Our Baby Peau

An earlier post reminded me about the Marriage Fund I set up last summer. I thought this is worth an update, since it embodies much of the values in our monogamous relationship. Here were the key points from my earlier post, along with the update in italics:

1. Create the explicit rules that are the foundation of our relationship. I wrote about the importance of doing this here. We have been doing this, but memory is notoriously imprecise, so we are now working on writing them down. This reiterates the operating constraints noted here. My point: I would never do a hundred million dollar business deal relying on human memory and spur of the moment thinking. I would think carefully about the deal and commit issues, expectations, and obligations to paper. My relationship is worth much more than any business deal, so why would I invest less effort and care into it?
   
   Jenny and I have a living document that is our relationship contract. It has been revised a few times, but not as much as I had originally anticipated. I do not have permission to post it, however.
   




2. Set explicit shared goals and projects to achieve them. See the point above. If it’s important we should not leave it to whim or nature. Nature is perverse about sex. Just watch Nova or those BBC specials. We need constructive projects to keep it together. These projects embody my interaction schema: intellectual, professional, social, sexual, exploration, sharing, friendship, and romance. It’s fun planning these. We track them all the time, but review comprehensively every year. I will blog about our first review later.
   
   We have several projects: one for-profit, one non-profit, several house related, and several self improvement related. At the moment we have too many projects and are paring down a few (meaning, for example, that some real estate will have to remain undeveloped or unimproved.) But there is one project which particularly excites me relating to sexual training. I will write about it shortly.
   




3. Cover the basics to reduce extreme or desperate behaviors. To that end I have established a trust fund for Jenny. It doesn’t pay out too much, but it’s more than enough to live on comfortably, based on her current earning power with reasonable growth. Nobody should feel captive to their ability to afford living expenses. The trust also holds a modest condominium which can be used for rental income or as a living quarters.
   
   I have written about my three party system for relationships, which makes the relationship itself a third human-like entity. We have even named it. I will not post the name we use but for purposes of the blog let's name it Peau. You can think of Jenny’s trust as a life insurance policy for Peau. It dies, we split, then Jenny is taken care of.
   




4. Create shared incentives that support shared goals. I am creating a Marriage Fund! Family and close friends will invest into a Marriage Fund. The marriage fund will pay a quarterly dividend for each year past year five that we remain married. If the marriage fails the money goes to charity (under some definition of failure that does not include a narrow subset of orderly dissolutions). This is the embodiment of my three party system. It is not a contract between the two of us; it is a contract with the relationship itself. This also serves as an icon for the socioeconomic investment and obligation noted here. And, yes, Jenny and I also pay into the marriage fund.
   
   The marriage fund evolved into an interesting beast. It is an asset secured multi-tranche debt fund with an option twist. Basically the investors receive an option to a debt service rate. I have contributed a good portion of our “couples” assets into the fund, predominantly real estate. Upon death or dissolution the assets are sent to a charitable trust. The option pays a coupon; the actual investment instrument is two options: a five and ten year option. There are buy back provisions. In theory you could take long or short positions, and we could do more leverage in these days of CDOs. Maybe in the future.

This thing is being managed by a private client services group. Let me tell you, there were some eyes-a-poppin’ when I described the structure to them, although I admit I did not describe all of the personal reasoning behind the crazy structure. There are tax headaches aplenty on this structure given the international composition of both investors and assets, but making a tax efficient global investment vehicle was not the point. Pooling with the community was an important point; making certain that was a return to investors as long as Peau was alive was another key point.

The other day Jenny pointed out that our “baby” Peau is already a millionaire.

I pointed out that our relationship is a hedge fund. Which tend to underperform the market [warning, PDF file].

There are also complexities regarding hedging against longevity and the issues of reporting. But that's for another posting.

Perhaps this is truly strange, but Peau even has an email address. Jenny and I sometimes dash off a note to Peau to tell it about our feelings — positive or negative. Peau’s email address is transparent — all missives come to Jenny and myself so we can see them. It is a purely psychological crutch, but it has been, in my opinion, surprisingly effective. There are many subtle features of this structure that Make Sense To Me. I will not bore you with a comprehensive discussion of them, but as an illustration consider the following scenario: in London we are gifting our real estate lease to Peau, solely to the benefit of the survival of our future relationship. It is explicitly clear to both of us that it is a relationship asset. Perhaps some couples routinely think that way, but Peau makes it very obvious and very much in our face.

Keep in mind that every time we sit down to talk about the relationship it is initially difficult. It does not sit well with the modern fairy tale-injected values we learn about romance. When tired or frustrated it is very annoying to feel forced into a rational discussion. But we have found that once momentum has built, say an hour or so into it, it becomes a shared task and quite motivating. It makes us feel closer and over time has become easier and easier.

Weird? Yes. But so far it works.