Stay At Home Mom? Protect Yourself Financially

by MomGrind

folding-laundry2I was a stay at home mom for six years. Prior to that, I worked as a divorce attorney. No one knows better than a former divorce attorney that any marriage, any relationship, can fall apart.


Regardless of how great things are for you and your husband or partner, if you don’t have an income, you should make sure you are protected in case something happens to your partner or to your relationship.

While this article handles traditional relationships where the husband is the breadwinner and the wife stays home, many of the points raised here apply to stay at home dads and to gay relationship. You can find specific advice for gay relationships here.


Don’t Underestimate Yourself

My first advice to you is to never allow anyone to imply that you “sit home and do nothing all day” (as a so-called friend of mine once implied). You are doing plenty around the house and with the kids, and your contribution is actually worth a lot of money. A recent survey shows that the average stay at home mom has a 94-hour workweek, and that in 2008, a full-time mother’s annual salary would come in at $116,805, if her work as a housekeeper, teacher, driver and psychologist was paid on the open market.


Sign a Fair Prenuptial Agreement

If you are asked to sign a prenuptial agreement, get a lawyer. Don’t sign anything that waives your right to spousal support or future spouse rights in the event of death or divorce. Make sure the prenup acknowledges your special status as a stay at home mom. For example, many of the agreements I drafted as an attorney stated that after a certain number of years, since the wife gave up those years of her career to raise the kids, the court should take that into consideration when determining her settlement.

The agreement can be very specific and state exact amounts (i.e. the wife gets $100,000 after 5 years of marriage, $500,000 after 10 years etc.) or it can be general and state a general intent to compensate the wife for giving up her career. This type of compensation can be in addition to whatever the wife is entitled to by state law or by being the legal owner of assets.


Plan For Your Retirement

Even if you no longer have a 401(k), you can save for your own retirement using a Spousal IRA. A nonworking spouse can make a deductible IRA contribution of up to $5,000 for 2009, as long as the couple files a joint return, and the working spouse has enough earned income to cover the contribution.


Stay In Touch With The Workforce

Stay up to date by by taking professional classes. Your resume can stay relatively fresh if you include some of the volunteering work you did during your years as a stay at home mom. Keep in touch with former coworkers on Facebook, Twitter and LinkedIn. Keep yourself in a place where, if you need to go back to work, you have professional connections to support your move back into the workforce. Many moms start a successful home business which provides extra income and can be a good safety net in case they need to make it on their own.


Have Your Name On EVERYTHING And Full Access To All Your Financial Accounts

Never let your husband be in charge of your accounts, only giving you limited access in the form of a credit card (that can be canceled) or a weekly “allowance.”

In Community Property States (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin) most property acquired during the marriage (except for gifts or inheritances) is owned jointly by both spouses and is divided upon divorce, annulment or death. Joint ownership is automatically presumed by law in the absence of specific evidence that would point to a contrary conclusion for a particular piece of property. The community property system is usually justified by the idea that such joint ownership recognizes the theoretically equal contributions of both spouses to the creation and operation of the family unit.

However, even in Community Property Jurisdictions, it’s always a good idea to have your name on everything you own as a couple, including the house, the cars, and of course bank accounts and investment accounts.

How do you handle your finances? Are both of you in charge or just one of you? Do you feel that you are going to be financially OK if the relationship ends?

I am an Israeli attorney. I am not licensed to work as an attorney in the United States. The advice given here is of general nature. Please consult a licensed attorney regarding your specific situation prior to taking any action.

Photo by riot jane

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