Although planning a wedding can be one of the happiest times in many people's lives, the fact remains that those getting married in New York City face a unique set of circumstances: a later average age of marriage (early 30's) and a divorce rate that is several times higher than most of the nation. Although no one wants to think of their marriage ending in divorce before it even begins, a prenuptial agreement can be a smart insurance policy to protect your assets in the event that things don't work out.
What is a prenuptial agreement? Often known as a pre-nup, a prenuptial agreement is a legally binding document signed by both parties (who need to each be independently represented, preferably by counsel) that states the couple's property rights and financial expectations in the event they one day divorce. A pre-nup will not be enforceable if it is unconscionable, or unreasonable. Certain items or provisions such as child support, or anything that is against the law, will be rendered invalid by a court. However, a pre-nup can do an excellent job of protecting a prospective spouse's assets. That said, not every person getting married needs a prenuptial agreement. Listed below are some things to consider that may indicate whether or not a pre-nup is right for you.
- Do you have substantial premarital assets, such as owning real estate or part or all of a business?
Under New York Law, property you purchased or have a share in from before the marriage remains your separate property in a divorce---up to its original value. Any increase in value of an asset such as a home, land, or a business that takes place after your marriage may fall under marital property and be part of the financial distribution to your spouse if they can show they helped contribute in some way to the asset's appreciation. A pre-nup can explicitly state that your spouse waives the right to these items, listed specifically, in the event of a divorce. Although that new business or fixer-upper might not be worth much now, it might be safer to protect your future investments today and never have to worry rather than potentially deal with a substantial loss down the line.
- Do you earn a salary that is significantly higher than that of your partner?
New York Law views marriage as a partnership, and seeks to protect the less-moneyed spouse. Therefore, if you make substantially more than your fiancé, you might want to ensure in a pre-nup that they are not entitled to a significant percentage of income that you have produced during the marriage. You can even specify what they would be entitled to by way of settlement.
- Are you still in graduate school, or do plan on going in the future to get a new degree?
Under New York Law, a spouse is entitled to a percentage of the earning capacity gained by their spouse's graduate degree if earned during the course of the marriage. Therefore, if you're going to be in law school, medical school, completing a Masters or an MBA, and will still be doing so upon the date of your marriage, it may be smart to have a pre-nup stating that your fiancé waives the right to get a 'piece' of the enhanced earning capacity that degree brings if you two divorce.
- Do you have children from a prior relationship or marriage?
Under New York Law, spouses are entitled to an elective share of the estate they can take against the deceased person's wishes as set forth in a will. Therefore, if you want to protect children from a prior relationship or marriage against this possibility, it may be important to have a prenuptial agreement where your future spouse waives their elective share, ensuring that your children inherit as you set forth in your will or trust documents. Similarly, by protecting your assets in the other ways described above, you can insure that you will not be losing a substantial percentage of your assets to a subsequent spouse, making prior child support or maintenance payments more difficult.
- Do you have family money from your relatives or specific items (such as fine art or jewelry) that you want to protect?
If you are the heir to a family trust or other fund, it may be important to protect that as well by having a prospective spouse waive rights. Many wealthy families protect their collective funds this way. Additionally, if there are heirlooms or other items that you are very attached to and don't want to risk losing in a division of the assets, you may want to set them forth as off-limits in a prenuptial agreement.
Should one or more of the above factors apply to you, and you feel comfortable with having a prenuptial agreement to ensure that you are protected in the event of a divorce, it is recommended that you consult with a New York family law attorney who can provide further advice on the matter, and consider carefully broaching the subject with your partner. While it's never easy to think of the negative side of marriage when you are at its beginning, it is always better to plan for the worst and hope for the best.