It comes from an ancient legal regime called “community property” inherited from the Spanish in the southwestern US. The details of what is within legal scope and how it is handled varies significantly with jurisdiction. In most cases the loss of ownership independence also comes with a loss of management independence — your spouse can get involved and has veto power. Assets that are out of scope can bleed into scope over time. The entire notion interacts poorly with modern legal and financial structures related to businesses and assets.
It isn’t talked about much but I’ve seen a couple startups destroyed by this and it is a not uncommon source of dead equity in cap tables.
Thanks for the explanation. I have heard of the concept of community property, but did not know where it came from historically. I also did not realise it had this effect - which makes sense now you explain it.
I do not think this is the explains of the decline in marriage though. AFAIK marriage has declined across the west - other US states, and certainly in many European countries.
People marry expecting to cooperate so I find it hard to believe this is a common reason not to marry on any case. The idea behind community of property must have been that the expectation of a marriage is that it will endure for life and the spouses are committed to each others' best interests. That is how it is supposed to work!
I think (and everything points to it being the cause here in the UK) is that without the social pressure to marry in order to co-habit people think of marriage as just a ceremony (on which they spend ridiculous amounts) and a piece of paper. They do not realise the legal benefits of marriage. In fact, many people assume that if they co-habit long term and have kids the law must be fair enough to give them reasonable rights, and some even think we have common law marriage here. It leads to distressing results when relationships break down, or a partner dies (especially without a will, or when a will is contested).
Washington has "committed intimate relationship" which does confer community property and is similar to a "common law marriage" so if people think that being in a long term relationship and not getting married is a way to "protect their property" then that's a fallacy.
> Because you're coming across with talk radio / TikTok vibes.
Really? That’s what you’ve got?
I’ve seen examples of this in Silicon Valley going back to the 1990s. A prenup is not reliable and loads of people don’t have one in any case. Unlike not getting married, there is significant social pressure against prenups. If you actually care the path of least resistance is to not get married. It is quite difficult to get a prenup against the possibility that someone will prove to be irresponsible or malicious in the future in a context they’ve never experienced thus far.
It also doesn’t address the case that if you start a company while married, your spouse effectively has full license to destroy it even if they were completely uninvolved up until the point where they decide to destroy it. I’ve seen it happen, lots of collateral damage for both employees and investors. People will do it out of spite. How do you write a prenup about a company that doesn’t exist yet and may never exist?
Anything that can happen legally generally happens in practice. Average people even in tech don’t hire a team of lawyers when they decide to get married.
If you’ve chosen to get your information from talk radio and TikTok as you seem to suggest, well, that’s a choice.
It isn’t talked about much but I’ve seen a couple startups destroyed by this and it is a not uncommon source of dead equity in cap tables.