Prenuptial Agreements Part 1: What’s Mine is Yours? What’s Yours Is Mine? Wait, What’s Going On?
It’s wedding season, and in addition to checking the typical wedding-related tasks off the to-do list, many soon-to-be newlyweds are reaching out to lawyers like me to draft prenuptial agreements. And one of the most common things they tell me is: “We just need a simple prenup.”
For the people who truly want a “simple” prenup, I have good news: You may not actually need one. A simple prenup may simply mean that you will be signing up to do exactly what the law dictates for divorcing spouses. So what does the law mandate?
In New York, all property that you possessed prior to your marriage, or property that you inherited during the marriage, is considered your separate property. In other words, if you came into the marriage with it, or you inherited it during the marriage, you leave the marriage with it. For many couples, this fact is all they want their prenuptial agreement to dictate. And if that’s the case, I agree they want a simple prenup and may not need one at all.
But for many people, they want to do something very different from what the law provides. They may want to define marital property differently than how the law defines it. Or their financial lives may get entwined to such an extent that it may not be easy to determine exactly what was separate property. With a well written prenuptial agreement, you can stipulate the terms that suit your needs—even if you need to “step outside of the box” and come up with very unique solutions. The goal is always to avoid needing the court system should you divorce.
That is when prenuptial agreements are needed, and these are some of the important terms and issues you’ll need to keep in mind:
Separate Property in New York is basically defined as assets that one party owned prior to the marriage, assets that a party received as gifts or inherited during the marriage, and all transformations of those assets such as into items that were purchased or investments that were made. To make it easier to leave the marriage with the separate property you’re entitled to, you will need to be clear in advance about what those assets are and what happens if they are commingled with joint or marital property.
Under New York law, marital property is all property acquired during the marriage. Every dollar you or your spouse earn, regardless of the account it’s held in, is marital property. Some couples use a prenuptial agreement to define marital property differently. Perhaps they agree that there will be no marital property unless it’s put into an account or other asset that’s held in joint names. Perhaps they agree that even an asset that was acquired during the marriage will not be considered a marital asset, agreeing instead that all funds they deposit into their IRAs and 401(k)s will never become marital property. Or, when a couple has already purchased a home together prior to the marriage, perhaps they agree that the home (while technically separate property) will be treated as any other marital asset.
The beauty of a prenuptial agreement is that it can be structured to meet whatever is important to you and your fiancé. But, remember that every time you agree on a term that is different from the basic law, your agreement is becoming less and less simple.
To determine whether you need a prenuptial agreement, simple or otherwise, and how that agreement can help you meet your goals, contact us today.
Vacca Family Law Group
60 E 42nd St #764
New York, NY 10165