New York Prenuptial Agreements
Prenuptial Agreements in New York – When to Get One
New York Law allows Prenuptial (prenup) agreements. The difference between a prenuptial and postnuptial agreement is the timing. A pre nuptial agreement is entered before the marriage. Many people do enter the contract after the marriage. The after marriage contract is the post nuptial agreement.
The first question is “Should I get a prenuptial (prenup) agreement?” The prenup is for people who are entering a second marriage or who have significant assets. Also for people who have been through a divorce who want to avoid equitable distribution..
The purpose of the prenuptial (prenup) agreement is to determine how the assets will be divided if there is a divorce. It is like insurance and not very romantic. When people are looking to get married they don’t like to consider a possible divorce. We see more pre-nuptial contracts for second marriages. We also see them when both parties have significant assets.
If the parties don’t have assets or do not anticipate assets, then a pre-nuptial contract is probably not necessary.
New York Courts take a very broad definition of “marital assets.” Houses are generally the main asset people have. There are other assets which should be considered. Licenses, such to be a doctor, lawyer or CPA, are assets and if earned during the marriage are assets of the marriage. Degrees which can “enhance earnings” are also assets. For example, an MD, JD, MBA and PH.d are examples of degrees which can enhance earnings. A person with an MD will earn more money than a person with just a high school education.
Other assets include stock accounts, an IRA, a 401(k). Businesses are also assets which are subject to equitable distribution.
The rule of thumb is that if it is acquired during marriage it is marital property.
Something acquired before marriage does not mean it will remain separate property. For example, a business owned before could have its increased value determined to be marital property. Money deposited into a separate acount, IRA or 401(k) could be viewed as marital property. A properly drafted prenuptial agreement can protect separate assets from becoming marital.
If marital money is deposited into an account with separate money the account can be transformed into marital property. If a piece of separate property is sold during marriage and another piece acquired it might be transformed into marital property. A well drafted prenuptial agreement can protect your assets.
The ability to control equitable distribution of property is the primary purpose to enter into a prenuptial (prenup) agreement. Be aware that the contract must specifically identify the property of each party. Leaving out or concealing assets is grounds to break the pre nuptial.
In order for the pre nuptial agreement to be enforceable, it must be “reasonable”, not the product of fraud, not “overreach” and not the product of duress.
Duress means that your will was overborne. A threat of physical violence is the clearest example of duress.
Reasonableness and overreaching are somewhat harder to define. If the agreement looks unfair, the court will probably not enforce it.
The courts will also look to see if the parties were represented by a lawyer. One attorney cannot represent both parties in the drafting and negotiating the prenuptial agreement.
Because of the complexity of this issue, it is generally a good idea to contact an attorney and not to try and draft this on your own. A poorly drafted prenuptial agreement could be unenforceable.