Dear Dave,
What are your thoughts on prenuptial agreements? I’m a divorced single mom with two boys, and I’m their primary caregiver. I’d like to get married again one day if the right man comes along. The reason I ask about prenups is I’m expecting to receive an inheritance of about $5 million sometime in the future. Would it be a good idea for someone in my situation? '
Sarah Dear Sarah,
In a situation like yours, I’d recommend a prenup. Full disclosure: Years ago, I used to be completely against them. I’d tell folks not to get married if they loved money and material stuff more than they loved the person they planned to marry. But after doing decades of financial coaching and even crisis counseling, I changed my tune. The reason I changed my mind is that I started to realize just how many weirdos are out there. When a dramatic amount of money is involved, a prenup can actually help the married couple by adding an extra level of protection between you and the crazies. Let’s say you marry a great guy, then his deadbeat cousin, a guy you’re suddenly related to by marriage, shows up asking for $10,000 to open a pizza place. Never mind that he can’t even boil water. Your guy says, “Don’t look at me. We’ve got a prenup.” He looks at you, and you smile, offer him a glass of water and send Cousin Eddie on his way. Believe it or not, that kind of stuff actually happens. Sometimes it’s the parents asking for a handout, sometimes it’s the kids — it doesn’t really matter. But it can drive a wedge between you and your spouse. Making and maintaining a good marriage is difficult. It’s hard work. You don’t need that kind of stuff creeping in and making things even harder. Do you see what I’m saying? In my mind, the prenup is not to protect you from the guy you married. He’s probably okay. Especially if you two are mature adults who took plenty of time getting to know each other before you walked down the aisle. And if you’ve been through a divorce, you probably feel that side of things a whole lot deeper than most folks. Now, I still don’t recommend prenups where small amounts of money are concerned. I remember one couple who each had normal finances and average net worths. The boyfriend wanted a prenup based on the fact he had a 1967 Ford Mustang. I flat out told her not to marry the guy because he loved a car more than he loved her. That’s practically planning a divorce. And Sarah, remember this: Wealth magnifies everything. The good and the bad. If someone who has a temper becomes wealthy, they become a bully. If they’re compassionate and generous to start with, they become what we call philanthropists. Kindness and generosity become their personal brand. That’s the kind of person you want to marry. `
— Dave Dear Dave,
I’m 29, and I’m about to buy my first home. My plan is to buy a duplex, and rent out the other side to help pay down the mortgage quickly. A good friend, who is like a brother to me, wants to be my renter. But I'm worried this might jeopardize our friendship at some point in the future. What do you think?
Justin
Dear Justin,
Congratulations! Believe it or not, I can still remember how exciting it is when you're finally able to buy your very first home. I hope the process moves quickly and smoothly for you.
Now, let's get to the real question, and how your friend plays into things. The kind of arrangement you're talking about can work. But to be honest, I'm afraid the odds aren't in your favor. No mat - ter how long you've known each other, or how well you get along, you always face the risk of running into a situation that can damage the relationship when you do business with friends.
Listen to this next part very carefully. Does what I just said mean you can never do business with friends? Nope. I do lots of business with friends. But before anything happens, I always make sure the specific requirements and expectations of our re - lationship are laid out very clearly. In writing. And in your case, I'd start making sure the ground rules are completely understood now. Ensure that he understands he absolutely must come talk to you ahead of time if there's even a chance he might be late with the rent. Most problems between a renter and landlord can be worked out if both parties are mature and reasonable. But you're not running a charity here. This needs to be emphasized in a very firm, but very kind, manner.
The truth is friends some - times have unrealistic ex - pectations of each other. The friend who is renting may think he'll get some slack on the payments. The friend who's the landlord may assume the renter will be a perfect tenant. These are both dangerous assumptions that need to be addressed before anything is signed.
You can make this work, Justin. Just be straightfor - ward and fair. Make sure the rules are completely understood by everyone involved. Then, if you ever have to enforce the rules, do it gently-but firmly.
— Dave