This article is designed to provide you with some basic information about prenuptial agreements, under the laws of New York State. Laws and the interpretation of laws vary between states, and both the written laws and the interpretations of these laws by NY Courts can change over time. You should always have a full consultation with an experienced New York matrimonial attorney before making any important decisions pertaining to getting married.
Prenuptial Agreements in New York State: Protecting Your Property and Assets
Marriage is a major life event and should be entered into with the understanding of the financial responsibilities and obligations that come with it. A prenuptial agreement, also known as a “prenup,” can help a couple prepare for any eventualities, including divorce. This legal agreement can provide peace of mind and ensure that the parties themselves control what will happen if they should become divorced instead of having the decisions made by a judge or court. If you are planning on getting married in New York State, including New York City, here’s what you need to know about prenuptial agreements.
The Purpose of Prenuptial Agreements
A prenuptial agreement is a contract between two individuals who are about to get married. The agreement outlines the terms and conditions for property rights, spousal support, and other financial matters in the event of death, divorce, or separation. Prenups have become increasingly popular as couples strive to protect their assets and reduce the potential for costly legal battles in the event of a divorce.
However, the prospective “non-monied” spouse may have grave reservations about entering into a prenupt. He or she can believe that even a gentle suggestion of a prenupt means that the marriage will be based upon financial considerations instead of genuine love. This is much less true when the monied spouse is extremely rich, as it is expected that someone like that will be requiring a prenupt, and in these situations the agreement will usually grant the non-monied spouse enough money to live very comfortably for life in the event of divorce.
Also, if both members of the couple have been married and divorced before, and/ or already have children that they wish to provide for, they may both believe that having a prenupt is both fair and wise.
What You Need To Know About NYS Equitable Distribution Law
New York is an equitable distribution state. Thie means that, in the event of a divorce, the divorce court has the power to divide up the marital assets in whatever way the court determines is fair and equitable. In general, the longer the marriage, the more likely it is that the court’s distribution will be close to a 50/50 split. However, we are only talking about “marital assets”. Non-marital assets include inheritances, proceeds from personal injury lawsuits, and property which was owned by one of the spouses prior to the marriage. This property is known as “separate property”. The divorce court has no power to divide up separate property.
However, separate property can become marital property in various ways, such as when money is taken out of separate bank accounts and put into joint accounts, and in many other ways. The increase in value of separate property, is also in most cases considered to be marital property. Also, there is a presumption that all property owned at the time of filing of the divorce is marital property, and the burden of proof is on either party who claims that property is separate property.
Requirements For A Valid Pre-nuptial Agreement
To ensure that your prenuptial agreement is valid and enforceable in New York State, it must meet specific requirements, including:
- Voluntary and Informed Consent: Both parties must sign the agreement voluntarily and with full knowledge of the terms, without any duress, coercion, or undue influence. It is better to execute the prenuptial agreement at least a month before the marriage, so that each party will have had ample time to change their mind.
- Full Financial Disclosure: Both parties must disclose all financial information, including assets, debts, and income. This disclosure should be signed and notarized.
- Reasonably Fair and Reasonable: The terms of the agreement must be fair and reasonable at the time of signing, and must not result in undue hardship for either party. The case law about what is reasonable and fair is not altogether clear and has changed over the years, and is expected to continue to change. Agreements that give little or nothing to the “non-monied” partner may not be upheld by Courts.
- Written Agreement: The prenup must be in writing and “acknowledged” by both parties. This means that there has to be a special notarization where the notary confirms the identity of the parties.
Important Considerations When Signing a Prenuptial Agreement
When you and your partner are preparing to sign a prenuptial agreement, here are some important considerations to keep in mind:
- Defining Marital Property: The prenup should clearly define what property is considered marital property and what is separate property, including real property, personal property, investments, and other assets. It should also address the circumstances, if any, that separate property or the increase of value of separate property, can become marital property.
- Spousal Support Provisions: The prenup should specify the terms of any spousal support obligations, including the amount and duration of support. It should be recognized that if the non-monied party becomes unable to work and has no means of support, this portion of the agreement may not be enforced.
- Estate Planning Provisions: The prenup should address any estate planning considerations, such as the distribution of assets in the event of death.
- Business Interests Protection: If either party owns a business, or owns a share of a business, the prenup should specify how the business will be treated in the event of a divorce or separation.
- Retirement Benefits Provisions: The prenup should address how retirement benefits will be treated in the event of a divorce or separation. Because the Federal ERISA Law applies, it may be necessary to include special language in the agreement which specifically mentions ERISA.
- Future Earnings Provisions: The prenup should specify how future earnings will be treated, including any potential increases in income or investments.
- Tax Consequences: The prenup should take into account the tax consequences of the provisions outlined in the agreement.
- Legal Advice: Both parties should have the opportunity to review the prenup with their own independent lawyers and get legal advice. The prenupt should state the names and addresses of the attorneys that each party has consulted with, and that the parties have a full and detailed consultation with their attorney before signing. Although it is Ok for the party who has more money to provide the other party with the money necessary to hire an attorney for consultation, the party who has the most money should not actually select the other party’s attorney.
Enforcing Your Prenuptial Agreement
In the event of a divorce, a prenuptial agreement can be enforced by a court. If the agreement meets the requirements outlined above, it will be presumed to be valid and enforceable. However, if either party challenges the validity of the agreement, a court will consider various factors, including the voluntary nature of the agreement and whether there has been duress, fraud, or overreaching by the other party. In recent years, there has been a trend by NYS courts towards enforcing prenupts.