New York Divorce Law Pre-Nuptial Basics, Part II
by Gary Port /
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January 27, 2008
This post will bring together a number of concepts visited in other posts, particularly the ones on maintenance and equitable distribution. New York divorce law and the law of property distribution can be a little hairy and not all the pieces of the Domestic Relations law play well with each other. It really is important to try and understand how the pieces of New York divorce and family law work or do not work together. This area on pre-nuptial agreements is a perfect example.
In the equitable distribution posts I have discussed the issue of separate property versus martial property. The purpose of the pre-nup is to ensure that the lines between the two properties do no cross.
As a general rule, property acquired before marriage is separate property and property acquired afterwards is marital property. But, this simple rule rarely remains simple.
For example, a house is acquired before marriage, and the couple lives there for ten years. During the course of the marriage, the house increases in value from $125,000 to $500,000. The increased value could be considered marital property. Or, wife has a stock account before marriage in the amount of $100,000. During the marriage she uses the money to buy a house, and the couple lives there for the next 20 years. An argument can be made that the entire house is marital. Or, wife gets a personal injury settlement, which is separate property. She puts the money into a joint account with the husband. He claims that since she “co-mingled” the money, he is entitled to half of the personal injury settlement. Finally, husband buys a house before the marriage, ten years into the marriage, he sells the house and uses the proceeds to buy another house. The wife now claims the entire house is martial property.
The way to avoid these problems is to get a pre-nuptial agreement. A will drafted pre-nuptial will reduce if not eliminate headaches and legal expenses. A poorly drafted pre-nuptial could put your lawyer’s daughter through college.
The first step to getting a good pre-nuptial agreement is not to do it yourself. Good legal documents do not come from the internet or by the people who make software packages. Also avoid those places which claim that although they are not attorneys, they can help you with drafting your legal documents.
The next step is to be complete on your assets. I like to get a full list of all the current assets. Then I draft clauses ensuring that not only is the property currently held separate but it will remain separate in the future. I specifically address the issues of increased value, co-mingling and transformation. If these issues are not addressed up front, then you will be opening yourself up for a fight at the divorce.
Finally, consider maintenance. A provision waiving or requiring maintenance can be put into the agreement. But be careful to address not only the current needs of the parties but the future ones as well. An agreement to pay $1,000 a week in 2008 may sound generous, but may be completely inadequate in 2038. The ability to actually pay maintenance must be gauged against future events. I’m sure that many executives at Enron thought their futures were secure.
There are a number of other factors that also need to be considered, but they will vary based upon your particular case. No “one size fits all” pre-nuptial agreement will work. That’s why it needs to be crafted to your particular circumstance. Maybe you don’t have a house, but hold a number of copyrights or patents. May you have an inheritance coming, or have a trust which will mature in a few years. Mature marriages have children from the first marriage to consider. Clauses can be placed in an agreement limited what property can be devised under a will.
For these and other reasons, consider a pre-nuptial agreement, but don’t pull one down from the internet.