Divorce Destroys Capital
kpkaiser.com
kpkaiser.com
Also bear in mind the fact that husbands can frequently be held accountable for their spouse's legal fees and you have a situation which creates a perverse incentive for litigation to continue.
I think people are basing their decisions with respect to marriage and divorce on what they hear on TV (or social drama sites), rather than actual data. Oh well, HN readers are people too...
Also, the story this article is about would have ended the same way if he needed to sell the company to pay off some other arbitrary debt; margin call on a bad investment, the mortgage on his underwater home, anything. Divorce isn't relevant to the "life lesson". (Which is, "if you have to do something right now, you're not going to get a good price". I think I'll call it the "Best Buy" effect.)
We're all smart people here. None of us would be so stupid as to sign a really bad VC agreement because we really liked the VC. Why do so many of us willingly sign bad contracts in our personal life? If someone here was signing an agreement with a startup cofounder that had no stock vesting clause and no provisions to secure IP, we'd be in like a shot to warn them. If someone here announced their engagement, I'm sure we'd all congratulate them. Marriage is objectively a terrible financial deal, particularly for the likes of us, but we ignore how bad a deal it is for purely sentimental reasons.
Money is an abstraction, a means to an end, not the end. For many (most?) people, that intended end is a happy, healthy, safe family, which is hard to do without marriage.
Marriage however is very specifically a contract between two individuals and the State. You get a marriage license and you file the paperwork at City Hall. The State's interest is obvious: it wants new, well-adjusted citizens. So the contract says, we'll give you these privileges (in tax, immigration, etc) and you do your bit. Part of that is, all property becomes the property of the new entity. So yeah, the only difference between "getting married" and doing it yourself is the contract.
I've heard the "marriage is an anachronism" argument for many years, exclusively from childless couples.
If that's true - and it may be just due to small sample size of my personal experience - then it implies confirmation bias on both sides of the debate.
Is anyone here in a committed, non-married relationship with kids?
Also worth noting is that co-habiting partners have almost all of the same rights as married partners, so legally, there's not much difference if one marries or not.
The bond between two people is only as valid/strong/durable as the commitment. There is no reason to preserve a tradition that has been co-opted by social conservatives and now symbolizes bigotry more than it serves a practical purpose.
Furthermore, all the social meddling (tax rates, special privileges) makes me feel like a pawn.
It seems to me that conservatives - if they really do stand for "small government" - would oppose the concept of legalized marriages, in which we are all expected to submit our personal relationship for approval by the government. If that's not intrusive state power, what is? Yet even the most diehard libertarians rarely question the validity of state-sanctioned marriage.
The main reason more libertarians (as opposed to good/small govt conservatives) don't criticize state sanctioned marriage is that most are unaware of how large the subsidies to married couples actually are. Many people think marriage is nothing more than a standardized contract between two people.
I don't consider my marriage "a lie" or "a bad contract", and certainly not a "financial deal". I'm not sure why you do, or why you believe I am being dishonest, or that I was dishonest when I made my vows.
If you seriously think that people should say "probably" to a "bad contract" then I wonder what you think your signature is worth on other contracts.
I do understand that human integrity is variable, and values vary. I don't wish to impose mine on you.
OP: "Any honest person would answer their vows with not "I do" but "probably".
I answered mine with "I do". Does that make me a dishonest person? Did you read my vows?
Are mortgages also a lie? Should everyone have signed "probably" in case they ended up in jingle-mail territory? Are then then dishonest people? I think not. Perhaps my honesty bar is set too low, but, again, I think not.
Saying that a commitment question (Yes/no, In/out, etc) should be answered with "probably" is a little strange, and a little naive, I think.
If 40% of mortgages ended in default, it would be a national emergency, but for some reason we accept that close to half of marriages end in divorce. The vows of marriage clearly fail to reflect how people actually decide to live their lives. In that sense, marriage is an outmoded institution, one I feel is in urgent need of revision.
We have to accept as a society that while the majority of us say we want to pair for life, a very large proportion of us actually do not want that. The cultural fallout of these dashed hopes and broken promises is truly toxic. We are collectively living in denial. We are telling children that mummy and daddy will be together forever, in spite of overwhelming evidence to the contrary. We need to be more honest and rational, to ourselves and to others.
