Prenuptial Contracts (Prenups)
A prenuptial agreement is a contract by parties planning to get married who wish to opt-out of the usual 50/50 marital property split laws and create their own separation and divorce plan.
As a rule, a prenuptial agreement determines the alimony and property rights of a couple in marriage and in the event of a divorce.
In today’s day and age, many couples contemplate marriage after having one or more prior divorces and being parents to separate children from prior relationships. People worry about their family fortunes and preserving family assets without sharing with their new spouse.
Prenuptial Agreements Include Provisions that Define:
- The procedure and ownership for buying a valuable property during the marriage
- The procedure for post-purchase management and disposal of property bought during the marriage using funds from one or both parties
- Contribution of each spouse to the maintenance of the property.
- Inheritance for pre-marriage separate children of the parties (although each party should then have a separate Will and perhaps consider creating trusts for their separate children)
- What happens when one party dies during the marriage (waivers of inheritance) and the related estate provisions
- Confidentiality clauses
- Financial penalties for both spouses in case of breach of contract.
The parties may even agree to structure ownership splits based on how long their marriage will last.
When drawing up a prenuptial agreement, the attorneys for both sides consider the following information:
- Information about income, resources, real estate ownership and financial assets of each party
- Debts of each party
- Family structure and separate children of each party
- Family trusts set up in the past
Prenuptial agreements are invalid without full financial disclosure by the parties to each other of the income, resources, assets and debts each may have.
It is highly recommended to use two attorneys in the preparation and negotiation of Prenuptial Agreements.
If you have an attorney, that attorney must sign the prenuptial agreement to indicate that they assisted you in drawing it up and you acted on their advice.
If English is not the first language of one or both parties, each party must ensure the agreement is read and reviewed with them in their native language.
Post-nuptial Agreements (Postnups)
When people decide to get married, they enter a contract of marriage and agree to share all their income and assets with each other. In the event of divorce, all the marital property is subject to being divided 50/50, or equitable distribution. Ownership rights to marital property are governed by the state’s domestic relations laws. However, even where the parties were married without signing a prenuptial agreement, they are free to enter a Post-Nuptial agreement (also called Postnup) to change their individual situation and opt-out of the state-dictated legal domestic relations structure.
Couples have the option to enter a postnup agreement to set different parameters for how their property will be divided should the marriage terminate.
How post-nuptial agreements differ from prenups?
Legally, post-nuptial agreements differ from prenups in that they are entered AFTER the marriage.
Post-nuptial agreements are often used when circumstances change after the marriage is already entered and in situations where one party wants to protect a family business, avoid taking on the other party’s sizeable debts, or to clarify financial responsibilities during the marriage.
Some states will allow the parties to a postnup to use one lawyer together where postnups always require use of different attorneys.
When are post-nuptial agreements useful?
If the parties did not have a prenup, it’s not too late to make a framework of separate property rights after the marriage. If the circumstances changed and one party stands to inherit a sizeable family business or inheritance may also be a good time to create a post-nuptial agreement. Finally, if the parties feel to be on the brink of divorce, but are not yet ready to take the plunge, a postnup may be a life saver. And finally, if your prenup no longer seems fair and both sides agree, they can toss the prenup and enter a brand new post-nuptial agreement with new provisions.
Why some people decide to enter into post-nuptial agreements:
- To make sure separate children from previous marriages and other relationships are entitled to separate inheritances.
- Where one party is sick and may soon not be capable of making legal decisions
- If one of the spouses makes horrible financial decisions, acts financially irresponsibly and takes on bad debts
- When one spouse is going to inherit a family business or becomes a beneficiary of a sizeable family trust or has parents transferring assets to them without wishing for the other spouse to share in those assets.
- When one spouse becomes a stay-at-home parent or takes a considerably lower-earning job to take care of the home and would like to secure equal property distribution in the even of divorce
- And finally, just to make property division very clearly defined and spelled out for the event of divorce
What may be included in a valid post-nuptial agreement?
The same property and parenting issues that people include in prenups also go into postnups. That includes alimony, property division, asset allocation for children, distributing debts, and what happens if one party dies.
Will me prenup, postnup or palimony agreement really protect me in court if we get divorced?
Prenuptial, Post-nuptial and Palimony agreements will stand and protect each party in court like a shield with the exception of the following situations that may invalidate them in part or as a whole:
- There is no written duly signed agreement. Oral agreements are not enforceable.
- One of the spouses was pressured to sign it by force, duress or coercion.
- There are invalid provisions included like custody or child support provisions.
- One party did not understand what they signed – English is not their first language, they did not have a lawyer, or perhaps they did not have the mental capacity to sign such a serious agreement (mental illness)
- There was no full financial disclosure by one or both parties.
- The agreement contains false or incomplete information
- One of the parties did not have proper time to consider the agreement or did not read it.
- Agreement was “unconscionable” (grossly unfair, one-sided, excessive).
- One of the parties did not have their own lawyer
Parties may NOT include provisions about custody, visitation and child support in prenups or postnups or palimony contracts.
In NY, there have been precedent cases where a prenuptial agreement was set aside by the court and not followed in property division decisions by the court for having become grossly unfair with passing of time, despite having been fair at the time of signing.
For example, in one case, the lower earning spouse was found to be entitled to a 50/50 split despite having waived it many years ago in a pre-marriage prenup where the marriage was very long, the parties had multiple children together during the marriage, and the lower earning spouse contributed to the growth of the high earner’s alleged separate property for decades during the marriage
Palimony agreements are agreements entered by parties who are not legally married to set up property ownership and division rights in the event of separation.
New York does not recognize Palimony Agreements, with some narrow exceptions that really take it outside the palimony sphere.
New Jersey does recognize Palimony Agreements, but with strict requirement that it is a written agreement, stating there is a promise for support to be paid if the marriage ends in divorce. This written agreement can be enforced in court in New Jersey then.
What do the courts look for when reviewing a prenuptial, post-nuptial or palimony agreement?
The courts look for fairness in prenuptial, post-nuptial and palimony agreements and have discretion to invalidate all or parts of this agreement that they consider uneven or inequitable.
At Shepelsky Law Group, we will ensure that your rights are protected to the maximum in a prenup, a postnup or a palimony agreement, as your individual unique circumstances dictate. We will ensure you receive full financial disclosure and do the right thing for your family and yourself.