We answer many questions from clients who want to know about prenuptial agreements and whether a prenup would be right for their situation. The topic of prenuptial agreements can be so controversial for many people that we wanted to provide additional guidance.
Here are commonly asked questions to help guide anyone in New York who is considering a prenuptial agreement.
What are the benefits of a prenup?
Prenuptial agreements can offer a variety of benefits. In addition to providing financial security, a prenuptial agreement can limit or prevent litigation in the future. Perhaps even more importantly, the process of creating a prenuptial agreement provides the incentive and opportunity for a couple to hold difficult conversations about money and expectations for their marriage. It is far better to engage in these discussions when the relationship is at a very strong point than to wait to address sensitive topics later when the marriage may be in trouble.
Why might someone want a prenuptial agreement?
The main reason someone may want a prenuptial agreement is to provide them with financial security, whether they are the partner with more or fewer assets. The partner with more premarital assets likely wants to protect them and avoid or limit the amount to pay for spousal support should the marriage end. The partner with fewer premarital assets likely wants to ensure that the pot of “marital assets” will grow during the marriage and will be equally divided should the marriage end. They will also want to know that they will be able to seek spousal support under certain circumstances.
Many people don’t want a court battle—another reason someone may want a prenup would be to limit what there will be to fight over should the marriage end. I’ve had many millennial clients tell me they simply don’t want their parents’ divorce. They saw how much their parents fought about finances or how unequal their parents’ post-divorce lifestyles were from one another, and they don’t want that for themselves or their own children.
What does a prenup protect?
A prenup protects property the parties owned before the marriage, which is referred to as premarital assets. The agreement defines what will be considered marital assets, and it describes how both premarital debt and marital debt will be handled.
Additionally, a prenup can protect a party’s right to spousal support or protect a spouse from having to pay spousal support. It can protect against nasty litigation if you divorce. A prenuptial agreement provides peace of mind during the marriage because each spouse knows what their rights and obligations are.
All marriages end, whether by divorce or death. So, a prenup can also protect estate rights should one spouse die.
What does a prenup NOT protect?
A prenup cannot protect your rights regarding child support or child custody if the children aren’t yet born when the prenup is signed.
Additionally, a prenup may not protect your interests if you don’t get proper legal advice or if you enter into the agreement too quickly without giving your partner adequate time to carefully consider the terms. You should take the time necessary to seek legal advice and thoroughly review a prenup beforehand.
How do you know if a prenuptial agreement is right for you?
If it’s important to you to protect the assets you bring into a marriage, you should think about a prenup. This agreement could help you understand what you can and cannot do with those assets during the marriage so you can plan accordingly. It’s easy for the money you earn during the marriage to get mixed up and commingled with premarital assets.
For instance, many people want to be able to use assets they acquired before marriage to buy a home or another valuable asset that will benefit their spouse and family. Without a prenuptial agreement, it’s difficult to know what you may get back from that investment. It can be hard to determine how to credit each spouse for the contributions made with their separate property. Litigation often centers around these issues.
You should also consider a prenup if you anticipate that one spouse may give up his or her career to be a primary caretaker of your children. Stepping out of the workforce for even a few years can cause a significant setback for the stay-at-home parent. This can impact their future earning capacity and make potential re-entrance into the workforce difficult. A prenup can address how that parent will or will not be supported should the marriage end.
It seems expensive to get a prenup. How will I know if it’s worth it?
I encourage clients to consider the value of a prenup over the cost. Yes, it may cost several thousands of dollars to negotiate a prenuptial agreement. But think about how much you could save in both emotional and financial terms before you calculate the true value a prenuptial agreement could provide.
The biggest cost savings usually stem from the avoidance of litigation. But entering into a prenuptial agreement with clear communication with your fiancé about what is important to each of you can also save a heavy emotional toll in the future. A well-drafted prenuptial agreement will give you peace of mind during the marriage and will allow for more ease and less animosity regardless of whether the marriage ends in divorce or upon death.
Do you need a prenup even if you’re not “rich?”
Even if you’re not “rich” now, you could become so in the future. If there is a large difference in the earning potential between you and your spouse, then you could end up paying much more in spousal support than you would feel is fair. It’s better to discuss these issues now so that your spouse can make appropriate career decisions during the marriage that reflect your agreement should the marriage end. I’ve known many clients who, at the end of a 20- to 30-year marriage, say they never would have given up their careers to be stay-at-home parents had they known how relatively little support they would be entitled to.
A prenup will also limit the chance that you will end up in litigation as a result of your divorce. Litigated divorces cost a lot of money—tens of thousands or even hundreds of thousands of dollars. Should you become financially successful during your marriage, you could end up spending a good chunk of it fighting with your soon-to-be ex.
Contact Us to Receive Our Prenuptial Agreement Checklist or to Schedule Your Initial Consultation
Deciding on whether a prenuptial agreement is right for your situation can be a sensitive topic for many couples, especially when they are preparing to start their married future together. If you have additional questions about prenuptial agreements, we would be happy to talk to you. Just give us a call at 646-798-4740 or complete the form below.