Perhaps because couples are marrying later and perhaps because of the times, we are reading lots these days about demand for prenups. As we have noted, the classic prenuptial is “Yours is yours and mine is mine unless we make assets joint.” But most modern couples under age 40 want to create some joint estate, if only their common residence.
The other trend comes as a fertility problem. Later marriage means deferred child-bearing and it seems as if couples are not as fecund as in less stressful times of the mid 20th century. This change has also “bred” conflict as we have divergent views about how much energy parenting requires and the question of “Who provides?”
One of the intangible questions that arrives shortly after the stork is whether the new addition merits nurturing beyond the typical employer granted maternity leave. We should say “family leave” because that is the new trend but it’s still fairly rare to see a father advance the idea that he will stay home to be a primary caregiver.
The place(s) where we work are also evolving in the wake of the pandemic. But most large scale employers want their career seeking employees to put the job first and family second. This can often be seen with invitations to a promotion requiring relocation.
So, Alex and Alexa meet in law school and each secures big law jobs with big law salaries. They marry at 28 and all seems well. Let’s assume for the moment they have no prenuptial agreement. At 30, their first child arrives and they each take their allocated “leave.” At 31, Baby 2 is delivered and the law firm managers wince when faced with another leave. Two kids means double the routine appointments, twice the everyday childhood illnesses and all the rest. This pressure reverberates through the marriage as the family has doubled in size. This is also a time when law firms like to assess whether the lawyer they hired is “partnerworthy” and that means prepared to put employment needs first.
This tends to produce “the conversation.” Two great lawyers. Two advancing careers. Two increasingly needy kids. In olden times, this would have been easy. Hire a nanny. Today that’s a $50,000 proposition for a second best alternative and most consumers in the nanny market are not thrilled with the current inventory.
The next conversation is what we can term the “hedge.” Perhaps one spouse should “take a year or two off” until the kids are eligible for full day school of some kind. Once that occurs, the lawyer can get back into the market and resume a career.
Sadly, the taint of leaving a career path almost never leaves. It produces a hole in the resume which employers view as a signal that “Family come first.” It means the lawyer probably can’t be sent to cover the month-long trial in Chicago or to negotiate the merger with a Formosan chip manufacturer in Taipei. And that means the otherwise highly talented employee is not going to rise to the top of the compensation pyramid. Most young people see the decision to step off the career track for a couple years as a small sacrifice. But, a labor economist is likely to conclude that the time off could affect career measured compensation (20+ years) by hundreds of thousands of dollars.
This is where the “workforce trigger” of prenuptial agreements comes into play. It tries to address the problem of one spouse stepping off the career-based pitching rubber. The spouse that makes that sacrifice is negotiating to get some compensation for that sacrifice. It’s a sensible approach except when we look hard at the numbers.
Let’s assume that after Baby 2, Alexa decides to step away from big law for a couple years. When she does that she and Alex are each earning $175,000 a year. Three years later, if she elects the comeback, her old firm has moved on. She will attract offers because of her big law firm experience. But, she is likely to find those offers coming at 50-60% of the former salary. Smaller firms rarely pay at the rate of their bigger brothers. This is true in private industry as well. Now, she is working nearly as hard as she was at age 32 but she is now 35 and earning $100,000. Alex stayed with Biglaw without interruption and he is now making $200,000. Aside from the raw sacrifice of three years of employment, it may take Alexa a decade or more back at the wheel to equal what Alex is already making.
When you run these kinds of numbers and look at the ultimate income disparity triggered by “a couple years off” the results can be staggering. It is not merely 3 years multiplied by $175,000 less taxes. On those numbers, both spouses are sacrificing the lifestyle the second salary would add. But, the real cost is the loss of down and loss of yardage which diversion off the career path triggers. That is a cost almost entirely born by the spouse who puts family first. When confronted with those numbers most couples reply that they will just have to keep working. They grasp the issue but the scope of the sacrifice over a 30-35 year career is more than they will want to address in a pre-nup.
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