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Friday, December 6, 2013

Post-Nuptial Agreements and Stay-at-Home Moms

There are many reasons why a career woman chooses to become a stay-at-home parent, though most anticipate that at some point, they will return to the workforce. 

However, what many who have walked this path are now finding is that re-entry into the work world isn't as smooth as they had anticipated. Matters can become especially thorny when the precursor for that re-entry is a divorce filing. Not only did many of these individuals fail to account for the possibility that their marriage might crumble, they didn't factor in the major financial blow that a break from the paid workforce would deliver in the long-term. Their skill sets are often dated. Their contacts are rusty. There is a gaping hole in their resumes and their opportunities have shrunk significantly. 

 A post-nuptial agreement can often address such financial sacrifices made by one spouse. Those assisting a spouse with an advance degree, such as a medical degree, may also benefit, as well as those who are starting a business together. 

Most are familiar with the pre-nuptial agreement, drawn up just prior to marriage. However, the post-nuptial agreement is gaining in popularity. It was recently given a fair amount of ink when media mogul Rupert Murdoch and his wife, Wendi Deng, divorced. The pair had several post-nuptial agreements. 

But such contracts aren't solely for high-income wage earners. In fact, it's something more couples should consider. While such a move may seem out-of-line to a couple starting a family together, it's important that the stay-at-home spouse consider the  financial ramifications he or she could face if the union fails. 

Economists estimate that the average stay-at-home mother will lose roughly $1 million of income over the time devoted to their children. That includes not only the loss of wages, but also the 401(k) contributions and the accumulation of Social Security benefits. 

A recent New York Times article referred to the decision of career women to stay-at-home with their young children as "opting out." The article highlighted how a number of these women, highly successful in their own right before the decision to stay at home with young children, are now struggling financially in the wake of collapsed marriages. While their husbands went on to continue rising the corporate ladder, many former stay-at-home mothers re-entering the workforce find they must accept mid- or low-level positions, even when they once held senior titles. Often, their incomes are only a fraction of what they earned before they left. 

In the end, these women are getting the short end of the stick. Many times, women are stepping out during what would otherwise be the peak years of their career. That's a major sacrifice, although one that is sometimes not as well-acknowledged by spouses - or the courts. 

A post-nuptial agreement serves as a kind of insurance policy for the spouse who is opting out. Theoretically, if you step out of the work force for a period of 10 years, you may never be able to recoup what you've lost. At least with a post-nuptial agreement, you can be assured of a more secure financial future, as your spouse will have less room to argue against the value of your contribution. 

That's not to say that stay-at-home parenthood isn't worth it. After all, your children are only little for a short time, and those early years pass quickly. There is indeed great value to investing your time and energy on them.

However, understand that the arrangement may shift the entire framework of your marriage, and perhaps not for the better. Working through this together may make you stronger as a couple. Or it may not. Either way, you should be prepared. 

If you are contemplating a post-nuptial agreement or divorce in New York City, call our offices at (718) 864-2011.

Additional Resources:

The Opt-Out Generation Wants Back In, Aug. 7, 2013, By Judith Warner, The New York Times

More Blog Entries:

Divorce in the Courts vs. Divorce Within the Religious Community, Nov. 24, 2013, New York City Divorce Lawyer Blog


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