The Moneyist: I’m worth $1.8 million — and want my girlfriend to waive her community-property rights before we marry

Dear Moneyist,

I have recently decided that I want to ask my longtime girlfriend of 5 years to marry me, and start a new chapter in our lives. My girlfriend is financially responsible to a degree that a lot of people are fine with: some savings, 401(k) contributions, paying bills, and getting by.

I am fine with her financial responsibility levels, but I look at money differently than her. I simply see it as a key to freedom. It’s a way of not doing things you don’t want to do anymore. I am a 41-year-old physical therapist. At 23, I bought my first starter home in Ohio.

I have bought rentals, flipped houses, bought and sold land to developers, and placed the majority of my real-estate hustle and physical therapy savings into indexing funds and ETFs. Between the equity in a couple of rentals and my index holdings, I have a net worth of about $1.8 million.

Don’t miss: My boyfriend and I have two kids — should I pay off his $130,000 student debt?

I have lived in San Diego for 6 years and will continue to stay here after we get married because my girlfriend is a local teacher and cannot change districts without losing her retirement benefits. Plus, her family lives in California.

If our marriage does not work out, does she get half of what we have made in the time together in California or is it half of what I’ve made in the past 18 years? I have never actually mentioned details of my finances to her, but it feels like a conversation we should have.

I plan on continuing my real-estate life, so do I start a new LLC for any new moves I make after I get married? Is a prenuptial agreement something that helps here, and how do I explain to someone that I care about the money that I’ve sweated so hard over for almost two decades?

I know this may sounds selfish, and maybe I am being selfish, but I have come from absolutely nothing and I just want to keep working towards my financial goals and make sure we are prepared for our future together.

Cautious in California

Dear Cautious,

California is a community property state, meaning that anything earned during the marriage may be split 50/50 should you decide to divorce. Your savings and investments made before your marriage and any inheritance you receive during your marriage are considered separate property.

You can ask your girlfriend to sign a prenuptial agreement to waive her rights to community property. You both need to seek legal counsel to advise on this prenup. It can be an expensive and arduous process. You would also both have to outline all of your financial holdings and debts.

Some things to keep in mind: “The agreement cannot be given to the other party very close to the wedding date,” according to Hossein Berenji from Berenji & Associates in Los Angeles. Putting undue pressure on your girlfriend close to the marriage could make a prenup unenforceable.

In 2011, a California court ruled that a couple, Jeffrey and Nancy Facter, who had signed a prenup waiving spousal support if they got divorced was “unconscionable” and found that prenuptial agreement — which included a community property waiver — was unenforceable in its entirety.

Two years later, that decision was overturned in appeal. None of the property acquired during the couple’s 16 years of marriage was deemed community property. However, the parties had to bear their own costs on appeal — and this case shows that prenups can be invalidated.

Also see: I was kidnapped by my father and only found my mother 5 years before she died — am I entitled to part of her estate?

Prepare for a wide range of responses when you float the idea of a prenuptial agreement. She may understand completely when she learns of your years of investing and saving that you are skittish about sharing half of any additional earnings in the event that you divorce.

On the other hand, California community property law means your $1.8 million in assets belong to you, should you divorce. That includes your rental properties and investment accounts. Asking her to waive any additional earnings during your marriage may come as an unwelcome shock to her.

Previous relationships will influence how well people receive the request to sign a prenup. One member of the Moneyist Facebook Group wrote: “I am starting a divorce after just 2 years. Her behavior changed completely right after the honeymoon.” He says you should both sign a prenup.

Another member seems to disagree with your plan. She wrote, “Don’t get married.” Others suggest discussing your respective finances before you propose marriage, which is always smart. No one likes to be blindsided by a partner’s multi-million-dollar honey pot or six-figure debt, for that matter.

Wealth has given you some freedom, but it appears to have come with its own set of restraints. After five years, a conversation about money is long overdue. And your girlfriend may not take kindly to being asked to sign a community-property waiver if you are planning a life and family together.

If you stick to your guns, you may have to choose between your future earnings and your future wife.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).

By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

Would you like to sign up to an email alert when a new Moneyist column has been published? If so, click on this link.

Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

Get a daily roundup of the top reads in personal finance delivered to your inbox. Subscribe to MarketWatch’s free Personal Finance Daily newsletter. Sign up here.

Read More