Talking about finances before getting married can be difficult but it is an important part of building a strong foundation for your future relationship. Discussing the benefits of a prenuptial relationship can help a couple understand shared financial plans and avoid future financial disputes. If you are engaged and want to know more about prenuptial agreements in New York, contact Martin Friedlander, P.C. online today, or at 212-321-7092.
Prenuptial Agreements in New York
A prenuptial agreement is a type of contract between two individuals who are planning on getting married. The prenuptial agreement provides for how the parties will treat certain property, assets, debts, and other issues in the event of a divorce or separation.
The contract terms can provide for just about anything the parties agree to but most prenuptial agreements specifically address the following terms:
- Marital property (property acquired during the divorce),
- Separate property,
- Individual and shared debts,
- Business assets,
- Maintenance, or alimony,
- Specific property,
- Retirement accounts,
- The family home.
When thinking about a prenup, the parties may want to consider what happens in the event of divorce or separation when the couple does not have an agreement in place. When a divorcing couple is in a dispute about property, the division of property and assets will be determined by state law and may be up to a judge to decide. However, with a prenup, the couple will agree on dividing property and assets and not leave it up to the court.
A postnuptial agreement is very similar to a prenuptial agreement. Instead of entering into the agreement before a couple is married, a postnuptial is a contract that is agreed to and signed during the marriage that addresses property, assets, and other responsibilities if the couple gets divorced.
Couples who enter into a postnuptial agreement may want to provide clarity about what will happen if the couple gets divorced. Additionally, a couple with a prenuptial agreement may have decided the terms of the prenup are outdated and want to make a new agreement. Change in life circumstances, like an inheritance, birth of children, or major illness may be a reason why the couple wants to make future plans for themselves and their family.
Benefits of a Prenup for New York Marriages
Even couples who may not have considered a prenup can benefit from such an agreement before getting married. Prenups are not only for the wealthy. Individuals and couples who may be able to benefit from a prenuptial agreement in New York may include:
- Individuals who have already experienced a messy divorce and want to avoid a similar situation in the future;
- Individuals with children from a previous marriage;
- Business owners or individuals involved in a family business who want to make sure the business assets and management are not impacted in the event of a possible divorce;
- Individuals who are giving up a career or educational opportunities to raise children or manage the home;
- Individuals involved in start-ups or creative arts;
- Individuals who will be moving to be with their future spouse, in a different state, country, or away from family.
When a Prenup Applies
A prenuptial agreement generally goes into effect when the couple marries. If the wedding never happens, the prenup would not be necessary. A prenup can also provide for qualifying events, such as requiring a certain number of years of marriage before it would apply. Additionally, a prenup can have a “sunset clause,” when the prenup would no longer be in effect. Most sunset clauses either invalidate the prenup after a certain number of years or phase a prenup out over time.
Maintenance or Alimony
A prenuptial agreement can provide security for a spouse, especially one who gives up their career to support the marriage or raise children. A prenup can provide for a specific amount or calculation for maintenance, an agreement not to challenge maintenance, and terms of maintenance, including amount, duration, and terminating events.
Children from a Previous Marriage
A prenuptial agreement can be especially beneficial to an individual with children from a previous marriage. A divorce is generally concerned with how to divide property and assets between the two spouses without consideration for any children from a previous marriage or other relatives. However, many parents will want to make sure their children are provided for and not ignored in favor of a divorcing spouse. A prenup can set aside certain assets for the children that would normally be divided in a divorce.
Creating Enforceable Prenuptial Agreements
It is important to make sure the contract you and your future spouse agree to is enforceable by law. The courts will generally enforce any valid prenup but may review the agreement to make sure it was entered into voluntarily and does not provide for any illegal restrictions. Couples considering a prenup should make sure it has all the hallmarks of a valid and voluntary agreement, that can help the contract withstand any future challenges by a spouse or family members. Factors in establishing a valid agreement include:
- The prenuptial agreement was entered into voluntarily, without fraud or duress;
- Each party had the opportunity for independent attorney review and consultation;
- There is a full and fair disclosure of financial assets and resources;
- The agreement is not unconscionable; and
- The agreement is not illegal.
Each party to a prenuptial agreement should have their own lawyer. If the other spouse selects and pays for the other spouse's lawyer to review the agreement, it may not by itself invalidate the agreement. However, each party should make sure their own interests are represented before signing any legal agreement.
Courts may take a second look at the prenuptial agreement to make sure it is not “unconscionable,” or unfair on its face. A benefit on one party's favor over the other may not be unconscionable, but a stark disparity may cause the court to question the bargaining power between the parties in making the agreement.
Illegal restrictions are enforceable. For example, a prenup that provides one parent will not have to pay child support for their own child may not be enforceable because restricting child support through a separate agreement is against public policy. Child support in New York is based on the child's best interests and child support may be enforced even if a prenup limits child support.
Prenuptial Agreement Attorneys in New York
We help our clients negotiate prenuptial and postnuptial agreements that will not only ensure that their individual needs are met but also work to preserve the relationship with their future/current spouse. Contact Martin Friedlander, P.C. today at 212-321-7092 or contact us online [email protected]