Prenups in New York: The Basic Facts

Couple-with-thought-bubbles-300x244A prenuptial agreement is a written contract between two people that is entered into before marriage and takes effect upon marriage.  This document has become more popular as couples realize the importance of clarifying expectations and setting a good foundation for communication about finances (and other issues) before the marriage.

Each couple has a unique set of goals and issues to be addressed and the prenup can be specifically tailored with that in mind.  Without a prenup, state laws dictate who owns the property acquired during the marriage as well as what happens upon the dissolution of the marriage.

Why get a Prenup? Marriage is a partnership. Talking about money should not be viewed as a negative aspect of the marriage.  Negotiating a prenup is a healthy way to create equality in the decision-making process.  The goal is to enter into the marriage with a full understanding of each other’s situation and expectations.

CoffeeShopCouple_INK_color-e1578794289820-300x267The reasons for having a prenup vary.  Some common reasons are listed below:

  1. You have acquired assets such as retirement funds, stocks, savings or real property before marriage and want to be clear that such property will remain your separate property. Part of the process involves understanding applicable law in your state and making informed decisions about the terms of your contract.
  2. You own the apartment or house where you will reside during the marriage and want to clarify expectations about how expenses will be paid, how to deal with capital improvements and/or rights to occupancy in the event of divorce or death.
  3. You want to protect children from a prior marriage.
  4. You want security about how income earned during the marriage and property acquired during the marriage will be treated.
  5. You want to avoid future litigation in the event of a divorce or death.
  6. Trust is built by sharing ideas in order to have a better understanding of what will happen with or without a prenup.

What is the key to an effective prenup?  In general, all agreements must be procedurally and substantively fair.  Factors that need to be considered are as follows:

  1. The writing: The agreement must be in writing and signed by both parties with certain formalities.  The agreement can be overturned if not properly executed.
  2. Independent legal counsel: Having independent counsel helps to ensure that both parties are making fully informed decisions.
  3. Financial Disclosure: Full and complete disclosure is required in most states.  It must be accurate and detailed.
  4. Timing: A prenup must be signed prior to the marriage.  The amount of time the prenup is signed prior to the wedding is an indication as to whether each person has considered the agreement thoroughly and has signed it voluntarily.  It is a good idea to plan well in advance as negotiations become more stressful as the marriage date approaches.
  5. Fairness: The degree of fairness may depend on the circumstances surrounding the agreement.  An agreement may be overturned if it is favorable to only one party.  Fairness factors include the objectives of the parties, the economic circumstances of the parties, the assets and liabilities of each party prior to the marriage, each party’s income and earning capacity, the age and health of the parties, etc.

Custom-Stock-Photo-for-Blogs-300x200How you arrive at a prenup is just as important as the document itself.  If you are thinking about a prenup, an experienced family law or matrimonial attorney can help you weigh the pros and cons by advising you on relevant law and analyzing the practical consequences of any proposals.  Getting your own independent counsel can help to ensure that the negotiations are productive and that your interests are protected.  For more information, visit the prenup section of my website.