Fifty years ago, divorce was rare. A hundred years ago, it was unheard of. At some point in the near future, divorce will be the most likely end of a marriage. The costs to society are clearly enormous and we urgently need to revise the legal nature of marriage to better reflect the practical reality. I do not oppose marriage; I oppose an outmoded version of marriage that enshrines self-deception and the deception of others into law.
Our cultural and legal concept of marriage is very specific and is in no way definitive. In many parts of the Islamic world, marriage can legally be of a fixed length, with exit terms prearranged. This to me seems far more rational, in preserving the true purpose of marriage (the protection of patrilineage) while allowing for more long-term flexibility and reducing the costs of divorce to near-zero.
Being proven wrong does not make you a liar, nor dishonest.
A commitment question is not a probability question, it asks whether you are in or out. Is it more honest to answer "probably" when asked whether you want another card when drawing 14 at blackjack? Are you dishonest if it turns out you made a mistake?
> the majority of us say we want to pair for life, a very large proportion of us actually do not want that.
So...the one group should force their viewpoint on the other?
> We need to be more honest and rational, to ourselves and to others.
I think I am being completely honest and rational. I don't tell my kids mummy and daddy will be together for ever, I tell them what the plan is.
> The costs to society are clearly enormous
Do you mean social costs or financial costs? How are the costs reduced if there is no marriage (except for in litigious societies, and if you removed marriage in them then lawsuits would simply shift to the next level)?
> Our cultural and legal concept of marriage is very specific
Yours or mine? You state that "marriage is a lie". I think it is not for everyone, but some people like it.
In my country, the costs of divorce are near-zero. Maybe it is expensive in some countries. Why then is that a problem with marriage, and not with that countries legal and social system?
Why is marriage "a lie"? Why is it dishonest to say "I do"?
Edit: Note that I think you are very likely right about marriage needing reform in the way that it fits into some modern societies. However, the terms you use to describe many people's happy lifestyles, people who may well think about things just as much as you, are somewhat inflammatory.
My marriage is one of the best things in my life, and having it described as a lie and myself described as dishonest is offensive, I guess.
Society has changed a lot, but maybe marriage is not the thing that needs changing to fix the problems you see.
Using his example, the value of the couple pre-divorce was (roughly): (A) $1,000,000 in value for his share of his business, plus (B) $55,000 in cash. That's $1,055,000 in value, or $527,500 for each partner.
After the divorce, the value of the couple is: (A) $250,000 in value for his share of the business (because of a quick sale of an illiquid business), plus (B) $0 in cash ($55k in cash to lawyers). That's a total of $250k, or $125k for each partner.
The majority of the value transfer, then, goes to the buyer of the couple's illiquid business, which must be sold too-quickly. Or, to take a more charitable view of the buyer, the fall in value may be from the value destruction from one of the partners suddenly exiting the business.
When everything is going great in my marriage, I don't need a reminder that I'm obligated to stay with my wife. It's when things suck that my ring, my vows, and my marriage certificate are beneficial. They keep me there because I know that if I break them, I'd be a liar. And I know my wife will stick with me when things are tough because she's made the same commitment.
If marriage is silly, are contracts between employers and employees and between founders and investors also silly? If not, why?
* they have performance requirements * they aren't life long commitments
If you don't perform well as a CEO the board can fire you. And you don't get to keep half of their personal net worth either.
You make a valid point that when things are tough, marriage helps you stay together. But it seems like for the wrong reason (fear of divorce, rather than love of the person).
It also seems likely that if the other person know's it's difficult for you to leave, they may not try as hard.
This same problem exists when professors get tenure, when you sign a 2 year contract with AT&T, or any long term contract that locks you in.
If your employment contract commits your entire lifetime to the company, then yes, it is silly, and will be deemed unenforceable in any court in the civilized world.
Marriage is the term that only validates relationships deemed OK by the state or church. It is a mechanism of social control and if anything undermines the gravity of two people's commitment to each other.
That would seem a more efficient, happy, and logical path to me.
I don't like X, therefore, instead of ignoring X, I think everyone else should stop doing X because I said so. Sounds silly when put that way, doesn't it?
Also, downvoted for implying my marriage is silly and/or somehow bigoted, ;)
It's odd how in so many other situations, HN readers would rather take the risky-but-personally-fulfilling path, even if the numbers don't quite work out. Yet when it comes to marriage, everybody seems to say "Don't bother because you may fail."
