dsmWealth June 4, 2020

Prenuptial Agreements: Yea or Nay?

BY STEVE DINNEN

"I love you so very much. Will you marry me?"

"Yes, darling."

"Great. But first, will you sign this piece of paper?"

Cupid, it seems, has put on his accounting eyeshade in suggesting a prenuptial agreement for his intended bride. It could have a chilling effect.

Comfort level aside, a prenuptial can serve a purpose, said Brent Cashatt, an attorney in the East Village who specializes in family law.

Primarily, Cashatt said, prenuptial agreements come into play with second marriages. The prospective spouses may be older and have individually built up assets that they wish to protect. This would especially be the case where they already have adult children and are making, or at least considering, plans to leave some of their money to the next generation.

When a first marriage is involved, Cashatt said a prenuptial typically would come into play if one side to the marriage has access to – currently or in coming years – substantial family wealth. Family members may desire to shield that some or all of that wealth should the marriage falter (50% of all marriages fail).

Iowa codified its law on prenuptials starting in 1992. It’s pretty straightforward legislation that spends more time discussing ways it can be revoked: that it was not agreed to voluntarily, that the agreement was unconscionable, or that the party being asked to sign was not presented with reasonable disclosure of property or financial obligations of the other spouse.

To head off problems such as this, Cashatt said he will ask that the party being asked to sign the agreement mark on the documents areas of concern.

"I ask the other side to make handwritten changes, and share it," he said.

Cashatt also likes to have the other side to the agreement sign it outside his office. That just gives the pact a little more sense of being a fair deal that was not entered into under duress.

Prenuptials will sometimes carry sunset provisions. The longer a marriage lasts, the fewer the restrictions on assets.

Prenuptial agreements can also protect each party from being responsible for any debts that existed prior to the marriage. Without an agreement, these debts can become marital property in some states if there's nothing that defines them otherwise.

Cashatt said more people don’t enter into prenuptials because they are difficult subjects. "It’s pretty icy cold water," he said. And he’s seen more than a few instances where a prenuptial is drafted, signed and never put into place.

FICO Standards to be Overhauled This Summer

BY STEVE DINNEN

Yes, we know your credit score is sky high. But just when you thought it couldn’t get any better, along comes a tweak that may actually fall in your favor – as long as you pay your bills on time.

Fair Isaac Corp., inventor of the ever-present and often scorned FICO Score that lenders use to measure credit risk, is giving it an overhaul starting this summer. Going forward there will be the FICO 10, and the FICO 10T. They will incorporate changes such as weighing personal loans more heavily and looking to see whether you’ve consolidated a bunch of loans, and then ran up more debt (that’s not so good).

Fair Isaac periodically updates its tool kit. Oddly, by my way of thinking, some creditors will cling to existing FICO standards. Fannie Mae and Freddie Mac require credit scores for any home loans that they might buy. And the people who supply those scores, Experian, Equifax and TransUnion, all use different versions of FICO.

Ted Rossman, an editor at CreditCards.com, ran his personal data through the credit scoring gauntlet last year and came up with three different numbers, which varied by 37 points.

The lowest score still is 300, where you’re out of the game, moneywise. The highest is 850, which is where you’re all at already. Right?

Black Corporate Leaders: Unrest Reflects Wealth Gap
BY SHARON EPPERSON FOR CNBC

Corporate and nonprofit leaders are echoing the anger, pain and frustration expressed by many Americans after the death of George Floyd, the 46-year-old black man who died in police custody in Minneapolis on May 25 after a white officer kneeled on his neck for more than eight minutes.

On Monday several black leaders in business and finance voiced their reaction to CNBC over the incident, agreeing the unrest that has transpired across America over the past several days is a result of both racial injustice and racial disparity in income and wealth between African Americans and whites in the U.S.

"So much of this unrest, this civil unrest, is tied to economic inequality. That’s just a fact. We need to move the needle on this economic inequality," said Mellody Hobson, president and co-CEO of Ariel Investments and a member of the board of directors at Starbucks, JPMorgan Chase and Quibi.

"The role of the CEO and the role of the corporation has changed, and while many may want to sit out on these issues, they can’t. They literally can’t," she said. READ MORE.

Gap Between Main Street and Wall Street Grows Wider

BY MATT EGAN FOR CNN

The stock market is not the economy. But rarely has the gap between Wall Street and Main Street felt so wide.

The United States is going through its worst race crisis since 1968 following the death of George Floyd, an unarmed black man, at the hands of a police officer in Minneapolis. Riots have hit cities across the nation. Looting is rampant. And President Donald Trump is threatening to send in the military to stop the violence.

The civil unrest could exacerbate the coronavirus pandemic that has already killed more than 100,000 Americans. That in turn could deepen the economic collapse that has forced more than 40 million people to file for unemployment. Meanwhile U.S.-China relations are imploding, imperiling the trade war cease-fire reached between the world's two largest economies.

And yet, the stock market is downright booming. READ MORE.