 50K? I wouldn't even consider a prenup for that. Too likely to poison the marriage. If it was 500k, then I could see it. Buy him a book on how to keep a wife happy and cross your fingers.

 

[cat843]

Some of this matters in what state you live in. In NY if you have $50K in the bank when you get married, if you get divorced the $50K is not considered a martial assert so it does not get split. However move the $50K to a joint account where you are each adding and taking out money and its a different story.

The safest way in NY would be for the person with the trust fund to buy the house in their name only before the marriage.

I do feel a prenup is kind of saying "I am not 100% sure about you so lets sign a contract in case we get married and then decide to get divorced".

 

[spasm3]

Interest rates are so low to buy a home , that i'd invest the money. If interest rates were high on borrowing, i'd use it to buy a home.

Invest it for retirement hope for 8+ percent or better over a couple of decades, and borrow for the home at 3.1 to 3.3 percent.

The temptation for them would be to use the 50k AND take out a loan for as much as they can afford , and buy too much house.

Give them the best advice you can about not buy too much house and paying it off in 15 years and having a retirement account to boot.

 

[Dave Hess]

Yeah, $50K I would not be worried. Maybe have this money in a Joint Owner account if a parent is still alive.

 

[dishdude]

This reminds me of the Seinfeld episode where George asks Susan to sign the prenup and she laughs at him. $50k is nothing.

 

[The_Jeff]

Use the trust money for 20% down on the house so you can skip the PMI. Don't announce the trust, just let it be a pleasant surprise when it's time for house buying. Play poor before then, see if she's able to save money maturely.

 

[splinter]

Originally Posted By: lawman1909
...in a friend's life who is concerned over this topic...Thoughts?

Stay out of it! Quickest way to ruin any personal relationship is to get involved with their financial and/or legal affairs.

If you're an attorney and/or financial professional acting in that fiduciary capacity they'll pay you handsomely to do your job.
Only then does this "Trust fund and Prenups" topic become your business.

$.02

 

[OneEyeJack]

Sometimes when a marriage goes bad, it goes really bad. Bullet proof documents are the only answer if there's a disagreement.

A man in LA, during a divorce came home to find his prize winning 37 Ford woodie burning in the detached garage behind the main house. The fire was started by his wife and some lawnmower gasoline. Evidently she was very upset and lashed out at him with a vengeance. Turns out the woodie was not only worth about $100K it was part of a prenup.

 

[sleddriver]

That is indeed a touchy one. He needs to talk to a lawyer to start. Second, I'd recommend a financial "snap-shot" of all of his finances, accounts, investments, real estate, signed by a licensed CPA, to document what he brought in with him.

The amount matters. For a look at how MOST people handle a large amount of new-found-wealth, just look at the lottery winners...and NFL players.

 

[04SE]

A good lawyer and good banker can lock that money up tight and be divorce, judgement AND levy proof.

Google dynasty trust. However, generally you need to have much more than $50,000 to even make it worth the expense and management fees.

Also, FWIW, I have been told by some high end lawyers that prenups are easily defeated. I have no experience with one (THANK GOODNESS) but I sure wouldn't trust one as my only layer of insulation/insurance.

 

[JohnnyMerrill]

50k isn't worth the worry or a lawyer's time

 

[stockrex]

Achtung!
Once the money is mixed with marital money, the money is irrecoverable.

I would keep it in trust fund, NOT declare it. keep documentation. what is his is his. you don't have to pay PMI. take 2 loans, and use the trust fund as an asset.

Oh, pay a good lawyer for a pre-nup NOW, friend watch out for friends, you have to the objective 3 person and protect his interests.

it won't cost you that much for a prenup.

 

[stockrex]

Originally Posted By: sleddriver
That is indeed a touchy one. He needs to talk to a lawyer to start. Second, I'd recommend a financial "snap-shot" of all of his finances, accounts, investments, real estate, signed by a licensed CPA, to document what he brought in with him.

The amount matters. For a look at how MOST people handle a large amount of new-found-wealth, just look at the lottery winners...and NFL players.


Yeap, take a snap shot of ALL accounts, detailed if investments are involved.

 

[bubbatime]

50K is a drop in the bucket - not worth a prenup.

500K? Potentially worth a prenup.

2 million dollars or more - Definitely get a prenup