Colorado mothers who are thinking about giving up their careers to stay home to raise young children should keep in mind that there may be certain ramifications for that decision. While there are numerous reasons why moms choose to stay home, it is important to note that they may be surrendering some of their most productive years in exchange for no financial compensation.
One of the biggest issues is what happens if the couple splits later and the mother has not added anything to her own bank or retirement account. There is no guarantee that the divorce settlement will compensate her for the time she spent raising the couple's children.
Probably not unless the couple agrees on a postnuptial agreement before she leaves her career to stay at home. Because the child-rearing years typically are a woman's best years as a wage earner, this can be a significant amount that can be negotiated during the postnuptial agreement process.
Most likely the mother will not be able to pick up her career where she left off. Furthermore, a woman who divorces typically faces an immediate reduction in her economic quality of life. If her foregone earnings are not addressed in a postnup before divorce, her time spent as a mother will not be fairly compensated and she is more likely to suffer financially. This scenario also applies to fathers who choose to stay home and care for the household and children.
Ideally, a postnup will detail both spouses' property rights and expectations. It can easily resolve one of the stickiest financial issues if it includes an agreement on alimony. Without a contract, a court will decide which spouse will pay and set what it thinks is a fair amount for spousal support, which could be far from what both spouses feel is fair.
Because emotions often run high during divorce, sound decisions are harder to make during this time. A postnuptial agreement made before divorce happens should spell out decisions that a court can then facilitate. Because the postnuptial contract is an important and binding document, the spouses should seek the help of a qualified and experienced legal professional.
Source: CNBC, "Why stay-at-home moms need a 'postnup'," Jeff Landers, Dec. 21, 2013