I would like to discuss why you might need to consider retaining an attorney to assist in securing a prenuptial agreement. There are many reasons why you might need a prenuptial or premarital agreement. All of the reasons below will apply to a postnuptial agreement as well, and I will discuss that contingency a little bit later.
First, the first reason you might need a prenuptial agreement is when one party makes more income than the other party. In this instance, there is an income disparity that has consequences under the New York State Domestic Relations Law, and that disparity should be addressed in a prenuptial agreement.
In New York State, if you are earning more income than the other party, this will affect how much you might have to pay for spousal support and child support if you do not have a prenuptial agreement. If you are going to be the supporting spouse, then you want to have provisions in your agreement that limit how much you are to pay in the event of a divorce. You can even avoid paying spousal support altogether if the circumstances warrant it and if that provision is fair and just given the circumstances of the parties. As such, if both parties are self-supporting and capable of supporting themselves, you can always waive spousal support against the other so long as the proper language is outlined in the Agreement. I sometimes advise that if there is a huge disparity in income and assets, and to ensure that the agreement is fair and enforceable, it is wise to provide some sort of provision as and for spousal maintenance after a set duration of time, which makes sense. For instance, a year into the marriage might be too early to make provisions for spousal support, but when you are five years into the marriage, it might make sense to provide some amount of spousal maintenance for some duration of time. Again, the terms are wholly up to the parties, but know that a Court looks at your agreement in the whole, and if it looks unfair and unconscionable on its face, then you risk that a Court might set the entire agreement aside.
Another reason you might need a prenuptial agreement is when one or the other of the parties has decided to stay at home and raise the children. While that contribution is admirable, it cannot be quantified, and when that situation has been concluded, it might be very hard for you to go back into the market and find employment. In that instance, if you are the spouse that is staying at home, you would want to have a provision in the agreement that says if you are staying home for seven years, for instance, you will get spousal support for seven years in the event of a divorce. You can decide the amount and duration of spousal support between the two parties. This is just an example of how important it is to protect yourself in the event of a divorce through the use of a prenuptial agreement.
Another thing to look at are the bride and groom’s assets at the time of the marriage, especially those assets that will increase in value over time or in which you intend to make contributions during the marriage. For instance, if you have more assets to protect than your intended spouse-to-be, or if you have started a retirement funds before the marriage and intend to keep contributing to it during the marriage, and you wish to protect that money in the event of a divorce, then you can do so in a prenuptial agreement so long as you disclose all those assets to your soon-to-be spouse. You will need to designate them as separate property since those assets earned during the marriage are deemed marital assets, even if you title them in your name absent a post-nuptial agreement.
The most common provision you will find in a prenuptial or postnuptial agreement is the determination of equitable distribution of property. Oftentimes, parties enter into marriage with substantial savings and other separate property assets, and they wish to protect that money. You can do that in a prenuptial agreement. Sometimes, the parties also expect to inherit a substantial amount of money. You can protect your inheritances in a prenuptial Agreement as well. While the law characterizes those assets as separate property, it can get murky when the parties start unknowingly commingling their separate property funds and inheritances with funds earned or real property acquired during the marriage. It is a very easy thing to do and a very common mistake to make, but one that can be easily rectified by providing for that contingency in a prenuptial agreement. An example of this would be that you might deposit your earnings into a checking account you opened in your name before the marriage, but you continued to deposit your income into that account after the marriage. By depositing income earned post-marriage into an account you had before you married, you will be deemed to have commingled the funds such that your spouse would have a claim to that entire asset. The act of said comingling, in effect, turns those separate funds you had before the marriage into a marital asset in full and subject to equitable distribution.
In that instance, it is very important to have a prenuptial agreement that spells out that no matter how your separate funds are kept, titled, transferred or spent, that the money maintains its separate property character; in other words, it shall be deemed your money regardless of how the money is held or how the real estate is titled. In New York law, at least, if you start mixing and mingling money or titling real estate in joint names, then you might lose your interest in that fund or real property unless such provisions have been taken care of in a prenuptial agreement. In other words, there is express language you can put into a prenuptial agreement that will protect you from losing your money or your real estate. There are multiple provisions an experienced New York prenuptial Attorney can add to a standard prenuptial Agreement, and said paragraphs ought to foresee the common problems you may run into and protect your assets if you treat same as marital without intending to do so.
There is also language you can put into a prenuptial agreement that will permit you to share all earnings or property acquired during the marriage if that is what the parties wish to do, while protecting your separate property interest in the same.
The language set forth in a prenuptial agreement can also work to ensure that if you die, your funds will revert back to your children or your family. You can do all this in the form of a prenuptial agreement.
You may also lay out exactly how you want to treat assets you may acquire during the marriage, from income you made to real estate, retirement funds, cash accounts, savings accounts, inheritances, expected inheritances, and the like. If you set forth that you wish all of said assets to be and remain your sole and separate property, even if they were earned or acquired during the marriage, then you must lay that out in the four corners of your prenuptial agreement and most of the time that provision will be enforceable so long as the agreement as a whole is not unfair or unconscionable.
In order to ensure the effectiveness of the prenuptial agreement, you will want to have two attorneys on both sides who are qualified to draft these sorts of agreements and perform a limited financial exchange of IRS returns and net worth statements.
Another reason you or your spouse may want to enter into a prenuptial agreement is to protect stocks that you might have at the time of your marriage or those stocks that you expect to acquire during the marriage. If you own stocks now, in the event of a divorce, your soon-to-be spouse might have an interest in those stocks or any increase in interest if you are directly managing your investments. You would want to spell out in the agreement that all stocks or stock increases, whether the stocks were required before the marriage or after the marriage, remain the sole and separate property of the person who owned those stocks.
Another reason you might want to have a prenuptial agreement is if you are a divorcing business owner. For instance, if you own a business, and your spouse contributes to that business by taking care of the accounting for one month out of the year then you are soon to be spouse might have an interest in the business or might at least claim an interest in the business, especially if there are children of the marriage. Indirect as well as direct contributions to the growth of your business create an interest in the nontitled spouse. To avoid that contingency, you want to spell out the fact that you own a business and that any appreciation in the value of your business, attributable to your work or the work of your spouse, remains your sole and separate property.
Another topic that people don’t think about when they get married is debt. What if your intended spouse has debts? And what happens if your intended spouse runs up debt during the marriage? Who is responsible for those debts? A judge in a divorce case has the power and authority to have either one of you pay for the other’s credit card debt if the credit card debt was acquired during the marriage. Even though debt that is required before the marriage is generally treated as the separate property debt of the person who rang up the debt, you still want to make sure that it is clear that the person who acquired that debt has to pay that debt. Protection against this contingency is easily accomplished by putting paragraphs into the prenuptial agreement that clearly state that the debt of either party is the responsibility of the party that accrued the debt.
Another area that you must consider is whether you purchase a home with your own money and put your spouse on the deed as a joint owner. If the parties decide to divorce, and there is no prenuptial agreement in place, who has to leave the marital residence first? You can address all of this in a prenuptial agreement.
If you are having marital difficulties and do not have a prenuptial agreement, then you can always prepare a postnuptial agreement, and the postnuptial agreement should address the same above-discussed issues as well. I hope this article helped you in your determination as to whether or not you want to get a prenuptial agreement.
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By: Your New York Divorce Lawyer