This chapter is called “How to Marry (Again): If You Absolutely, Positively Must”. This is a twelve page chapter. By no means do I advocate anyone getting married but I will cover the last two pages of the chapter. If you want to read the first ten pages of the chapter, you can always buy the book yourself.
More from the words of Jed Abraham
The bottom line is: You acknowledge her real dependency upon your continued support in the event you separate; you accept her requirement that she not be left without resources; you agree to ease her transition from married to divorced. In return, she accepts your requirement that she have no legal claim on your property, and she agrees that your support obligation be generally limited in time and amount. You agree to give her a little less than she’d like.
To do it right, you should fund your divorce during marriage. To really do it right, the very day you return from your honeymoon you should set up an separate account for your wife into which you regularly deposit a small percentage of your income. She will get the proceeds upon divorce or upon reaching a certain advanced age, whichever comes first. Your pre-nuptial should provide that this account will represent your entire financial obligation to her in the event of divorce or upon reaching a certain advanced age, whichever comes first. Your pre-nuptial should provide that this account will represent your entire financial obligation to her in the event of divorce. If you fail to fund it appropriately, or you make improper withdrawals, you will owe her the difference, with interest.
You can get fancy. You can pay the tax on the account’s income as it builds. That way, it will accrue tax-free to your wife. You can put the funds into escrow, trust, life insurance, or an annuity. That would remove the funds from your direct control and possibly provide some tax and estate planning advantages.
You can get even fancier. You can calibrate the percentage you pay with the level of income you earn. The higher your income, the higher the percentage you pay, just like federal income tax. If she has special concerns, such as health insurance, you can provide for them, too.
To make things really fair and square, she must agree to set up a similar account for you. That way, if she turns into an uncompromising careerist after all, you are similarly covered. Even if her earnings are marginal, her account will “equitably” offset yours.
This kind of arrangement allows you to plan rationally for an irrational event. At every moment, you will know exactly what your exposure is. You have already provided for it: a sort of divorce insurance.
The trick is to set a fair rate of funding. The parameters are: how much you can afford to set aside without sabotaging your other financial goals, and how much your ex will need at some unknown time in the future. While the odds of divorce are high, they are higher at certain times than at others. They depend on the number of years you stay married: they start out low, then they rise, and if you succeed in scratching your seven-year itch, they turn over and start to decline. They also depend on the prevailing propensity of married couples to divorce. So, an estimate of how much your ex will need at any given time is fraught with uncertainty. On the other hand, your ongoing financial needs are relatively easier to quantify than hers. All other things being equal, you will come up with a rate that is weighted more by what you think you can afford than by what she thinks she might need; it should produce an amount that will neither discourage you from marrying her nor encourage her to divorce you.
But all other things not equal. Out there, lurking in the background, is the law. The law tells her she can get a pretty piece of your property, plus alimony. Her lawyers tells her that’s the minimum she’ll need. Her friends tell her that’s the least she deserves. So you’re not just bargaining with her. You’re also bargaining with the shadow of the law, and the shadow knows.
You arrive, at last, at the moment of truth. If she insists on getting what the law will give her, you still have time to tell her she can have the law. And get the hell out.
On the next summary I will be covering the final chapter “How to Change Things: We’re All In This Together”