The usual advice about startups, namely "incorporate and get everything in writing early" is very similar advice. Incorporation and contracts limit your liability in much the same way that avoiding marriage does.
I fail to see the analogy between a startup and a marriage, and I'm a bit curious on why so many others see it. A long bow to draw, I think.
Any commitment is only as strong as the people who make it. Marriage is a meaningless stamp on a relationship.
Both religious groups and governments have bigoted policies about who may marry. There is really no defense of it. It's a crude, outdated custom, and any relationship is only as strong as the commitment of the people in it, no more so, no less.
So why should unmarried couples pay more taxes than married couples? Why should singles?
I agree that one's marital status should not impact anything relating to government services, including taxes.
However, no later than maybe the 60's or 70's marriage seems to represent the need for a person to grow in life, personally and psychologically. It's about two people being together not because they couldn't survive alone but because they want to learn about life together and through each other.
That is, loving the other person by showing them their weaknesses and being loved by letting the other do the same. Rather than physical survival, the process of growing in life won't necessarily benefit for a life-time commitment.
This is reflected in the divorce rates.
People tolerate each other to the extent they are willing to grow. There's no other reason for marriage any more than to artificially keep the people together a bit longer, should one or both of them decide that they just met their extent sooner than they thought.
* * *
Disclaimer: I'm married. For me, it's good, I want to be married rather than just in a long-term relationship. We have a prenuptial agreement (for the case of a divorce only) to dissociate our marriage from our individual and financial lives. Most of our current spending and money is joint while we live together, which hopefully is a long time.
If you both love each other, there is no problem. If it does not work out, there is a monetary split as you defined in the contract, so no one is taken advantage of, and both people are secure for some amount of time until they can move on to a new job/new relationship etc.
That way you don't have to waste 10 grand paying lawyers to setup a prenup so that you don't have to waste 50 grand paying lawyers to handle a divorce settlement.
It only holds if you really do live like a married couple and people would reasonably assume you were married - but it would apply in this case.
So this 'work around' would still get the benefits of being married - but also wouldn't avoid any divorce issues.
It DID apply in Scotland (as "marriage by cohabitation with habit and repute" - 'common law marriage' is a much easier term to remember) until 2006. I had reason to check on it in 2004 and hadn't realised it had changed.
I think you're doing it wrong.
"OK, we'll do that."
Then don't.
And besides, when I get married, it will be forever ;)
Seeking protection from unforeseen changes is a prudent thing to do.
Since it is unlikely that unless there is a huge benefit to signing a prenuptial agreement a woman isn't likely going to an alternative is to trick her by getting married in a state with laws that are beneficial to the income earner and not the spouse. You promise a nice wedding at a country club in xyz state, she thinks it is sooo romantic and that you are awsome.
In reality when you dump her for a newer skinnier model she finds out that she has spent the last xx years with you for nothing because the state laws don't provide for an equal split of the assets. Out of kindness you buy her a used cheap RV so she isn't homeless and give her $200 so she can eat for a little bit while she signs up for welfare.
Since it is unlikely that unless there is a huge benefit to signing a prenuptial agreement a woman isn't likely going to
Then you don't marry her. Really, if someone isn't willing to sign a fair agreement for your (and her) protection before the relationship then you don't want to be with them.
she finds out that she has spent the last xx years with you for nothing
Apart from the enjoyment, the love, the emotional support and all of the other things that long term relationships are supposed to provide. If she's staying with you because she thinks there's going to be some financial payoff then there's something gravely wrong with the relationship.
exactly. instead, just leave the cash on a bureau top or bedside table where she can find it easily. the exchange is still implied on both parts, and you both still win because she gets her money reward earlier and the man doesn't have to worry about being destroyed financially 10 years down the line.
(tongue somewhat in cheek)
Say that in California, and the prenup is invalid.
Which is one reason nobody should ever be married in California.
You wouldn't get an investor without an agreement, you wouldn't get a co-founder without an agreement, you shouldn't get a wife without an agreement.
Yes - what's wrong with that? What do you think marriages are about? Business?
I doubt a prenup would prevent you from sharing your wealth with your wife though.
However, judges can and do use any technical or substantive problems with the prenup, however small, to justify striking down inequitable prenups. The usual problem: the wealthier spouse did not disclose all financial assets and liabilities. Something as simple as not disclosing a checking account with a $0.01 balance can invalidate a prenup protecting millions.
(IAAL)